Friday, September 26, 2014 10:57:22 AM
"ahem ..
depo gate undertaken on 5.1.13 .. as for this
Quote:
AGAIN, DID WE SHAREHOLDERS MISS SOMETHING? HAS THE PROCESS BECOME HIGHLY SUCCESSFUL?
this actual P2O investor .. never CONfuses stock manipulation with P2O's achievements"
I am a disgruntled but *actual* JBII/PTOI investor who starting posting nothing but pro JBII/PTOI posts in January 2011 through the fall of 2013. I showed extreme patience but my tone changed after waiting for JBII/PTOI's much anticipated Processor 3 only to realize that after months running Processor 3 the company's behavior let on that they didn't have what they claimed they had; or at least weren't in a position to help shareholders realize profits promised. Feel free to look back to my 2011, 2012 posts showing my blinded steadfast support of the company who I now believe took advantage of my faith and trust and deceived me throughout. I'm as real as they get! I invested thousands and still hold a very small amount of shares today.
Also, I haven't heard of "depo gate" but using the word "gate" insinuates scandal and what I posted yesterday was a quote from a Bordynuik interview where he claimed the following:
"I haven't sold a share and our management team is not on payroll. We get paid when the process is highly successful. We get nothing otherwise."
I then pasted a Bordynuik response from a transcript of the Cross-Examination on an Affidavit sworn at the office of Nimigan Mihailovich Reporting, Hamilton, Ontario. Feel free to keep scrolling down through the court file below as you'll see I've boldfaced my previous paste in red. I believe my post and all posts to be factual as this isn't a game to me.
This *actual* JBII/PTOI investor is showing justifiable, and IMO expected, frustration with the wealth accrued by John Bordynuik in 2012 alone based on the statements made by Bordynuik that he'd do different above.
According to salary.com, in 2012 Bordynuik had a base pay of $261,052, received $78,350 in bonuses + non-equity incentive compensation and received $1,270,171 in option award value. salary.com claims Bordynuik made $1,609,573 in total compensation. Feel free to click the link and look for yourself.
Again, this *actual* investor's question stands? HAS THE PROCESS BECOME HIGHLY SUCCESSFUL?
Welland Court File No:3612/12
Court File NO.:CV-12-2474-00
ONTARIO SUPERIOR COURT OF JUSTICE
B e t w e e n:
SANDRA ELSLEY
Plaintiff
- and -
JOHN BORDYNUIK
Defendant
---------------------
The Cross-Examination on an Affidavit sworn December 28,
2012, and January 28, 2013, of, John Bordynuik,
defendant, taken upon an oath in the above action this
1st day of February, 2013, at the office of Nimigan
Mihailovich Reporting, Hamilton, Ontario.
----------------------
A P P E A R A N C E S:
Counsel for the Plaintiff Frederick Hawa
Frederick Simon Hawa
Counsel for the Defendant Renata Kis
Ross & McBride
John Bordynuik - 1
JOHN BORDYNUIK
having been duly sworn, was
examined and testified
as follows:
-- UPON COMMENCING AT 10:09 a.m.
MR. HAWA:
1 Q. Good morning, sir?
A. Good morning.
2 Q. Could you please state your name for the
record?
A. John William Bordynuik.
3 Q. Mr. Bordynuik, you are familiar with the
plaintiff --
A. Yes.
4 Q. -- Ms. Elsley.
A. Yes.
5 Q. How old are you?
A. 43.
6 Q. And what do you do?
A. I am the corporate, I am the chief
technology officer of JBI, chief of technology, sorry,
at JBI.
7 Q. Where is this company based?
A. In Thorold, Ontario.
8 Q. Thorold, Ontario?
John Bordynuik - 2
A. Yes.
9 Q. Does it have a U.S. office?
A. Yes, it does.
10 Q. Is it registered as a U.S. corporation?
A. Yes, it is.
11 Q. So the Thorold office is a registered
place to carry on business?
A. Well, we have subsidiaries that are
Canada corporations and so, no, the Thorold office is
registered, as I understand, as our main office.
12 Q. The Thorold office is your main office?
A. Yes.
13 Q. So what is the significance of the
Nevada registrations?
A. The significance of the Nevada
registrations was the state in which the public shell
entity was incorporated.
14 Q. Now, is the company still incorporated
in the State of Nevada? Is it still a Nevada
corporation?
A. Yes.
MS. KIS: Counsel, as you know, there is
a couple of corporations at issue here. So maybe you
want to clarify which company when you reference the
company.
John Bordynuik - 3
BY MR. HAWA:
15 Q. JBI Inc. is the name of the company, is
it not?
A. Yes.
16 Q. And that is a company incorporated in
the State of Nevada?
A. Yes, it is.
17 Q. Does it have an address in Nevada?
A. Um, it has, I think that you have to
have -- I don't remember what it's called. Let me
think. You have to have a registered agent in Nevada so
I believe that's the --
18 Q. That's the procedure?
A. Yes.
19 Q. Okay. Now, when did you -- you have
children, Mr. Bordynuik?
A. Yes, I do.
20 Q. How many?
A. With my wife, four total.
21 Q. Four total. And are they, are they
living with you?
A. Um, three are full-time. And one is
part-time.
22 Q. Are they dependents?
A. Yes, they are.
John Bordynuik - 4
23 Q. How old are they?
A. One is 16, 18, 19 -- 16, 18, 19, 20.
24 Q. Are you married?
A. Yes, I am.
25 Q. When did you meet Ms. Elsley?
A. I met her --
MS. KIS: Counsel, sorry, you jumped
right in and it occurs to me that I should put on the
record -- I don't mean to break your flow. It sounds
like a good time to interrupt. You did produce 62 pages
on our office last night. These are purportedly under,
were produced pursuant to the undertakings as
Mr. Abradjian --
MR. HAWA: Undertakings of Ms. Elsely.
MS. KIS: Yes.
MR. HAWA: And that of Ms. Widdis.
MS. KIS: Okay. So you have not made a
distinction which is Ms. Widdis' and which were
Ms. Elsley's. In any event, they came in at about
11:30 p.m. last night. I do appreciate that you got
them to us as soon as you could. Our position with
respect to these documents as well as some of the other
affidavits that were produced and which contain
information that ought to have been produced to the
court when you initially obtained the order, that you
John Bordynuik - 5
know, we'll be taking issue with these productions. We
object to you relying on them for the purposes of the
motion. And we will carefully consider any questions
that you ask pursuant to the evidence.
MR. HAWA: You can state that to the
court when we get to the court. I don't think this is
where you should put that on the record.
MS. KIS: I wanted to be consistent with
Mr. Abradjian's comments at both of his
cross-examinations yesterday.
MR. HAWA: Consistent with his comments?
MS. KIS: Yes.
MR. HAWA: Regarding?
MS. KIS: The affidavits that were
filed. The three affidavits that you filed after the
initial hearing that contained information that ought to
have been contained in the initial affidavit.
MR. HAWA: You can object to that at the
motion.
MS. KIS: I put it on the record here,
counsel. Thank you.
MR. HAWA: Thank you.
26 Q. Now, when did you meet Ms. Elsley?
A. In the early 2000s.
27 Q. In the early 2000s?
John Bordynuik - 6
A. Somewhere in there.
28 Q. You developed a romantic relationship?
A. Not then.
29 Q. Not then. Where did you meet
Ms. Elsley?
A. I met her in her home.
30 Q. Met her in her home?
A. Yes.
31 Q. And when did your relationship become
more of a personal relationship?
A. Um, in probably mid- to late 2006.
32 Q. Mid- to late 2006. Where were you
working then?
A. I was doing a job for, at that time, I
was working at -- well, two things AI Applications, and
I was also doing, I was designing a medical cart for
Rubbermaid.
33 Q. And now you met Ms. Elsley in early
2006, but were both enterprises your business?
MS. KIS: Sorry, I think that his
evidence was that he met Ms. Elsley in early 2000.
THE WITNESS: That's correct. She was
providing --
MR. HAWA:
John Bordynuik - 7
34 Q. You became more intimate around 2006?
A. Yes, that's correct.
35 Q. Around 2000, what were you doing around
2000, between 2000 and 2006?
A. Sure.
MS. KIS: Counsel, how is it relevant?
MR. HAWA: It is relevant.
MS. KIS: Why?
MR. HAWA: It is relevant because of the
allegations that we made and Mr. Bordynuik's made about
his pecuniosity?
MS. KIS: Go ahead.
A. Certainly she was working on the west
coast for Paul Allen under Vulcan Northwest.
BY MR. HAWA:
36 Q. When was that?
A. 2002 to, through to 2004.
37 Q. And you were working for Vulcan, which
is a subsidiary of Microsoft, is that what it is?
A. No, it isn't. Paul Allen is one of the
co-founders of Microsoft. He had his own company, his
own entities from the sale of his Microsoft shares, and
he hired me to restore his computers and to actually
several things; recover the original Microsoft data in
1975, restore his original computers, restore a bunch of
John Bordynuik - 8
computers for the museum, and paid me a little over a
million dollars for that.
38 Q. When did you come back to Canada?
A. I think it was 2003 or 2004.
39 Q. 2003, 2004. What did you do then?
A. Then I developed, I was doing -- I did
two things. I did a dirty bomb detector. And I also
did an automation system, and I developed a board that
could control just a bunch of devices.
40 Q. Did -- was -- were you working on your
own accord, in your own business?
A. Yes.
41 Q. Did you make any money in those
businesses?
A. It paid me an income.
42 Q. It paid you an income?
A. Yes.
43 Q. Did you file tax returns?
A. Yes, I did.
44 Q. How much did you make in 2004?
A. I couldn't tell you.
45 Q. Approximately?
A. The Vulcan stuff, I couldn't tell you.
46 Q. 2005?
A. No idea.
John Bordynuik - 9
47 Q. Did you have assets in 2006?
A. Yes, I did.
48 Q. Approximately how much?
A. I had a house in Niagara-on-the-Lake,
and I had a bunch of furniture. I had a patent. I had
somewhere around, somewhere around probably a million.
49 Q. That's, that's including the value of
the intellectual property?
A. No.
50 Q. That's the value of the house and your
cash and other --
A. Yes, I made significant money from the
old computers and --
51 Q. Now, you then met Ms. Elsley and moved
in with Ms. Elsley, is that correct?
A. In 2007.
52 Q. 2007?
A. Yes. We were deciding which home to
move into, mine or hers.
53 Q. You moved to hers?
A. She wanted us to.
54 Q. Where was your other home?
A. My home was on Niagara-on-the-Lake, Line
3. It was a large estate, Concession 2, Line 3.
55 Q. Was it fully paid for?
John Bordynuik - 10
A. No, it was not.
56 Q. No? Now, when you moved into her home,
who paid the bills?
A. I think that we both did.
MS. KIS: What bills do you mean,
counsel?
BY MR. HAWA:
57 Q. All of the household bills and household
expenses, did you contribute to those expenses?
A. Yes.
58 Q. From your own resources?
A. Yes.
59 Q. Did you file income tax returns in 2006,
2007, and 2008?
A. Yes, I did.
60 Q. Would you undertake to provide me with a
copy of your tax return?
MS. KIS: We are going to take that
under advisement, counsel. I am still not convinced
it's entirely relevant. You've asked your questions and
he has given fairly fulsome and responsive answers to
those. I'll take it under advisement.
-- UNDER ADVISEMENT
MR. HAWA: Would you provide me with a
income tax return from the time that you came back to
John Bordynuik - 11
Canada?
MS. KIS: I'll take it under advisement.
-- UNDER ADVISEMENT
BY MR. HAWA:
61 Q. When did you come back from Paul Allen's
enterprise?
A. It was 2003 or 2004.
62 Q. That is when you returned to Canada?
A. Yes.
MR. HAWA: So would you undertake to
provide me with income tax returns for 2004 and 2005?
MS. KIS: We are going to take it under
advisement.
-- UNDER ADVISEMENT
MR. HAWA: Okay. Would up undertake to
provide with a financial statement for the year, the
financial statement of your net worth in 2006, 2007, and
2008?
MS. KIS: Counsel, I don't understand
the difference between a personal financial statement
and tax returns. Why would you need both?
MR. HAWA: There is a difference between
income and assets, Ms. Kis.
MS. KIS: A tax return set out?
MR. HAWA: No, of course not.
John Bordynuik - 12
MS. KIS: Take it under advisement.
-- UNDER ADVISEMENT
MS. KIS: What was the date for the
financial statements?
MR. HAWA: Financial statements for
2006, 2007, and 2008, personal financial statement, just
with the rough net worth with underlying documents.
63 Q. So you are saying, would you say, it's
wrong if Ms. Elsley alleges that she paid all the bills
and financed the entire operation that you were
attempting to undertake in 2006, 2007 and 2008?
A. Absolutely.
64 Q. Would you say that she is lying if she
said she maxed her credit cards, maxed her lines of
credit, liquidated her RSPs, mortgaged her home all
during the period of time when you began living with Ms.
Elsley?
A. When I met Ms. Elsley in 2006, she had a
360,000 line of credit. She had two $25,000 maxed Royal
Bank cards. She had a maxed CIBC. She had a lawsuit
against her and she was a mess.
65 Q. When you met her in 2006?
A. Yes.
66 Q. When you moved in 2006, you met her
prior?
John Bordynuik - 13
A. Well, I am referring between 2006
and 2007 in that area.
67 Q. Yeah.
A. When I, after I was in the house for a
while, I learned that she was completely broke.
68 Q. Had she been assisting you in any way
prior to that before you moved in?
A. Absolutely not.
69 Q. Did she assist you after you moved in
with your enterprise? First, it was A1 and then it was
JB, is that right?
A. Yes. In JB, she did an investment from
her locked RSP for $120,000 in the October or November
of '06.
70 Q. So why did you feel compelled to first
give her 50% of the company?
A. I didn't.
71 Q. Well, you drafted a shareholders
agreement where she would be 50% owner.
MS. KIS: Counsel, what share purchase
agreement are you talking about? What company are you
talking about?
BY MR. HAWA:
72 Q. Did you not draft a share purchase for
JBI Ontario wherein she would be a 50% owner?
John Bordynuik - 14
A. No.
MS. KIS: What document?
MR. HAWA: I am just asking a question.
THE WITNESS: In fact, she couldn't
be --
MS. KIS: You are asking a question
about a specific document, counsel. Can you put that to
the client.
BY MR. HAWA:
73 Q. I am not going to pull the document yet.
I am asking a question. Did you have any kind of
agreement with her with regards to JBI Ontario?
A. Yes.
74 Q. What kind of agreement did you have?
A. Well, we signed a number of documents
because it involved her locked RSP so it involved her
owning a small percent of the company.
75 Q. What percentage was that?
A. It was around 1 to 5%.
76 Q. Of JBI Ontario?
A. Of John Bordynuik Inc. Ontario.
77 Q. 1.5?
A. 1 to 5. Somewhere in there.
78 Q. Did you sign a shareholders agreement in
that regard?
John Bordynuik - 15
A. Yes, we did. Both of us.
79 Q. So you provided her shares of JBI
Ontario as a result?
A. That's correct.
80 Q. Certificate included?
A. That's correct.
MR. HAWA: Would you undertake to
provide a certificate for JBI Ontario?
MS. KIS: We'll take it under
advisement.
-- UNDER ADVISEMENT
A. Hold on a sec. I could provide the
document, but she has the certificate. I can only
provide the documentation showing --
MR. HAWA: Could you provide any
resolution of JBI Ontario wherein in the resolution you
issue shares to her?
MS. KIS: We'll take it under
advisement, counsel. I am not sure how readily
available some of that document is. It's all under
storage. So we'll take it under advisement.
-- UNDER ADVISEMENT
BY MR. HAWA:
81 Q. Do you have a corporate minute book left
for JBI Ontario?
John Bordynuik - 16
A. Somewhere at the new company.
MR. HAWA: Would you give me a copy --
would you undertake to provide me with a copy of the
resolution regarding all outstanding shares of JBI
Ontario and a shareholders ledger?
MS. KIS: We'll take it under
advisement.
-- UNDER ADVISEMENT
MR. HAWA: Okay. So you said --
MS. KIS: Hold on, counsel. You are
going very fast. I want to take proper notes to get
this to you if we are going to produce it somewhat
expeditiously. So you want an under advisement of all
outstanding --
MR. HAWA: Under advisement.
MS. KIS: You want an undertaking. I am
giving you an under advisement.
MR. HAWA: I want a copy of the
resolutions authorizing shares of JBI Ontario. I want a
copy of any resolution authorizing and issuing shares to
any shareholder of JBI Inc. Ontario.
MS. KIS: Of any shareholder.
MR. HAWA: Yep. Excuse me. I want a
copy of the resolution stating the number of outstanding
shares of JBI Ontario and a copy of the resolution
John Bordynuik - 17
issuing shares to Sandra Elsley.
-- UNDER ADVISEMENT
BY MR. HAWA:
82 Q. So let me ask you. How many shares are
outstanding in JBI Ontario when she first got involved?
A. I couldn't tell you.
83 Q. Okay. Now, when Sandra first became
involved, you were with AI, is that correct?
MS. KIS: Sorry, counsel, is the
question when him and Sandra first became involved
romantically?
BY MR. HAWA:
84 Q. In 2006.
A. AI was John Bordynuik Inc. was already
incorporated.
85 Q. In?
A. In July 2006, I think.
86 Q. Were you the only shareholder initially?
A. Yes, I was.
87 Q. Then she became the second shareholder?
A. Yes.
88 Q. You say it was about 1 to 5% of the
outstanding shares?
A. Yes.
MR. HAWA: Could you provide me with a
John Bordynuik - 18
shareholders ledger at that time when she was the second
shareholder?
MS. KIS: We'll take it under
advisement.
-- UNDER ADVISEMENT
BY MR. HAWA:
89 Q. Now, I will jump a little bit, but why
did she become a 13% holder of JBI Delaware?
A. We had approximately seven shareholders
at around late, trying to get the time here, around
late 2007. We all sat down and decided on this share
structure so additional shares were issued to some
people for nominal amounts.
90 Q. That it around the end of 2007?
A. Yes.
91 Q. By then you had about seven
shareholders, you said?
A. I think so. Somewhere around there.
92 Q. So around then, that is for JBI Ontario
you provided her with enough shares to make it 13%?
A. That's correct.
93 Q. I see. So she became a 13.1%
shareholder of JBI Inc. Ontario?
A. That is correct.
94 Q. At around the end of 2007?
John Bordynuik - 19
A. Yes.
95 Q. Did anybody lend money to the company at
that time?
MS. KIS: Which company, counsel?
MR. HAWA: JBI Ontario.
A. Yes.
96 Q. Who?
A. Malcolm Stark.
97 Q. How much did he lend?
A. I couldn't tell you.
98 Q. Who else?
A. Pat Widdis.
99 Q. And how much did she lend?
A. I couldn't tell you.
100 Q. Was it around 200,000?
A. Maybe.
101 Q. Was she a shareholder?
A. Not at that time, no.
102 Q. So she was just a lender?
A. Yes.
103 Q. Did she become a shareholder of JBI
Ontario?
A. Yes, she did.
104 Q. She did. What about the other lenders,
did they become shareholders as well?
John Bordynuik - 20
A. Yes, they did.
105 Q. Were they both shareholders at the same
time or lenders first and then shareholders?
A. No, they decided to convert debt to
equity in 2008.
106 Q. In 2008?
A. I believe so, yes.
107 Q. So the total debts of these seven
shareholders who lent money, are these the ones that
lent money to the company, the additional seven
shareholders?
A. Yes.
108 Q. They lent money and became the initial
shareholders?
A. No, no, the initial seven shareholders
were I think was Brian Seburn.
MS. KIS: Spell the last names for the
reporter.
A. S-E-B-U-R-N, John Papavicky (ph), and I
can't spell that one. There was myself, Sandra Elsley,
a trust established for my children. There was -- it
was staff. I just don't remember who.
109 Q. There was seven shareholders?
A. Yes.
110 Q. Aside from the lenders?
John Bordynuik - 21
A. That's correct.
111 Q. And how many lenders were there?
A. I couldn't tell you.
112 Q. What about, you couldn't tell me. Was
it 3 or was it 17?
A. Maybe. I would be guessing. Half a
dozen.
MS. KIS: Don't guess, John.
THE WITNESS: I don't know.
BY MR. HAWA:
113 Q. Well, it was not 100 and it was not 2?
A. That's correct.
114 Q. It was a few, okay. Now, the lenders
then also became shareholders?
A. Yes.
115 Q. In addition to the seven?
A. Yes.
116 Q. That is around the end of 2007,
beginning of 2008, is that correct?
A. It was somewhere in that time period.
117 Q. And the primary business of JBI Ontario
was the tape legacy, tape legacy data reading business,
right, the legacy data reading business, was that
correct?
A. We were sole sourced by NASA to read
John Bordynuik - 21
their data.
118 Q. To read their data. Did the company
have revenues?
A. Yes, it did.
119 Q. Approximately how much in '07?
A. Maybe 40 or 50,000.
120 Q. In '08?
A. I couldn't tell you.
121 Q. Okay.
A. We were going through a sole source
process with NASA, which took a lot of time.
122 Q. Yes. Is it a patented technology?
A. Yes. We filed for patent protection.
It is not patented yet, but we filed for patent
protection.
123 Q. Yes. Now, during that time, it seems
that the number of shareholders increased, is that
right?
A. That is correct.
MS. KIS: What timeframe, counsel?
MR. HAWA: The end of '07 and beginning
of '08.
124 Q. Was Sandra Elsley instrumental in
contacting new shareholders?
A. She contacted her, some of her family
John Bordynuik - 23
and friends, and I understand she contacted others that
I have learned of more recently.
125 Q. There was about 252 shareholders in
around 2008, is that correct?
A. I couldn't tell you what the total
number was.
126 Q. It was a few hundred, though, wasn't it?
A. It was in the hundreds.
127 Q. Was there an offering memorandum or
prospectus done?
A. There was no prospectus done. There was
a private placement document done.
128 Q. Like an offering memorandum?
A. Something like that.
MS. KIS: The timeframe you are dealing
with is 2008, is it not?
BY MR. HAWA:
129 Q. The end of 2007, 2008.
A. That's when we started that offering.
130 Q. Yeah. And so did you contact any
shareholders and sell shares?
A. Yes, I did.
131 Q. How many shareholders did you contact?
A. Quite a few, probably 60, 70.
132 Q. And the balance were contacted by
John Bordynuik - 24
Sandra?
A. No.
133 Q. No?
A. Not at all.
134 Q. Aren't most of those shareholders her
contacts, her friends, her relatives?
A. No, they are Steve Doede's contacts and
friends. They are Brian Seburn's contacts and friends.
They are Katie Matakowski's family and friends. They
are Steve Clark's family and friends and many other
staffs family and friends. In addition to that some of
the people we did business with like our landlord and
other people we met through this business.
135 Q. The 252 shareholders, was there any
restrictions on the minimum amount that they could
invest?
A. I don't recall.
136 Q. Some of them were small shareholders,
weren't they, a few thousand shares?
A. Yes.
137 Q. You did a consolidation, didn't you, or
you did a share split in JBI Ontario?
MS. KIS: When, counsel?
MR. HAWA: Sorry?
MS. KIS: When was the timeframe?
John Bordynuik - 25
BY MR. HAWA:
138 Q. In around 2008, wasn't there a share
split of 125 to 1?
A. Something like -- I don't recall exactly
what that was.
139 Q. You did that in JBI Ontario?
A. I don't know if that happened in JBI
Ontario or JBI Delaware. I'd have to look at the
records.
140 Q. Or you just transferred the shares 125
to 1 basis to Delaware, right?
A. I couldn't tell you. I would have to
see the agreements.
141 Q. Now, you then took the shares. You had
252 shareholders and the raise was about $3 million, was
it not?
MS. KIS: What do you mean "the raise",
counsel?
BY MR. HAWA:
142 Q. The raise from the shareholders. You
raised about $3 million, isn't that correct?
MS. KIS: From the initial --
MR. HAWA: -- 252 shareholders.
BY THE WITNESS: Referring to in the --
143 Q. Around 2008 for JBI Ontario?
John Bordynuik - 26
A. JBI Ontario in, somewhere by June or
July I believe the offering had finished the PIPE, and
it was, I don't know how many shareholders there were.
It was hundreds but, in any event, it was around
three million.
144 Q. It was around three million. So that
was the PIPE and all 252 came into this investment,
correct?
A. You're saying 252?
145 Q. There were several hundred shareholders
as you said, came into this investment?
A. Yes.
146 Q. Now, so you characterize that as a PIPE.
Isn't that a U.S. acronym, Private Investigator Public
Enterprise?
A. We called it at the time it was Public
Investment Private Equity, and we also had on the U.S.
side, I think it's Private Investment and Public Equity.
So there is two different usages of it.
147 Q. So in Ontario you are characterizing it
as a PIPE, but it was a different usage?
A. Yes.
148 Q. But in Ontario you also characterize it
as an IPO, is it not?
A. That's another term that could be used
John Bordynuik - 27
for it, yes.
149 Q. It was not really an IPO within the
rules of the security laws in Ontario?
MS. KIS: Counsel, that's a legal
question.
BY MR. HAWA:
150 Q. Did you get legal advice? Did you get
legal advice on issuing shares to all these
shareholders?
A. Yes.
151 Q. And you were told you could sell these
shares to everybody that participated?
MS. KIS: Counsel, isn't that privileged
information, what information Mr. Bordynuik would have
received from his lawyers?
BY MR. HAWA:
152 Q. In any event, you said that there were
two kind of PIPEs now. The one in Ontario, what did you
call that again?
A. We called it a, it was either a PIPE.
There is a number of different terms to use for it. The
bottom line is an investment in a company.
153 Q. Right. So you called that initial
investment by the few hundred shareholders in Ontario a
Private Investment Public Equity?
John Bordynuik - 28
A. No, public Investment Private Equity,
something like that.
154 Q. And you reversed that for the U.S. PIPE?
A. That's right.
155 Q. So that's your understanding of a PIPE?
A. Yes.
156 Q. Now, who was not in the PIPE?
A. I couldn't even begin to --
157 Q. Of the several hundred initially in
Ontario, were they not all part of that?
A. Well, Sandra Elsley wasn't.
158 Q. Why not?
A. She didn't invest in it.
159 Q. You said earlier she invested $120,000.
A. She invested 120,000 in 2006. That has
nothing to do with a PIPE in 2008.
160 Q. Okay. But you allocated 13% to her, in
any event?
MS. KIS: 13% of what?
BY MR. HAWA:
161 Q. Of the shares of JBI Ontario?
A. That is correct.
162 Q. And the rest got their proportional
number of shares in JBI Ontario pursuant to their
investment in that so-called PIPE?
John Bordynuik - 29
A. Yes, but Sandra's 13% was much later.
In the early stage, it was maybe a percent or two. It
was not very much.
163 Q. But it became 13.1 around the end of
2007 beginning of 2008?
A. Somewhere there, yes?
164 Q. And that's when you raised the money, is
it not? When did you raise the money?
A. We were raising money I think it was
during that time or near that time.
165 Q. So that, so that so-called PIPE was
around the end of 2007 and beginning of 2008?
A. Yes, I believe so.
166 Q. The amount of money raised was about how
much?
A. 3 million.
167 Q. $3 million. Did JBI Delaware, who you
purchased in 2008, right? You purchased JBI Delaware
June 2nd, 2008, isn't that correct?
A. I couldn't tell you the exact date.
168 Q. Okay. Did it raise any money with a
PIPE?
A. No.
169 Q. Did it raise any money at all?
A. No.
John Bordynuik - 30
170 Q. So you had this company with this
technology and some cash in Ontario around the beginning
of 2008, correct?
MS. KIS: That's JBI Ontario you are
referring to, counsel?
BY MR. HAWA:
171 Q. JBI Ontario?
A. That's correct.
172 Q. And you made a decision. Now, from
those, did you draw a salary from that money?
MS. KIS: From what monies?
BY MR. HAWA:
173 Q. From the monies raised by the
shareholders and JBI Ontario?
A. All employees did.
174 Q. How many employees did you have?
A. I think that we had maybe seven or eight
at that time, seven or eight at least. Plus, we had all
the tape reading people. Part-time people, we had quite
a few. Full-time people, we probably had seven or
eight.
175 Q. You made a decision to go public in the
U.S., right?
MS. KIS: When you say, you, there is
three separate corporations we also talked --
John Bordynuik - 31
BY MR. HAWA:
176 Q. You, John Bordynuik, made the decision
to go public in the U.S.?
A. All of the staff, we all got together,
including Sandra Elsley, and decided to do that in 2008.
177 Q. You purchased JBI Delaware for that
purpose?
A. That is correct.
178 Q. That was in June of 2008 from a
Ms. Sheila Hunter, is that right?
A. Yes, that's correct.
179 Q. You purchased how many shares of JBI
Delaware?
A. I couldn't tell you.
180 Q. 58 million. Sorry, 100,000, does that
sound reasonable?
A. That's possible.
181 Q. For how much, do you remember?
A. It was very little.
182 Q. About $30,000, is that about right?
A. It might be.
183 Q. So you paid $30,000 for the shell
approximately for JBI Delaware. You paid 30,000 for JBI
Delaware?
A. Anslow & Jaclin was working with us to
John Bordynuik - 32
go public so they set up the structure for us to do
that.
184 Q. Yes, they set up the structure for you
to do that?
A. Yes.
185 Q. So where did the $30,000 come from?
A. It came from me.
186 Q. John Bordynuik or JBI Inc.?
A. John Bordynuik.
187 Q. You paid for that. Where did the money
come from, from your bank account or did someone lend it
to you?
A. No, it had to come from, it had to come
from John Bordynuik Inc. Ontario owed me some money, and
it had to come from that.
188 Q. I see. So you purchased the shares of
JBI Delaware, which was a dormant shell really, was it
not?
A. No, it was specifically set up to, it
was a blank cheque company specifically set up by Anslow
& Jaclin to go public.
189 Q. It was doing an initial S1 an IPO
instead of having been public. It had not been public,
is that what you say?
A. It never had been public.
John Bordynuik - 33
190 Q. I see.
A. It had been I believe reporting. Maybe
not. No, I would be guessing.
191 Q. It must have been active in the public,
otherwise, why would you pay $30,000 to incorporate
essentially?
A. Well, in order to get a blank cheque
company, they costed a lot more at that time. There
were three different tiers of company. You just
couldn't take a regular company. And then I think it
had something to do with the fact that it was registered
with the SCC. There was something there, but it was
referred to as a blank cheque company. It was not
trading. Its securities had not been through any kind
of registration or any kind of offering. It had just
been created for the sole purpose of creating a vehicle
for a company to merge into and then go through the
process of going public.
192 Q. So you made the decision -- now in the
reporting there, it indicates that as of 2008, JBI
Delaware had $2.6 million. But you wouldn't agree with
that, would you?
A. In what, reporting?
193 Q. Well, JBI Delaware had no money, right?
A. That's correct.
John Bordynuik - 34
194 Q. Now, you merged JBI Ontario in February
of 2009 with JBI Delaware, right? You did a share swap,
did you not?
A. There was some kind of transaction that
Anslow & Jaclin set up to acquire the shares of JBI
Ontario.
195 Q. Do you remember how many shares were
issued by JBI Delaware?
A. I have no idea.
196 Q. Does 58 million sound reasonable?
A. If we have the documents, I can look at
them and verify that.
197 Q. Let me put it this way. Sandra Elsley
was issued 7.7 million shares, isn't that correct,
7.75 million shares?
MS. KIS: Counsel, I don't know if there
is a reason why. If you have the supporting document
that we can reference, it would probably be easier
rather than him guessing. It's your examination. It
just seems --
MR. HAWA: I don't really want to get
into the specifics of the numbers.
198 Q. I just want to advise you that you
provided, when I asked you and you confirmed you
provided Sandra Elsley 13.1% of the shares of JBI
John Bordynuik - 35
Ontario, right?
MS. KIS: At what time?
MR. HAWA: This is in 2007 and 2008.
199 Q. Now, you said that earlier, okay. You
said that earlier, you provided her with 13.1%.
MS. KIS: Counsel, I don't think that
was exactly his evidence.
MR. HAWA: That was his evidence that
she became a 13.1% shareholder of JBI Ontario.
MS. KIS: It is the "you gave her" that
I have an issue with, counsel. I think the evidence
that my client has given is that there was a meeting
that this was discussed among all seven shareholders of
JBI Ontario. It is going to make the record incredibly
confusing if we are talking about you and we mean JBI
Ontario and Mr. Bordynuik at the same time or if we mean
JBI Ontario or JBI Delaware.
BY MR. HAWA:
200 Q. You, John Bordynuik, provided, and JBI
Ontario and you made the decision to provide her with
13.1%. Why did you increase it to 13.1? It was 1 to
5%. Why did you increase it, or why did you or JBI
Ontario increase it to 13.1?
A. It was a meeting that we had at that
time. I don't recall why.
John Bordynuik - 36
201 Q. When you then merge with JBI Delaware,
she then again owned 13.1%, did she not, of JBI
Delaware?
A. We had completed a share swop agreement.
But from what I recall, the share swop itself never
actually occurred.
202 Q. But the S1 listed the shareholders, did
it not?
A. Yes, it did.
203 Q. It listed all the shareholders including
Sandra Elsley, right?
A. Yes, it did.
204 Q. On the JBI Delaware registration of
shares?
A. Yes, it did.
205 Q. On that, am I wrong to say that she
owned 13.1% of the outstanding shares?
A. She owned 13.1% of the outstanding
shares in JBI Delaware. That is what we were telling,
yes, the structure would be in early 2009.
206 Q. Early 2009. We are in agreement on
that?
A. Well, what we are saying that is what we
are proposing the structure to be, and we are also
proposing what the registered shares would be.
John Bordynuik - 37
207 Q. Yes, yes.
MS. KIS: Counsel, do you object if I
put, you produced the S1 in your motion record.
MR. HAWA: It's in the motion record,
yes.
MS. KIS: So I am asking if you object
to me putting this to him.
MR. HAWA: We are in accord on it.
208 Q. That was around February 9th of 2009,
isn't that right?
A. The share --
209 Q. The merger?
A. The share swop occurred on February 9th,
2009. That was when the agreement was executed.
210 Q. Yes. Now, within a couple of months of
that, you purchased the shares of 310 Holdings, isn't
that right?
A. On either April 23rd or April 24, I
purchased shares, not from the company. I purchased
them from the majority shareholder of 310 Holdings, the
public company.
211 Q. Nicole Wright?
A. Yes, that is correct.
212 Q. How did you find Nicole Wright?
A. A number of capital companies were
John Bordynuik - 38
contacting us at that time, because going public in the
U.S. was near impossible after the financial collapse
and all the problems. So I believe at some point a
Beverly Hills Capital had contacted me about, we had
originally looked at trying to get a public company
shell that was trading, but it was impossible in '08.
And '09, because the markets had crashed, they were very
inexpensive.
213 Q. So you bought control for $80,000,
right?
A. That is correct.
214 Q. So Beverly Hills Capital approached you,
and there was another few of these companies that were
shareholders. It was a shareholder, wasn't it, Beverly
Hills Capital?
A. There was about 20.
215 Q. Shareholders?
MS. KIS: Of what?
MR. HAWA: JBI, JBI Nevada.
THE WITNESS: No, 310 Holdings.
BY MR. HAWA:
216 Q. That became JBI Nevada?
A. And I spoke with Nicole Wright and --
217 Q. Beverly Hills Capital put you in touch
with her?
John Bordynuik - 39
A. Yes.
218 Q. And they contacted you ad hoc because
they picked up that you were now involved trying to go
public in the U.S., is that how Beverly Hills --
A. We had many of those.
219 Q. You had many of those people calling
you?
A. Oh, yes.
220 Q. To try to sell you a shell?
A. That's correct.
221 Q. And a trading shell, so to speak, a
clean shell, a trading shell?
A. Trying to sell us a way to go public
that would have been prohibited before.
222 Q. So Beverly Hills Capital. Who was the
person who contacted you from Beverly Hills Capital?
A. Mark Portabello and --
223 Q. Mark Portabello. And Westside Capital
another shareholder, do you know about them?
A. I can't recall.
224 Q. There were a few corporate shareholders,
weren't there, Beverly Hills Capital included?
A. There always is.
225 Q. And Nicole Wright had the majority of
stock, did she not?
John Bordynuik - 40
MS. KIS: In which company?
BY MR. HAWA:
226 Q. We are talking about 310 Holdings JBI
Nevada?
A. In 310 Holdings, Nicole Wright owned the
non-trading control stock.
227 Q. Non-trading control stock. When you say
non-trading, does that mean after a holding period it
would become trading?
A. No, there are more, there are more tests
than just that, and it's an affiliate stock. It has a
totally different meaning then the other stock. Her
stock was not registered. The other stock was
registered.
228 Q. But it could be registered, could it
not?
A. If the company, well, if the company
filed a registration statement and went through the full
registration process with the SCC.
229 Q. In order to register the stock for
trading?
A. That's right.
230 Q. And then there would be a holding period
and then it would be saleable?
MS. KIS: Counsel, isn't that a legal
John Bordynuik - 41
question.
MR. HAWA: It is. He may know it as a
fact.
MS. KIS: If you are asking his
understanding, I am comfortable with it, but asking for
it as a legal point.
BY MR. HAWA:
231 Q. Well, I am asking for your
understanding.
A. My understanding is, in order for a
stock to be even tradeable, a few things had to occur;
one, the company would have to file a Super 8-K. It
would have to be current in its filings, hold the stock
for no less than one year, meet the nominal operations
and other conditions placed by FINRA and the SCC. There
were a number of them for that kind of a company.
232 Q. The, you purchased 40 million or
42 million shares from Nicole Wright?
A. It's in the documentation.
233 Q. Well, you state in your defence that it
was $42,250,000, is that correct?
MS. KIS: What tab is that at, counsel?
MR. HAWA: That is in your affidavit,
the first affidavit in the initial motion record and --
MS. KIS: I think it's tab B, counsel.
John Bordynuik - 42
MR. HAWA: Tab B?
MS. KIS: Yes.
MR. HAWA: Of the -- it is tab B. I
just have the affidavit because that's how you sent it
to me. I don't have it bound. I suppose you were in a
rush at the time. Tab B --
A. I said I purchased 40,250,000.
MS. KIS: It's paragraph 26 of the
Statement of Defence, counsel.
MR. HAWA: There is paragraph 26 and
then there is paragraph 40, which says 42 million shares
and paragraph 41 says 42,250,000 shares?
MS. KIS: What is the other?
MR. HAWA: And paragraph 39 says the
same.
234 Q. How many was it?
A. It's in the filings. It was all the
shares that she owned. It was already filed with the
SCC and it's public.
MS. KIS: We can undertake to get you
whether it was 40 or 42.
-- UNDERTAKING
BY MR. HAWA:
235 Q. Okay. Of the 42, you purchased the 42
or 40 million shares of JBI Nevada, which was, we'll
John Bordynuik - 43
call it JBI Nevada. It was 310 Holdings Inc. It became
JBI Inc. which is JBI Nevada?
A. Later in 2009, it did, yes.
236 Q. Later in 2009.
A. Could I get some water?
-- OFF THE RECORD DISCUSSION
--- BACK ON THE RECORD AT 10:53 a.m.
BY MR. HAWA:
237 Q. So I just want to back up, and I wanted
to ask you a question about the PIPE. The only PIPE
that raised money, so to speak, for -- prior to, prior
to your acquisition of JBI Nevada, was the PIPE that you
did in Ontario, isn't that correct?
MS. KIS: For JBI Ontario.
BY MR. HAWA:
238 Q. For JBI Ontario?
A. Yes.
239 Q. Now, so you characterize that offering
to the shareholders where a few hundred came in in
Ontario as the PIPE?
A. Well, 1, 200. It could be up to even
300 somewhere in there, somewhere in the lower, not 100.
240 Q. I understand. Now, of the few hundred
were the majority of them in the PIPE, of the few
hundred shareholders in Ontario, did the majority come
John Bordynuik - 44
in when you did do the PIPE in Ontario? You had seven
shareholders initially, as you said?
A. Yes.
241 Q. Sandra was one of them?
A. Yes.
242 Q. Were they part of the PIPE, those seven,
or were they not?
A. Some of them chose to be.
243 Q. So they invested more money, is that the
idea?
A. That's correct.
244 Q. And some did not of the seven?
A. I don't recall. They might have. They
may not have. I know that Sandra Elsley did not. I am
trying to recall if anyone else didn't.
245 Q. She may have been the only one who
didn't?
A. I don't know if that's a fair statement
but --
246 Q. What about Pat Widdis? How did she
become an investor in the PIPE?
A. I think that she converted her debt to
equity and invested in the PIPE. I think it was both, I
believe.
247 Q. So when she converts her debt to equity
John Bordynuik - 45
that is called participation in the PIPE. It's just
automatic?
A. Yes.
248 Q. I see. And Sandra could not convert her
shares into PIPE shares?
A. She didn't have to.
249 Q. She didn't have to because she owned
shares?
A. Yes.
250 Q. You make some distinction between PIPE
owners and PIPE participants and non-PIPE participants
in order to qualify for proportionality in JBI Nevada.
Do you recall that, or should I take you through it?
A. Well, I recall that there were issues
with it. If you're referring to when I bought 310
Holdings and decided how the shareholders in John or
gosh --
251 Q. JBI Delaware?
A. Yes, could move over to 310. That was
also with the original shareholders of 310.
252 Q. And you made some distinction between
PIPE holders and non-PIPE holders?
MS. KIS: At that time?
THE WITNESS: At that time, yes.
John Bordynuik - 46
BY MR. HAWA:
253 Q. So when you send out your bulletin or
newsletter, you send it out to all the shareholders of
JBI Delaware to advise of your plans with JBI Nevada,
did you not?
A. Which bulletin?
254 Q. I'll take you to --
MS. KIS: I know what you are talking
about, counsel. It's the supplementary motion record.
And it is tab L.
MR. HAWA: There it is.
MS. KIS: And it is a forward --
MR. HAWA: Is it tab L?
MS. KIS: It is an e-mail from Best Real
Estate Buy Incorporated to Mr. Bordynuik, but it's
forwarding or attaching --
MR. HAWA: Mine is not tab L in the
supplementary. Let's get it straight, the initial
responding materials, the initial responding materials.
MS. KIS: No, the supplementary?
MR. HAWA: Is that it, the e-mail that
you provided?
MS. KIS: It is that. Three pages in.
MR. HAWA: Okay. Good enough.
MS. KIS: What I am saying from this
John Bordynuik - 47
e-mail address at the end of it, it actually attaches
the e-mail that went to the shareholders.
BY MR. HAWA:
255 Q. So is this the one to the shareholders
of John Bordynuik Inc. now, we are looking at? It's
page 2, is it not?
A. Right. We had, at that time, we managed
-- there was some kind of an e-mail subscription program
through I Contact that would allow us to send updates to
folks that had put their e-mail address in the PIPE
share subscription documents.
256 Q. Put their e-mail address in the PIPE
subscription documents. Now, are you saying that they
would be entitled to, because you are promising the JBI
Delaware shareholders you would be going public soon,
but you couldn't do it?
A. We are trying. FINRA had sent us a
letter stating that they would not allow the stock to be
Rule 144, except under rule 144.2. We also had a
significant comment letter from the SCC, plus, with all
the challenges of Anslow & Jaclin and trying to bring
anything public was near impossible, we realized that
going public with Delaware was going to be virtually
impossible at that time.
257 Q. And so --
John Bordynuik - 48
A. And restricted stock.
258 Q. So you made a quick decision. Within
two months you bought -- Beverly Hills Capital contacts
you and you buy 310 Holdings?
A. That's correct.
259 Q. And you had been, of course, contacted
prior to April by Beverly Hills. So you bought, you
merged with Delaware. But prior to your acquisition of
JBI, you had been looking and talking. When did you
first start contacting companies like Beverly Hills?
You say they were always contacting you?
A. No, after the crash had occurred in the
spring of 2009, we were getting contacted by companies.
We were getting contacted in 2008 after I had purchased
the Delaware shell. However, the price and cost of
those things were so high and the amount of stock that
would be remaining or that would be held by the original
founders were so high that it was not worth doing.
260 Q. But you had not planned on doing it
initially when you merged Ontario, JBI Ontario and JBI
Delaware in February of 2009? You were planning at that
time by February to take Delaware public, right?
A. That's correct. We tried really hard to
do that.
261 Q. You tried hard to do that between
John Bordynuik - 49
February and April?
A. Yes.
262 Q. So, but prior to April you had been
already engaged in talks to purchase another public
shell?
A. Not too far, not to much earlier,
because it didn't take all that much. It was a very
small company. It had basically no operations. So it
didn't --
263 Q. When did you make first contact with
Beverly Hills Capital?
A. It might have been some time in April.
264 Q. So you made a quick decision --
A. Yes.
265 Q. -- to buy that shell?
A. Yes.
266 Q. Because Delaware was stagnating?
A. No, not at that time, no. It was, I
actually thought at that time it was an insurance
policy. I looked at it that way for the cost of the
80,000 shares in the event that there were problems or
anything. It was just finally, it was something that we
originally wanted to do in '08 but just couldn't.
267 Q. I see. So you were assuring the
shareholders of Delaware that you would be going public.
John Bordynuik - 50
You didn't do it through Delaware. You further assured
them that you would be doing it through JBI Nevada?
A. I didn't assure anybody. I tried my
best. We did everything that we could to get our
financial statements in to get everything into the SCC
to get Delaware public. That's the way that we wanted
to go public. That was the most cost-effective route.
268 Q. And anybody who participated, as you
say, in that PIPE in Ontario that became part of
Delaware who became part of Delaware, they were not
distinguishable when they became part of Delaware when
the shareholders of Ontario, the PIPE shareholders in
Ontario became shareholders of Delaware?
A. What do you mean "they were not
distinguishable"?
269 Q. The ones who are PIPE owners, as you
say, PIPE participants in Ontario, as opposed to the
ones that weren't. As you said earlier, the ones who
were not PIPE participants were a small number,
including Sandra Elsley, right?
A. Yes.
270 Q. Once they all took shares of JBI
Delaware on the merger, you didn't really distinguish
between them, did you?
A. Well, they were in the filing.
John Bordynuik - 51
271 Q. Which filing?
A. The S1 filing.
272 Q. They were distinguished in the S1 filing
in what way?
A. Well, they were commented by how they
acquired their shares, who they were.
273 Q. What do you mean by "how they acquired"?
They all acquired the shares in the same way, in a share
swop, didn't they?
A. That isn't good enough for the SCC. You
have to say how you acquired your shares in the original
entity.
274 Q. In the original entity?
A. Yes. Or what your relationship was to
the company. All of that had to be disclosed.
275 Q. Okay. So there was some distinction
between the Ontario PIPE and the Ontario non-PIPE
shareholders in the Delaware filings?
A. I believe so, yes.
276 Q. In what way? Can you show us on the S1
filing?
MS. KIS: It is tab G of Ms. Elsley's
first record. I am just going to point, counsel, that
it's a 70-page document.
MR. HAWA: Yes, there is a shareholder's
John Bordynuik - 52
list, page 108.
MS. KIS: I guess I am saying to you
there is some notations with respect to various
shareholders on page 114.
MR. HAWA: 114.
MS. KIS: Yeah. There is some footnotes
that start at, on 113. I am just telling you I don't
know if there is something else contained in the pages
responsive to your questions. If there is, I will
advise you outside of the examinations once I've had a
chance to review all 70 pages, whatever Mr. Bordynuik
can glean from these pages in a short amount of time.
-- UNDERTAKING
THE WITNESS: That is certainly one.
BY MR. HAWA:
277 Q. Where is the, is it something that comes
to you quickly as far as --
A. Well, 114 and 113 is all the footnotes
of who many people are, what the relationship with the
company is.
278 Q. The relationships?
A. Yes.
279 Q. But not PIPE and non-PIPE investors in
JBI Ontario? No distinction there, is there?
A. It does tell them how they became or how
John Bordynuik - 53
they got some shares, like, Larry Maxwell in the course
of ordinary business and at the time of the purchase he
had no agreements or understandings directly or
indirectly with any person that distributed the
securities so at the time that he purchased his shares.
So it is saying 24 is Larry Maxwell. There is also --
280 Q. There is no reference to Sandra Elsley
whatsoever, is there?
MS. KIS: In the note?
A. Yes, there is.
281 Q. Okay.
A. Number 21, "Sandra Elsley was an
employee and non-signing officer of the registrant
subsidiary company until October 2008. Her employment
was terminated with cause in October of 2008 and has no
role in JBI and is now a common shareholder."
282 Q. Okay. So there is no identification of
her as non-party to this? There is no distinction
between her and the other shareholders?
A. Yes, there is in this document. Not in
that particular paragraph but --
283 Q. Just take a few minutes to look at the
document.
MS. KIS: Do you mind if we go off
record to do that?
John Bordynuik - 54
MR. HAWA: Yes, go off the record.
-- OFF THE RECORD DISCUSSION
--- BACK ON THE RECORD
MS. KIS: Counsel, we have taken a look
at this S1 document at tab G of Ms. Elsley's first
motion record. We have been through it. There are some
notations. Like I said, it's a 70 page document, so
we'll undertake to review it thoroughly and provide you
with any indication where there is a distinction made
between the PIPE and non-PIPE, you said alleged PIPE,
and alleged non-PIPE, JBI Ontario participants and
shareholders.
-- UNDERTAKING
MR. HAWA: And if there is a distinction
in that S1 document between those shareholders?
MS. KIS: Yes.
MR. HAWA: Would you also undertake to
provide me with a list of non-PIPE shareholders in JBI
Ontario?
MS. KIS: Yes, if we can find that
information.
MR. HAWA: If you can find that
information.
-- UNDERTAKING
284 Q. Now, you -- this, going back to this.
John Bordynuik - 55
Going back to tab L at, in the supplementary responding
motion record. It's an e-mail from John Bordynuik to B.
Molodynia, and it also states to all shareholders of
John Bordynuik Inc.?
MS. KIS: Sorry, counsel, I put it aside
for a second.
BY MR. HAWA:
285 Q. Would you agree that that e-mail is
assuring the shareholders that JBI Inc. or 310 Holdings
will be public soon and their shares will be tradeable?
A. In this e-mail advising we will be
public next week.
286 Q. Would you agree that you are also
assuring them that they are getting their shares in
direct proportion to their holdings in JBI Delaware?
A. No.
287 Q. No?
A. No, because I actually mention later in
the document that Q & A that any shareholder did not
participate in the three million PIPE, he only received
a maximum of 300,000 free trading stock --
288 Q. Hold on, please. I am asking you are you
not assuring them they will be getting the same
proportion of stock in JBI Nevada as they had in JBI
Delaware?
John Bordynuik - 56
A. I was advising the PIPE holders that
they were.
289 Q. Yes. And that's, of course, by far the
majority of the shareholders, right?
A. Yes.
290 Q. So you were drawing a distinction
somehow between the majority PIPE holders and the few
non-PIPE holders?
A. That's correct.
291 Q. Did someone advise you to do that?
A. No. It's just the way that it was.
292 Q. Why did you do that?
A. Why did I do what?
293 Q. Why did you distinguish between the
so-called PIPE holders, which were by far the majority
and the ones that didn't participate in that PIPE in JBI
Ontario?
A. Well, because the PIPE holders would
want to know how this affects everyone in the company.
So I outline in here that some employees, myself, were
receiving, receiving either less stock or different
stock that was not free trading and subject to
restrictions or what have you. So it was important to
outline what the deal was to disclose it.
294 Q. So all PIPE owners were getting
John Bordynuik - 57
unrestricted stock?
A. Yes.
295 Q. Even if it was over 300,000 shares?
A. That's correct.
296 Q. So if you would be a PIPE holder and
get, if you participated in the PIPE in Ontario, you are
saying that you would get an unlimited number of
unrestricted stock?
A. No, the issue was it was a cost basis.
So if you put $1 million in the company, and you had
2 million shares, you were going to get, you had a cost
basis of 50 cents a share, you were going to get those
shares from the original shareholders.
297 Q. You were going to get the shares from
the original shareholders of JBI Nevada?
A. That's correct.
298 Q. So you made that arrangement with the
original shareholders of JBI Nevada that they give up
their shares for a minimal amount of money?
A. Yep, that's usually how these deals are
done.
299 Q. In order to accommodate all of the
shareholders that were expecting a proportional number
of shares as they had in JBI Delaware?
MS. KIS: Say that question again,
John Bordynuik - 58
counsel, I am sorry.
BY MR. HAWA:
300 Q. You made the arrangement with the
shareholders of, the previous shareholders, these
corporate shareholders like Westside Capital and Beverly
Hills Capital, you made these arrangements for nominal
amounts, an insignificant amount of money?
A. It was not always that, no.
301 Q. It was a tenth of a cent, wasn't it?
A. Some weren't.
302 Q. Most of the share purchase agreements
were for a tenth of a penny, were they not?
A. Not all of them. There were some people
that paid more.
303 Q. From the other shareholders of JBI
Nevada?
A. No, from the original shareholder.
304 Q. Of JBI Nevada?
A. No, of 310 Holdings.
305 Q. Of 310 Holding, which is JBI Nevada?
A. We are at this period of time where the
company has stated throughout these documents is 310
Holdings. I am trying to be consistent with what time
period we are at.
306 Q. Right. So you are saying that a lot of
John Bordynuik - 59
them paid a tenth of a penny, did they not, the
shareholders from Westside Capital?
A. Yes.
307 Q. A tenth of a penny for their shares. It
was a nominal amount, was it not?
A. Yes.
308 Q. And those shareholders that paid a
nominal amount to these other shareholders of 310, they
got a proportionate number of shares. They just didn't
buy any amount of shares that they wanted for a tenth of
a penny, did they not?
A. No, they couldn't or they could buy on
the open market or --
309 Q. Anybody could buy on the open market.
Anybody could buy on the open market, I suppose. There
was a listing, wasn't there?
A. Yes.
310 Q. Yes. But that is not the way that it
was being done. It was not being done on the open
market. It was being done through the shareholders of
JBI Nevada who agreed to sell their shares for a nominal
amount of money, correct?
A. Correct.
311 Q. Back to the shareholders of JBI
Delaware?
John Bordynuik - 60
A. Correct.
312 Q. And this had nothing to do with 310.
These were transactions that you arranged between the
shareholders?
A. I didn't arrange it. It was arranged by
Beverly Hills Capital and some other brokers there. I
negotiated it. That was it.
313 Q. You negotiated it, because JBI Nevada
had no interest in any of this, did it? 310 had no
interest in any of this?
A. 310 Holdings was a new company that had
plastic to oil and wanted to bring the tape business
into it and with them.
314 Q. Yes. But you have these few hundred
shareholders of JBI Delaware who promised to go public
for a number of months. Now, finally, they are going
public through another vehicle, right?
A. Right.
315 Q. So in order to orchestra that, they were
getting these PIPE holders, which were by far the
majority, as you said, these PIPE holders were getting a
proportionate number of shares from the existing
shareholders from JBI Nevada/310 Holdings, correct?
A. That's correct.
316 Q. So it was not that they can access as
John Bordynuik - 61
many shares as they wanted from the pre-existing
shareholders, correct?
A. They could go to them and do that if
they want. It was a public information that I bought it
April of 2009.
317 Q. But that's not the way that it was being
done. They were getting a proportional number of shares
in JBI Nevada/310 Holdings in order to accord with their
shareholdings in JBI Delaware?
A. The PIPE people did.
318 Q. The PIPE people did.
A. My dad, Steve Doede, Sandra, myself did
not.
319 Q. But you offered Sandra that, did you
not? You did? You got 40 million.
A. No, I had to return most of them.
320 Q. Why did you have to?
A. Because that was the only way that the
company was going to be able to raise capital for the
best interest of the shareholders.
321 Q. But that was a business decision that
you made in order to benefit the shareholders of 310
Holdings, right?
A. Yeah, and at that time, too, I also
communicated that with the original shareholders when
John Bordynuik - 62
this deal was closing that it was part of it.
322 Q. Now, your percentage, your initial
percent, the 40 million shares in JBI Nevada 310
Holdings, approximated the percentage that you had in
JBI Delaware, did it not?
A. When I took the 40 million shares from
Nicole Wright.
323 Q. Yes.
A. It was, however, there was already an
agreement in place to return stock to the treasury.
324 Q. An agreement with who?
A. With the original shareholders and
Nicole Wright that I was returning X number of shares to
the treasury.
325 Q. So when you acquired shares from Nicole
Wright, there was an agreement with the shareholders
that you would be returning how many shares back to the
treasury?
A. At that time, it was 21 million.
326 Q. So there was a written agreement to
that?
A. Yes.
MR. HAWA: Would you undertake to
provide me with a copy of that agreement with the
shareholders?
John Bordynuik - 63
A. Yes.
-- UNDERTAKING
327 Q. Who were the shareholders with whom you
made the agreement, Nicole Wright?
A. Nicole and I. But it was also, I mean,
there were the --
328 Q. Well, Nicole was getting out of it. She
had no interest whether or not you returned shares,
right?
A. She certainly did, because she was
facilitating the deal with Beverly Hills Capital.
329 Q. Facilitating what deal?
A. The deal to buy 310 Holdings.
330 Q. Well --
A. I am buying 310 Holdings stock from her.
331 Q. Yes.
A. So the way that works --
332 Q. She doesn't need Beverly Hills Capital
for that. She just needs to sell them to you?
A. No one in the world is going to buy
someone's control stock without having some kind of deal
for the rest the company.
333 Q. No, you mean the rest of the company
wants that deal and somehow has -- somehow they were
able to assert their rights against Nicole Wright and
John Bordynuik - 64
you to make that deal to transfer shares back, isn't
that correct?
MS. KIS: I don't understand that
question.
BY MR. HAWA:
334 Q. Well, I don't understand your
transaction. And I don't understand why Nicole Wright
would even care whether you transferred shares back to
the company, to the treasury. Why would she care if she
sold you all her shares?
A. Well, it's really simple.
335 Q. Unless she has an obligation to the
other shareholders?
A. Well, she did.
336 Q. As part of her agreement with the other
shareholders?
A. Right.
MR. HAWA: Would you undertake to
provide me with any agreement that Nicole Wright had
with the other shareholders?
A. I wouldn't have that. What I have is
what I was told.
337 Q. So you have an agreement that obligated
you to provide the shares back?
A. That's correct.
John Bordynuik - 65
338 Q. 21 million of those shares?
A. That's correct.
339 Q. Any more?
A. No.
340 Q. So of the 40 million or 42 million,
depending on what you read, you are obligated to give
back 21 million?
A. That's correct.
341 Q. You could hold the balance?
A. Yes.
342 Q. So --
A. I could hold the balance of controlled
stock restricted shares, yes.
343 Q. Yes. And eventually you could file an
S1 on those restricted shares and sell them after a
holding period, is that correct?
A. Two or three years down the road.
344 Q. That's your understanding?
A. Yes.
345 Q. But of the 42 million you gave, you say
in your defence, that you gave back 33 million?
A. I did.
346 Q. So why the additional 12 million?
A. Well, it's very simple. In order to
grow the company and to keep the value where it was at,
John Bordynuik - 66
it was better if I returned my shares to the treasury
and built more value in the company, therefore, making
the smaller amount of shares worth more.
347 Q. So, but it was of it -- yes, but then
you lose your shares. It benefits other shareholders
but you?
A. And me, and me because my shares go up
too then what I have left.
348 Q. They go up but you give up shares. They
might go up because there is less, there is less
dilution?
A. If I have 100 shares that is worth
$50 or 50 shares that is worth $100, it's the same
thing.
349 Q. Yes.
A. And it did go up a lot. Look at the
company now.
350 Q. But, so you had some decide in that you
felt it would improve your share value?
A. Not only improve the share value, it
also attracted very large investors because they saw
that I had an interest in building this company. This
is not uncommon.
351 Q. It's not uncommon. I don't know if it's
common or uncommon, but it was at a time when Sandra
John Bordynuik - 67
Elsley was denied her 7.7 million shares?
MS. KIS: Sorry, what is the question
there, counsel?
THE WITNESS: Denied? No, she wasn't.
BY MR. HAWA:
352 Q. So at one point you say that the company
used the shares as collateral in your defence. In your
first affidavit you say that, and I'll take you to the
first affidavit. You indicate at paragraph 15, "That
JBI has in the past used my shares as collateral for
financing." Now, does that mean, are those the shares
that you give back to the company?
A. No, they are stock that I hold.
Generally, when you have financing, investors want
either a lock on your stock or use them as collateral
for debt. For example, when we acquired PAKIT I had to
use ten million shares as collateral -- sorry, the
outstanding debt of PAKIT.
353 Q. So you gave back the 10 million shares
to the company?
A. Well, that didn't create the collateral.
I still had to use my stock. Giving back 10 million
shares to the company doesn't create any collateral for
anybody. It's destroyed.
354 Q. There is 10 million shares in treasury
John Bordynuik - 68
that can be used as collateral? Are those the ten
million used?
A. No, when you return stock, I mean the
term "return to treasury or struck" is the same thing.
The bottom line is the company can issue stock to
whatever its authorized capital is. There is not some
magical amount that it has in a treasury that it can use
for fantastic purposes. When you return stock to the
treasury, it's gone, wiped, cut, finished.
355 Q. Well, the treasury can reissue them and
sell them?
A. They can reissue them.
356 Q. They have value?
A. They didn't reissue 10 million shares
for the PAKIT debt.
357 Q. You used your own shares?
A. Yes, I did.
358 Q. For what, the remaining 20 million?
A. At that point I think I had -- I think
so, yes.
359 Q. You made a decision to return another
12 million shares. Your defence states 33 million?
A. That's correct, total.
360 Q. Total?
A. Yes.
John Bordynuik - 69
361 Q. Did you get any consideration at all for
that besides the business decision that it would be good
for the company and the shareholders?
A. No. The only thing that I ever got for
one small batch of them was some preferred stock to
ensure that the company couldn't be taken over in the
short term. However, the preferred stock had no value.
And there was an agreement to return that to the
treasury too. So it was just a short term measure to
ensure that the company was stable during its
fast-growing stage.
362 Q. So the preferred stock had no value?
A. Had nothing.
363 Q. Because it was not convertible to
common, was it?
A. No, it was not. It had no dissolving
rights, no dissolution rights. It had nothing.
364 Q. But it had super voting rights 100 to 1?
A. That's correct. That is to ensure that
no one can come in and take out the company. That was
it.
365 Q. Do you still own those preferred's?
A. There is an agreement in place. I have
them. However, the preferred's are limited to just
putting in place right now a Board of Directors of five
John Bordynuik - 70
board members and then retired to the treasury. That's
all that is left of them now.
366 Q. I see. And if they had been
convertible, they would be worth much more, if they had
been convertible to common?
A. If they had been convertible, the
company would have been worth a heck of a lot less,
because any shareholder looking at the company would say
that these --
367 Q. That John Bordynuik owns all this, yes?
A. Yeah, and what the company really has,
say, 150 shares outstanding versus 45.
368 Q. How many shares are issued and
outstanding now, any idea?
A. Well, I think somewhere around
100 million.
369 Q. 100 million. So at the time of the, at
the time of the transfer of shares to the shareholders,
most of them got unrestricted shares, is that correct?
MS. KIS: This is the time when JBI
Delaware shareholders got 310 shareholdings?
MR. HAWA: Yes.
MS. KIS: Okay.
A. The shareholders entered into a
transaction to purchase the registered stock from the
John Bordynuik - 71
original shareholders. So it was unrestricted because
it was registered, that is correct.
370 Q. I am not asking you to speculate. But
had you not identified enough pre-existing shareholders?
Were the Delaware shareholders to get shares from you?
A. No.
371 Q. No?
A. No, not at all.
372 Q. You identified enough prior shareholders
of 310 in order to satisfy all of the Delaware
shareholders?
A. That is correct.
373 Q. Did all of the Delaware shareholders,
but for the couple of non-PIPEers, did all the Delaware
shareholders participate and get shares in Nevada in 310
Holdings?
A. I think actually two, maybe a handful
never came in.
374 Q. Never came in?
A. They were very small and nothing
happened.
375 Q. The rest became shareholders?
A. Yes.
376 Q. Now, altogether, there were a few
hundred of them, as we said. But JBI Nevada/310
John Bordynuik - 72
Holdings had thousands of shareholdings, right?
A. It had -- at what time?
377 Q. At that time?
A. Oh, it, it had many. I couldn't begin
to fathom an exact count, because it's near impossible
to get that.
378 Q. Yes, but the transfer agents would have
that?
A. No, they don't. The transfer agents
only have paper certificate holders. All of the
registered stock sits into a street name called CEDE &
Company. It's a term used by transfer agents to state
that the shares are held in the public market. You have
no idea who they are, how many shares they have or what
they own. It's really difficult to find out. You might
be able to find out through a proxy statement or
something like that. It's very difficult.
-- OFF THE RECORD DISCUSSION
--- BACK ON THE RECORD
BY MR. HAWA:
379 Q. All right, Mr. Bordynuik, you will
undertake to provide us with an agreement between you,
Nicole Wright, and the other shareholders of JBI -- 310
Holdings Inc. of Nevada regarding your obligation to
provide back 20 million shares.
John Bordynuik - 73
A. 21 million shares.
380 Q. 21 million shares, sorry?
MS. KIS: When you say JBI Nevada, you
mean 310 Holdings?
MR. HAWA: I do, yes.
MS. KIS: To the extent that that
agreement exists in that context, we will provide it.
If there is some other agreement between Mr. Bordynuik
and Nicole write, we'll just produce that, and I will
get you whatever we have in that regard.
MR. HAWA: Okay.
-- UNDERTAKING
381 Q. The other shares you said were yours to
use as you please, but you also gave back another
12 million or so?
A. Yes, I did.
382 Q. So then you, in total, you have given
back to treasury of JBI Nevada, you have given back
33 million shares?
A. Somewhere around 33 million.
383 Q. For a nominal consideration, except for
your business. None as you say?
A. Other than the fact that the value of
the company went -- because of it.
384 Q. I see. Because --
John Bordynuik - 74
A. Yeah.
385 Q. The balance of the shares was about
9 million then that you have held and used and sold, is
that correct?
A. No, I had 40 million. Maybe it would be
seven left at that point.
386 Q. If there was 40 million. If it was 42,
according to your defence, then it would be more, right?
A. Right.
387 Q. How many shares have you now left
remaining?
A. Somewhere around 3.4 and change.
388 Q. 3.4 and change. So you presumably sold
three and a half to five and a half million shares?
A. No, I did not.
389 Q. No?
A. No, not at all.
390 Q. Okay. You said that you have given back
33 million so you would have had seven --
A. Well, my shares were also used for other
purposes for the company. They were used to pay for
hiring our CFO.
391 Q. Your own personal shares?
A. Yes.
392 Q. These are the remaining 7 or 9 million
John Bordynuik - 75
shares --
A. Yes, that is correct.
393 Q. -- were used to hire a CFO?
A. Yes.
394 Q. So you paid the CFO with shares?
A. Yes, I did.
395 Q. I see. Who is the CFO?
A. Mattingham.
396 Q. Mattingham?
A. Yes.
397 Q. That is the new CFO that you made a deal
with?
A. Yes.
398 Q. How many shares did you provide to him?
A. 400,000.
399 Q. Of your own shares?
A. Yes.
400 Q. You did that for the sake of the
corporation?
A. Absolutely. We needed a CFO really
badly.
401 Q. Out of the goodness of your heart?
A. No, out of the goodness of the fact that
we had really poor accounting, and we needed someone
really good. And without that, the company would be
John Bordynuik - 76
worthless.
402 Q. I see. Once again, no other shareholder
is stepping up to provide shares but you?
A. Well, I wish there was.
403 Q. Okay. Anybody else did you provide
shares to, any other service provider or, of the 7 or
9 million remaining?
A. I need to review all my returns and
share distributions were filed with the SCC. It's a
one-page document. If I have that, then I can go
through it with you. It outlines exactly where they
went to, who, when and why.
404 Q. These are all restricted shares?
A. Yes, they are. They are affiliate
shares.
405 Q. Now, are they any good to
Mr. Mattingham? Can he sell them?
A. No.
406 Q. Until what happens, to your knowledge?
A. To my knowledge, he has to wait at least
a year. We have to be current in our filings. And I
think that is it, because I became a non-affiliate.
407 Q. Because you have --
A. -- less than 5%.
408 Q. I see. Of the shares?
John Bordynuik - 77
A. Yes.
409 Q. Outstanding?
A. Yes.
410 Q. Does that apply to you as well?
MS. KIS: What?
BY MR. HAWA:
411 Q. Does the same rules apply to
Mr. Mattingham's share apply to you as well now that are
a non-affiliate with less than 5%?
A. That is correct. I held them for three
years. I was finally able to --
412 Q. To sell?
A. Unrestricted, sell them.
413 Q. Yes, but you didn't have to hold them
for three years?
A. Oh, I had to hold them a long time.
414 Q. Depending whether you were over 5% or
under 5%?
A. You had to be under 5%, because it's a
affiliate control stock. I had to wait three months
after I was no longer an affiliate.
415 Q. Yes.
A. As well, I also had to meet all of the
requirements under the non-affiliate status, which means
no longer a board member, under 5%, had not been an
John Bordynuik - 78
affiliate for over three months and had already held the
shares for at least a year and that the companies, in
the time that I held them for at least a year, the
company was current at all times in its filings. If
it's not, it resets the clock. It sucks.
416 Q. How many shares have you sold?
A. For consideration?
417 Q. Yes.
A. 850,000.
418 Q. In the market?
A. Yes.
419 Q. And you have 3.2 remaining?
A. No, I didn't say that. 3.4.
420 Q. 3.4 million shares?
A. Yes.
421 Q. Did you advise Sandra of this PIPE and
non-PIPE distinction that you would be making when it
came to shares of 310?
A. What period? What time?
422 Q. Did you ever advise her?
A. Yes.
423 Q. When, what period?
A. We discussed that in May and June of
2009.
424 Q. 2009?
John Bordynuik - 79
A. Um hmm.
425 Q. What did you tell her?
A. I told her the challenges that we had,
we got -- probably advised her on or about the date we
got the FINRA letter discussing the limitations of the
restricted stock and then the DB SCC comment letter.
Sorry, I'll turn that off. We had discussed it in May
or June. She was asking for updates I believe from time
to time on the 310. And I sent her, in addition to
that, I sent her copies of, we were also discussing a
settlement over all the outstanding issues, the debt
with her and everything else. So that was all going on
at the same time. It was just rolling on forever. And
at that same time, we had provided settlement documents,
various settlement documents to her.
426 Q. In the end of 2008 you provided some,
didn't you?
A. And 2009.
427 Q. The settlement document in 2009 was to
settle, that is Exhibit M of your affidavit, is it not?
A. That's correct.
428 Q. That --
MS. KIS: Hold on. Take a look at it.
THE WITNESS: Sorry.
MS. KIS: That's okay.
John Bordynuik - 80
BY MR. HAWA:
429 Q. The so-called settlement agreement.
A. It's a very real settlement agreement.
430 Q. And to your understanding 300,000 free
trading shares were about the same value as 7,775,000
shares?
A. At that time?
MS. KIS: Sorry, counsel, what was the
question?
BY MR. HAWA:
431 Q. To your understanding you gave her two
choices; to own 7,775,000 shares of non-eligible 144
restricted stock or take the 300,000 free trading
shares. Isn't that the choice that she made?
A. We put those two choices to her. The
significance is, does anyone want to take the risk with
the restricted stock because most of these public
companies don't last six to ten months, especially with
all the litigation going on with public companies? And
it was her choice to decide that. I was encouraging her
to take the restricted stock. However, there were
significant limitations on it as there was mine.
432 Q. And the limitations are represented
there, are they not?
A. Yes, they are.
John Bordynuik - 81
433 Q. And one of the limitations, the shares
have not been registered. So if you choose the
restricted stock, you say, you are hereby advised or the
agreement says the following: "The shares have not been
registered for sale and the company will not seek the
registration of them."
A. That's correct. We were not planning to
go through a registration statement. These shares would
be coming from -- the treasury of the company would have
to issue the stock to her.
434 Q. And is the company the only, the only
person who could register these shares?
MS. KIS: You mean, JBI Nevada and 310
Holdings?
BY MR. HAWA:
435 Q. In 310 Holdings and JBI Nevada?
A. Yes.
436 Q. So if she took 7,775,000 shares, she
would not be able to sell them whatsoever unless the
company cooperated and registered them?
A. No, I am not saying that. I said they
have not been registered for sale. Meaning that these
aren't, this isn't stock that has been gone through a
registration statement.
437 Q. Right.
John Bordynuik - 82
A. So you do not have the exemptions
available to you of registered stock.
438 Q. Yes.
A. The same as mine.
439 Q. Did she have any other avenue to sell
such stock?
A. She could have sold it privately. That
is what people do, or you could wait. The time is
probably around two years.
440 Q. So you are estimating it would be about
two years before she could sell them and the
restrictions would come off?
A. Sure. The reason being, one, 310
Holdings was also a former shell company and the SCC
placed further limitations on share sales of restricted
stock of shell companies because of problems that they
had with that.
441 Q. So if the company has ever been
inactive, it didn't have an active business within it,
it would fall into the shell gap?
A. That's correct.
442 Q. And it would increase the holding
period?
A. That's correct.
443 Q. I am kind of familiar with that. The
John Bordynuik - 83
shares are not eligible, 144 eligible as per 144. What
does that mean "not eligible"?
MS. KIS: You are looking at the second
point there?
444 Q. Yes.
A. That is the FINRA rule that says because
the company was a former shell, you cannot, there are a
series of 144 eligibilities that are required for normal
144 stock. This stock would not be eligible under that
because of Rule 2. First of all, when I purchased the
company, it was a shell. That was the first problem.
And I read that in the next sentence.
445 Q. You say "The holding period is
indefinite at this time"?
A. It is. It was, because we could not
seek -- even if -- my stock that I got from Nicole
Wright, she had held for four years. I couldn't get a
144 restriction on it if my life depended on it, because
it was a shell company. It's indefinite at that time
until it's current and Super 8-K meets the requirements,
twelve-month holding period all that stuff, absolute
minimum.
446 Q. The holding period is, "You will not be
allowed to DTC your shares, nor will you be permitted to
sell your shares on the open market"?
John Bordynuik - 84
A. That is correct. I couldn't sell mine
on the open market and I couldn't DTC them either. You
just can't. They have to be unrestricted.
MS. KIS: I apologize, for clarity what
is DTC?
THE WITNESS: DTC is Deposit Trust
Corporation. That's the CEDE & Company I was referring
to is when you take a stock and you put it in the public
pool and no one ever kind of sees it again, and you have
a number in your account saying how many shares you
have.
MS. KIS: Sorry, counsel.
BY MR. HAWA:
447 Q. Isn't that misleading when you say you
will not be allowed to DTC your shares and will not be
permitted to sell your shares on the open market?
A. No, she couldn't. How could she sell
them on the open market? You couldn't take them to any
broker or you are not allowed to sell them on the open
market. You couldn't go to Royal Bank and say deposit
my stock. I want to sell it. You can't.
448 Q. Doesn't the restrictions eventually come
off?
A. Years down the road.
449 Q. You didn't know how many years?
John Bordynuik - 85
A. We don't know. It could be never. That
was the problem. We don't know. It took a while for
the company to get to the point where we could reach 144
status.
450 Q. Had Sandra taken the first choice?
A. Yes.
451 Q. Three years have elapsed now?
A. Yes.
452 Q. She would have been able to sell some of
those shares?
A. Some, but she would be an affiliate.
453 Q. Yes.
A. So every time we were late, she would be
denied. We were late in every quarter to, till I think
our last quarter was probably the first time we ever
have been on time. Because when you are late, you are
now not in compliance and the Rule 144 rule does not
apply. That is why I paid to bring in a CFO.
454 Q. Wasn't Sandra Elsley promised a salary?
Was she not paid a salary when she started with JBI
Ontario?
A. She was paid a salary, yes.
455 Q. And when did she start providing
services to the company?
A. In, I think that it was around late 2006
John Bordynuik - 86
early 2007, somewhere in there.
456 Q. So she was paid a salary right through
in that period?
A. No, no. She, I don't recall when her
salary started. I provided that in my Affidavit of
Documents or whatever.
457 Q. Around 2008, sometime in 2008?
A. That's possible.
458 Q. So for two years she didn't -- she was
not paid?
A. It would be one year.
459 Q. 2006, 2007 to 2008?
A. You can't say 2006. The company was not
incorporated until 2006. So we are talking 2007 and '08
it started paying salaries. So a year and change, a
couple months maybe.
460 Q. So she was providing services in that
time without being paid, right? Isn't that a debt to
her?
A. No.
461 Q. No? Why?
A. Well, because you have to document it.
You have to set it up as such. Then you also have to
report it as income to Revenue Canada. She was not
doing any of that.
John Bordynuik - 87
462 Q. So --
A. So --
463 Q. So there was no thought between you that
you might, you would owe her the money later?
A. She was a shareholder in JBI. A lot of
shareholders work at JBI, even to this very day and
don't get paid, and they don't receive any compensation
for it. We are trying to help. My dad is a prime
example. He was working at the recycling centre for two
years without a dollar for it. He cared and it effected
his investment. You don't have to work for it, but then
don't cry if your investment goes south.
464 Q. So you, but she still incurred debt to
the company, that is your position, about 129,000?
A. Yes, she borrowed money. Even the day
after she made the investment, she borrowed money.
465 Q. She made the investment when?
A. October 2000 sometime. It was late
2006.
466 Q. And yet she made the investment. She --
was she providing full-time service to the company?
A. No, not at all.
467 Q. What portion of the time?
A. Oh, maybe 10, 20%.
468 Q. Was she ever full-time?
John Bordynuik - 88
A. In 2008, she was supposed to be, but she
was doing a lot with her practice. So she did a lot of
it there. And she was at home a lot doing it so she was
not really full-time even then.
469 Q. So even in 2008 when she was paid a
salary, she was not full-time?
A. Yes, it was a real problem. She had --
470 Q. Didn't you -- wasn't there an
understanding that you would be paying some of those
debts, that they were not really debts? They were on
the company books to look good?
A. Which debts?
471 Q. The debts that you allege that she owed
the company.
A. In September of 2008, she executed a
loan agreement for $18,000 with the company, after the
PIPE was done for some personal debts, I believe, some
problems that she had. She had a 50,000 payment that
she had to make out to settle one of her own lawsuits
prior to me meeting her with the Coopers, so no.
472 Q. Where did she go to pay for that, that
Cooper debt?
A. It was not a debt. She was either going
bankrupt or settling the Cooper lawsuit. It was either
one or the other. She told them that she was going to
John Bordynuik - 89
file for bankruptcy if they didn't accept $50,000.
473 Q. Didn't -- right. So she had an
obligation to pay $50,000. So you say she borrowed
money from the company?
A. Yes, she did. And she signed a loan
agreement for it and Steve Doede was there. He was the
one that actually wrote the agreement.
474 Q. Was that not just for cosmetics to
satisfy the other shareholders that it was something
that you intended, as John Bordynuik, that you intended
to pay or the company intended to pay?
A. No.
475 Q. No?
A. No.
476 Q. Didn't you intend to pick that up as
part of your obligations to her?
A. I didn't have any obligations to her.
477 Q. Just -- I am going to read an e-mail.
MS. KIS: Pardon, counsel, is this an
e-mail that is found in any of the records?
MR. HAWA: In any of which records?
MS. KIS: One of the four that you filed
or either of ours?
MR. HAWA: No.
MS. KIS: Is it a new document that you
John Bordynuik - 90
said you would not be putting to my client?
MR. HAWA: It is equivalent to that
medical report that you stole and surprised us with
yesterday.
MS. KIS: Is there an allegation of
theft now, counsel?
MR. HAWA: The medical report was taken
right off a computer, and it didn't belong to you to
bring to the agreement -- to the --
MS. KIS: Counsel, are you giving
evidence now on the record?
MR. HAWA: Anyway, I am going to read an
e-mail.
MS. KIS: Well, I think what you need to
do, counsel, is tell me which of these newly produced
e-mails you are going to put to Mr. Bordynuik so I can
decide whether one of these documents are appropriate to
put to him given the position that I put on the record
at the beginning of these examinations.
BY MR. HAWA:
478 Q. You will acknowledge that it said it
doesn't accept that they were loans from the company?
A. Pardon?
479 Q. Sandra didn't really accept them as
loans, did she?
John Bordynuik - 91
A. Yes, she did. She signed them as such
and she received the money on the same day that she
signed those loans and she did them with Steve Doede and
Brian Sebrun. Our I.T. guy actually witnessed them.
480 Q. But she was not being paid for all her
services?
A. Yes, she was. She was paid in 2008 when
she took these loans. She look them in 2008.
481 Q. Prior to that, she was not paid. She
was given credit for that?
A. No. Well, she was in stock, I guess you
could say. The 13%, she went from 1 to 13.
482 Q. Now, this is an e-mail from John
Bordynuik to Sandra dated December 12th. I sent you a
copy of that?
MS. KIS: Is this the bundle of e-mails
you would have sent me at 11:26 p.m. last night?
MR. HAWA: Yes, the bigger one.
MS. KIS: The bigger bundle of the 93
pages, um --
MR. HAWA: You asked for it.
MS. KIS: Counsel, you have an
obligation to produce these as part of your initial
record. You've had them in your possession.
MR. HAWA: No, I have an obligation to
John Bordynuik - 92
produce them as part of our Affidavit of Documents not
as far as this motion is concerned.
MS. KIS: That's right. That is why I
am objecting to asking questions with respect to them.
MR. HAWA: This is a document that I
want to put to Mr. Bordynuik and --
MS. KIS: What is the document, counsel?
MR. HAWA: You can have a look at it and
object to it if you wish. It's an e-mail dated
December 12th. It's about three or four pages in. If
you, I think that you have it there. Do you have it
there?
MS. KIS: It's, "Hi, Sandra, attached
are the agreements."
MR. HAWA: Yes.
MS. KIS: Counsel, this is in our
record.
MR. HAWA: This is in your record?
MS. KIS: Yes. Why don't we reference
the record.
MR. HAWA: All right. The
supplementary?
MS. KIS: Yes. I think it's tab H,
counsel.
MR. HAWA: Okay. Referencing at tab H,
John Bordynuik - 93
of the supplementary responding motion record. E-mail
from John Bordynuik, supplementary motion record, sorry,
of the defendant. E-mail from John Bordynuik to Sandra
dated December 12th, 2008.
"Hi, Sandra, attached are the
agreements. They are quite straightforward. Mutual
non-disparagement, confidentiality, and no more nonsense
on consolidated loan agreements and amounts, since it
looks bad."
What does that mean "since it looks
bad"?
A. The problem that we had at that time
that we didn't know was that loans made to an officer of
the company, prohibits the company from going public
where it creates a lot of problems because of Enron and
Worldcom would give loans to their executives and do
exactly what you were insinuating, trying to "forgive
them or get rid of them." That's not allowed under the
SCC. So what I was attempting to do there was actually
purchase the loans myself through the sale of my own
stock, and then she would owe me the money instead of
the company. It was a significant problem brought to my
attention in December. I went, crap, this is a big
problem. We didn't know about it.
483 Q. "If I can purchase them from the
John Bordynuik - 94
company" and why did you put that in quotation marks
"then I will" purchase the loans from the company?
A. If I can, to get them off the damn books
so that it doesn't prohibit us from going public.
484 Q. Well, you don't really mean purchase
because --
A. Well, because I am purchasing them from
the company, but it's -- that's something I'd have to
do. I would have to actually sell some of my shares,
purchase the loans from the company at face value, and
then I would own the loans.
485 Q. And then you would own the loans and you
would be collecting from her?
A. Yes.
486 Q. But in a sense -- because that's an
honest to goodness purchase, isn't it, if you did
purchase them from the company?
A. I am calling them purchase. It's a
related shareholder purchase. I think it's called an
arm's length transaction or something like that. It
still shows up. It's not as bad, at least, at least the
loan has been paid to the company so it's not
outstanding as far as the company goes and as far as the
public filing goes. It would be the same as if when
Kenneth Lay at Enron borrowed a bunch of money, if
John Bordynuik - 95
someone paid those loans off of the company and took
them personally, the shareholders of the company then
wouldn't have that loan overhanging.
487 Q. Did you have a bank account in 2007,
2008 while you were living with Sandra Elsley, personal?
A. Yes.
488 Q. Did you have any money in the bank
account?
A. Yes.
489 Q. Were you paying any of your ongoing
expenses from that bank account?
A. Yes, I was, all of them. I had
insurance. I had all kinds of things.
490 Q. Sandra Elsley was not financing all of
your lifestyle and your children?
A. Absolutely not.
MR. HAWA: Could you provide me with a
copy of your bank statements at the time.
MS. KIS: I'll take it under advisement.
-- UNDER ADVISEMENT
BY MR. HAWA:
491 Q. 2007, 2008, while you were living with
Sandra Elsley, did you have one personal account?
MS. KIS: Counsel, I don't think this
line of questioning is relevant. I'll take it under
John Bordynuik - 96
advisement.
-- UNDER ADVISEMENT
492 Q. How many accounts did you have?
MS. KIS: I refuse it.
-- REFUSAL
BY MR. HAWA:
493 Q. Did you have any personal accounts?
MS. KIS: Well, he answered the
question.
A. Yes, of course.
MR. HAWA: So you are taking it under
advisement whether to provide me with a copy of that
account in 2007 and 2008 while you were living with
Sandra Elsley?
A. Yes.
-- UNDER ADVISEMENT
BY MR. HAWA:
494 Q. Did the $80,000 you paid to Nicole
Wright come from your personal bank account as well?
A. Yes, it came from a wire transferred
from my personal bank account, and I produced that in my
Affidavit of Documents with the purchase agreement
actually.
MR. HAWA: Is it in your materials?
MS. KIS: I don't think so.
John Bordynuik - 97
MR. HAWA: So it will be provided in
your Affidavit of Documents?
A. Oh, absolutely. The purchase agreement
with Nicole and proof to the lawyer. I had to provide
it anyway.
495 Q. It came from your personal bank account?
A. Yes, it did.
496 Q. With which institution?
MS. KIS: You will see the document when
you see it, counsel. Why is that relevant?
MR. HAWA: Will you undertake to provide
that for this examination?
MS. KIS: Yes.
-- UNDERTAKING
BY MR. HAWA:
497 Q. When you purchased shares, when you
purchased the asset, when -- let's be clear. When 310
purchased the assets from JBI Delaware in or around June
of, June 2nd, June 2nd, 2009, you swopped those assets
JBI/310 swopped those assets, took the assets from JBI
for 809,000 shares, is that correct?
A. That's correct.
498 Q. Were they free trading shares?
A. No.
499 Q. So they were restricted shares?
John Bordynuik - 98
A. They were restricted shares from the
treasury.
500 Q. And they were restricted in the same
manner as your shares were restricted and Sandra's
shares were restricted?
A. Not Sandra's shares, my shares.
501 Q. The shares that Sandra was going to
receive or had an option to receive the 7,000,000,
7.7 million shares?
A. She didn't take an option. My shares
were consistent with my shares.
502 Q. They were consistent with your shares?
A. Yes.
503 Q. Did you take, were those shares
transferred to JBI Delaware?
MS. KIS: What shares, counsel?
MR. HAWA: The shares that were used to
pay for JBI Delaware's assets.
MS. KIS: I don't understand the
question.
BY MR. HAWA:
504 Q. Mr. Bordynuik understands the question.
A. No, I don't actually. I don't
understand how I can transfer the shares to JBI
Delaware. They are not transferred from anything. The
John Bordynuik - 99
company issued shares.
505 Q. Issued shares to pay. So the shares had
to be transferred. The name of JBI Delaware had to
appear on those shares eventually, did it not?
A. Yes.
506 Q. So they should be in JBI Delaware's
treasury, would they not?
A. No, it would not be in JBI's treasury.
Because JBI Delaware's treasury has its own stock, not
310 stocks' treasury.
507 Q. By treasury, I mean in its safe or in
its account. That is what you were to have transferred
JBI, JBI Nevada was to have transferred 809,000
shares --
A. Yes.
508 Q. -- to JBI Delaware?
A. But that changed later with the
statement. So, therefore, the share amount was much
less and that stock still sits in JBI Delaware's name.
509 Q. The share amount was much less?
A. Yes.
510 Q. So it was not 809,000 shares,
ultimately?
A. Well, it was originally. It was not
issued then. Later on when it was issued in January or
John Bordynuik - 100
February of, I think it was 2010 or much later.
511 Q. Were they not issued to your account to
John Bordynuik?
A. No, they were not issued to my personal
account, no.
512 Q. So those shares were not in your name?
A. No.
513 Q. So it was -- the deal was for 809,000
shares, but they were never transferred to JBI Delaware?
A. No, some were. I think that it was
about 200,000.
514 Q. 200,000?
A. That's correct.
515 Q. That's all?
A. That's what is in there, yes.
516 Q. So there are 200,000 shares?
A. Approximately.
517 Q. In JBI's Delaware's name?
A. That's correct.
518 Q. Was a certificate signed in favour of
JBI Delaware?
A. Yes.
MR. HAWA: Would you provide a copy of
that certificate?
MS. KIS: I don't know if it's relevant,
John Bordynuik - 101
counsel. I'll take it under advisement.
-- UNDER ADVISEMENT
BY MR. HAWA:
519 Q. Well, you say at that -- why did you,
why did you change it from 809,000 shares? That was the
agreement at the time.
A. It was an agreement but it was based on
the price of the stock and the value of the assets. We
did not have a great auditor. And when we brought in
Withum Smith, they said it was not properly accounted
for or properly booked. So they then restated that
acquisition to what it should have been.
520 Q. Now, they stated the acquisition. They
valued the JBI Delaware assets?
A. Yes.
521 Q. So initially, and they felt that you
overpaid, that JBI Nevada had overpaid with its stock?
A. No, they felt that it had something to
do with depreciation, and depreciation I believe of the
assets that was the issue. I'd have to go back through
the restatement to understand why. We didn't understand
then because an auditor actually came up and accounted
for every receivable. They accounted for every dollar.
522 Q. They changed them by about 100,000 or
so, right?
John Bordynuik - 102
A. No, it was a lot more than that, I
think.
523 Q. All together, initially, the assets were
valued at $500,000, would you not agree?
A. Yes, I believe so.
524 Q. And then the restatement valued them at
around $443,000, something like that?
A. Something like that, yes.
525 Q. As a result, you are saying because of
that, they -- the transaction was negated for 809,000
shares?
A. Yes, it was.
526 Q. And as a result, JBI Nevada only had to
pay 200,000 shares?
A. Something like that.
527 Q. So at a later time JBI Nevada changed
its mind about the value?
A. No, the auditor changed their mind.
528 Q. The auditor ripped up the deal that you
initially made for an asset purchase agreement?
A. He didn't rip it up. He restated it.
529 Q. He restated it?
A. He said it was not properly done.
530 Q. The Agreement of Purchase and Sale was
not properly done?
John Bordynuik - 103
A. That's correct.
531 Q. Because the assets were overvalued?
A. They were not valued properly.
532 Q. What about the shares? Why then were --
if the assets were reduced by the valuation of the
assets was reduced by about a third, as you said, why
were the number of shares paid reduced by
three-quarters?
A. I don't recall why. I do recall that and
I can certainly show that the company issued JBI --
533 Q. -- 200,000 shares?
A. That's correct.
534 Q. To Delaware?
A. They still sit there to this very day.
535 Q. Rather than 809,000 shares, which they
were initially to have been paid?
A. That's correct.
536 Q. Now, at the time of the transaction, at
the same time that was a time when the stock had just
started to trade above a penny?
MS. KIS: What is the time of
transaction, counsel?
BY MR. HAWA:
537 Q. The time of the transaction --
A. That's not true.
John Bordynuik - 104
538 Q. Well, perhaps you can -- June, what was
the date of the transaction, June?
A. No. The --
539 Q. Go ahead.
A. The date that you enter into an
agreement isn't the date that the transaction completed.
The transaction completed in July, and that's when it
closed.
540 Q. It closed?
A. When it closes, that's when the
valuation is looked at, not before. So it is not done
at a penny a share. Anytime you do a transaction, it
closes on the day of. This was July 15th we were
trading over a buck. I think we were trading a buck 20
and buck and a half. That is how it was done. Our
securities lawyer did that.
541 Q. At the same time, just prior within that
month it had been trading for pennies?
A. No, it hadn't. It closed in July.
542 Q. On June 3rd it was 20-cents, isn't that
correct?
MS. KIS: Are you looking at a document
that you can direct him to?
THE WITNESS: The stock was all over the
place. It also was 2 bucks, I think, at the end of
John Bordynuik - 105
April. It was all over the place.
BY MR. HAWA:
543 Q. At the same time JBI Nevada went and
borrowed $200,000, not borrowed, went and traded 66,000
shares at $3 a share for $200,000 of Delaware's money,
isn't that correct?
A. JBI Delaware bought 66,000 shares of 310
Holdings to get to, to get money into 310 so that it
could operate so the shareholders that got the 310 stock
could actually do something. The company could actually
start growing and building, otherwise, they both would
be sitting on empty companies.
544 Q. So you overpaid for those shares, did
you not?
MS. KIS: Are you asking his opinion?
BY MR. HAWA:
545 Q. JBI Delaware overpaid? They paid $3 a
share at a time when the sock was trading at 49-cents?
MS. KIS: Counsel, you keep referencing
a chart. It seems to be in one of the records. Can you
tell me where it is so we can see the same numbers.
BY MR. HAWA:
546 Q. Do you recall when $200,000 was traded
for 66,000 shares?
A. No.
John Bordynuik - 106
547 Q. Does June 27th ring a bell?
A. Well, unless I see the document, I am
guessing.
548 Q. All right. I am --
MS. KIS: Counsel, if you are referring
to the numbers set out at paragraph 44 of Ms. Elsley's
affidavit.
MR. HAWA: Yes.
MS. KIS: I don't know where you have
gotten those numbers. There is no actual support for
those numbers. It's literally just a chart.
MR. HAWA: How about looking at the
actual chart.
MS. KIS: Sure. Just direct me to it.
MR. HAWA: At exhibit, it's at tab 0 of
the original motion record. So it's in volume 2.
MS. KIS: So, counsel, this is still a
set of numbers with prices. I don't know the source of
the information. But there is, undoubtedly, a whole set
of numbers set out here; dates, and then a whole column
of various cents and indecipherable numbers in the far
right column, but you can certainly direct us to any of
those.
MR. HAWA: Well, I take you to June.
MS. KIS: Okay.
John Bordynuik - 107
MR. HAWA: And take you to June, which
is about page -- page 17, 349.
MS. KIS: Okay.
MR. HAWA: There is a June but that's
not correct.
MS. KIS: This is 2011.
MR. HAWA: Sorry, 2009.
MS. KIS: I think it is 342.
MR. HAWA: It is.
549 Q. Now, do you agree that's the trading
history for JBI?
MS. KIS: We are refusing that question.
Based on these numbers, counsel, we have no idea where
you got them from. We have no idea. There is no legend
or any kind of indication of where these came from.
Based on what is in front of him here, I am not going to
let him answer that question.
-- REFUSAL
BY MR. HAWA:
550 Q. Was the stock trading at $3 when you,
when JBI Nevada traded 66,000 of its shares for
$200,000?
A. No.
551 Q. No?
A. No.
John Bordynuik - 108
552 Q. What was it trading at?
A. It had traded up to $2, around that
time. I don't know exactly. I don't know the date when
the agreement was done. I know that during the month of
June I think it peaked at around $2 or more.
553 Q. But it really wouldn't matter to the
shareholders, would it. If they all got their
proportion of share in JBI Nevada, it wouldn't really
matter if the transactions were arm's length or not,
would it?
MS. KIS: I don't understand, which
transactions?
THE WITNESS: I don't understand the
question.
BY MR. HAWA:
554 Q. You did a couple of transactions. You
did an asset purchase and you did, you did a share
purchase. You did a, JBI Delaware bought shares, 66,000
shares of JBI Nevada. And at the same time, in June of
2009, JBI Nevada bought assets of JBI Delaware, correct?
A. The asset purchase was very important.
That is why we ended up restating it. There are
specific accounting methods for acquiring assets. There
are specific prices and rules that you have to adhere
to. You just can't pick any number out of the sky. For
John Bordynuik - 109
the asset purchase when Withum Smith restated it, they
stated what the amount should be and all that.
555 Q. They reduced it by a third?
A. At least a third.
556 Q. Of the asset valuation?
A. Yes. However, on the share purchase.
557 Q. But at the same time you reduced the
number of shares, the purchase price by three-quarters
from 809,000 to 200,000?
MS. KIS: Counsel, you already asked
this. He already answered. Move on to the next
question.
BY MR. HAWA:
558 Q. That was at the same time as the -- so
in one case, that was at the same time that JBI Nevada
was taking money from JBI Delaware, correct?
A. The only way that JBI Nevada was funded
was through JBI Delaware.
559 Q. After that 200,000 was transferred, did
JBI Delaware have any money left?
A. Oh, no, actually, it didn't. No, I
don't think so.
560 Q. That was it?
A. That was it.
561 Q. Did JBI Delaware ever trade those
John Bordynuik - 110
shares?
A. No.
562 Q. Are they still in treasury?
MS. KIS: Of JBI.
BY MR. HAWA:
563 Q. Of JBI Delaware?
A. Those 200,000?
564 Q. And the 66,000?
MS. KIS: Counsel, hold on. You just
said JBI Delaware. Did JBI Delaware ever trade the
shares of JBI Nevada.
MR. HAWA: The ones that they hold as a
result of these two transactions?
MS. KIS: Of JBI Nevada.
BY MR. HAWA:
565 Q. Of JBI Nevada?
A. It has sat in restricted form in the
same cert. the day it was issued and has not changed.
566 Q. So there are at least 266,000 shares in
JBI?
A. There is somewhere around 200 and
change. None have ever been traded, whatever, left in
the original form. I don't know the exact number, but
it's somewhere in that area.
567 Q. So who approved the reduction of the
John Bordynuik - 111
purchase price of the assets from 809,000 shares to
200,000 shares?
MS. KIS: Do you mean who within JBI I
or JBI Delaware?
BY MR. HAWA:
568 Q. Within both?
A. Well, two things. One, 310 Holdings
needed capital to operate or else it was going under.
569 Q. Um hmm.
A. That was the first issue.
570 Q. Um hmm.
A. The second one was that the fact that
the restatement showed that the assets had to be
reduced. So we didn't -- it was not -- I had to accept
the audit. I was not about to sit there and fight with
them about it.
571 Q. And the audit also changed the number of
shares that you had to pay?
A. It changed the value.
572 Q. It changed the number. It decided --
the audit, who did the audit?
A. Withum Smith, the top 30 audit firm in
the U.S.
573 Q. They did an audit as a result of a
requirement of the SCC?
John Bordynuik - 112
A. Yes, they do. They felt that the
original audit done was done on the face value of the
assets and it was not acceptable. It had to go through
a full and thorough, some kind of -- there was
depreciation and all kinds of accounting GAAP rules we
were not aware of.
574 Q. So they decreased the value of the
assets and they increased the value of the shares that
were used to pay for the assets because the number of
shares was reduced to 200,000. Did they do that as
well?
MS. KIS: I don't understand the
question.
A. I don't understand the question.
575 Q. Well, the number of shares that was used
to purchase these asset was reduced from 809,000 down to
200,000?
A. Right.
576 Q. Now did they do that?
MS. KIS: Who is they, the auditors?
BY MR. HAWA:
577 Q. The auditors?
A. No.
578 Q. Who did that?
A. I did.
John Bordynuik - 113
579 Q. You made that decision?
A. Yes.
580 Q. On behalf of who?
A. Well, 310/JBI.
581 Q. And who was acting as an officer for JBI
Delaware? Were you not an officer for them as well?
A. I don't even know if JBI Delaware at
that point in time was even current.
582 Q. Did it have an officer?
A. It had filed a registration withdrawal.
I was an officer up until it was dormant. I don't know
what the proper term is used for that.
583 Q. Who signed the deals between JBI
Delaware and JBI Nevada?
A. I did back in 2009.
584 Q. So you signed twice, once for them?
A. Yes, that's correct.
585 Q. Is that not a conflict of interest?
MS. KIS: Counsel, is that not a legal
question?
MR. HAWA: It is a legal question.
586 Q. In May of 2009, in May of 2009, April of
2009, the stock was not trading for anything
significant?
MS. KIS: The stock of what, counsel?
John Bordynuik - 114
BY MR. HAWA:
587 Q. The stock of JBI Delaware, JBI Nevada, I
mean?
MS. KIS: 310 Holdings at the time.
THE WITNESS: 310 Holdings stock was not
what?
BY MR. HAWA:
588 Q. Was respectfully not trading in April,
March?
A. Yes, it was. It was trading in April
and May.
589 Q. For a negligible amount, is that not
correct?
A. No. April and May it was pretty active
after I filed my 8-K and what I was doing with it and
putting plastic to oil, it got reasonable trading I
would say for a new company.
590 Q. What about the stock price?
A. It whips out all over the place.
591 Q. But prior to April?
A. It was a shell company.
592 Q. It was a shell company?
A. Yes.
593 Q. So as soon as you put your plastic to
oil technology it started to --
John Bordynuik - 115
A. It went crazy. People saw the 8-K.
594 Q. People saw the 8-K?
A. Um hmm. There are many platforms that
are there to detect 8-Ks of shell companies going or
starting operations. It's very common. I used to do it
in 2000. I used to invest in just shells.
595 Q. You had sent some e-mails or you had
sent some e-mails to the shareholders of JBI Ontario to
come and pick up their shares and sign share purchase
agreements of 310 Holdings, had you not, in around June
of 2009?
A. That's correct.
596 Q. How much notice did you give the
shareholders?
A. They got as much notice as they wanted.
597 Q. Notice?
A. Meaning notice for?
598 Q. To come and sign their purchase
agreements?
A. They could come any time. Some came at
the end of 2009. It didn't matter when they came.
599 Q. When was the first time that you gave
them notice to come?
MS. KIS: What do you mean by notice
counsel.
John Bordynuik - 116
BY MR. HAWA:
600 Q. Notice for the shareholders to come and
receive their shares.
A. They could, I think that it was sometime
mid-June we had a couple specific days we set up at the
office. We had a lot of people there to help. There
was a bunch of people that wanted to get stock as
quickly as possible. After that, we wouldn't have the
resources, and they could pick up their stock any time.
601 Q. So they were both picking up stock and
signing a share purchase agreement, were they not?
A. That's correct.
602 Q. And a share purchase agreement was one
of these other shareholders --
A. That's correct. Actually, a couple
share purchase agreements. There were two I am aware
of.
603 Q. Two different companies that had
share --
A. No. That they had to sign. There were
two agreements. One they signed with us wherein they
were unwinding their JBI Delaware Holdings. And then
the other and winding the transaction. The other one
was with them wherein that original shareholder signed
and they signed and that went back to the shareholder.
John Bordynuik - 117
There were two sets.
MR. HAWA: Well, could you undertake to
provide me with a copy of one of these agreements
wherein they agreed to unwind their JBI Delaware shares?
MS. KIS: Well, counsel.
MR. HAWA: We don't have any such
production.
MS. KIS: I guess my question to you is
you have produced some. In the witness statements there
are some.
BY MR. HAWA:
604 Q. Those are the share purchase agreements
from the shareholders of JBI Nevada, right?
A. I would like to see one first.
605 Q. The share purchase agreements are in our
productions, examples of them.
MS. KIS: Do you mind if we go off of
the record while we look for it, counsel.
MR. HAWA: Exhibit L.
-- OFF THE RECORD DISCUSSION
--- BACK ON THE RECORD
BY MR. HAWA:
606 Q. It's the same agreement?
A. Yes.
607 Q. It's all within the same agreement?
John Bordynuik - 118
A. Yes.
608 Q. I see. It was not two agreements?
MS. KIS: Sorry, counsel, for the
clarity of the record, page 260 of volume 2 of
Miss Elsley's first affidavit in the main motion record
you asked for where there was a provision or whether
there was a separate agreement with respect to unwinding
of the shares. It's paragraph 12, it looks like of the,
at least in this case and this is a document that you
produced that is appended it looks like to the witness
Statement of Michael John Greene. And it's a share
purchase agreement between Westside Capital and 8424
Santa Monica, sorry, just Westside Capital is the
address and then Michael Greene. Like I said, provision
12. It reads,
"The shareholder agrees to unwind the
original investment in John Bordynuik Inc. Canada
because John Bordynuik Inc.'s assets are being sold to
310 Holdings Inc. to carry on the business of John
Bordynuik Inc. The purchaser acknowledges that --"
And it goes on.
MR. HAWA: It doesn't continue?
MS. KIS: I am not sure if that's
supposed to be an enumerated list that they acknowledge
the following or if that's just a typo.
John Bordynuik - 119
609 Q. All right. Let's look at another one of
those similar agreements, for example, Exhibit L. Share
purchase agreement between Beverly Hills Capital
Corporation and Sandra Elsley for 300,000.
MS. KIS: What page, counsel? They are
all Exhibit L.
MR. HAWA: Page 281.
MS. KIS: I am sorry.
MR. HAWA: It has the same kind of
provision. They all --
MS. KIS: Yeah. It looks like there is
that same provision in there, counsel.
BY MR. HAWA:
610 Q. What it's, I know you are not a lawyer,
but what does unwind, what does that provision mean?
What happens to those shares?
A. Well, it means they are gone.
611 Q. They are gone in what sense? They
ripped them up?
A. It's destroyed. They are gone. Unwind
generally means if a merger doesn't work, like in the
Delaware one we, it was dumped. To give you --
612 Q. So the intention was that if they got
their shares in JBI Nevada, they were to have nothing to
do with the shares. They were forfeiting their shares
John Bordynuik - 120
in JBI Delaware. Who was getting the JBI Delaware
shares?
A. No one. They are being destroyed. And
it doesn't say JBI Delaware. It's John Bordynuik Canada
Inc. They unwind their original investment. They
unwind it. The reason being is, and I think that you
are having some difficulties here, but JBI Delaware was
a company that owned JBI Canada.
613 Q. Yes.
A. And JBI Canada owned those assets.
614 Q. I understand that completely.
A. Great.
615 Q. So there was no asset, there was no
share purchase. There was no share trade. It was just
this sum agreement to rip up their shares?
A. There was a share purchase agreement
with all the original shareholders to buy stock in John
Bordynuik Inc. Canada. That is what the original Inc.
did that null and voided those agreements. They unwound
that transactions. There was no longer a need to have
JBI Delaware for that.
616 Q. There must be some shareholders in JBI
Delaware still left?
A. I don't know.
617 Q. After all, it still owns some shares of
John Bordynuik - 121
JBI Nevada?
A. They are sitting there in hyperspace.
They are still sitting there.
618 Q. They had a value of almost 1.5 million
at one point in hyperspace.
A. And they still sit there. They still
reside there this very day, those same share certs. with
restricted legends on them.
MR. HAWA: I don't know if it's a good
time to break. I want to go through the supplementary
affidavit.
-- OFF THE RECORD DISCUSSION
--- BACK ON THE RECORD AT 1:30 P.M.
BY MR. HAWA:
619 Q. Yes, Mr. Bordynuik, what determined the
300,000 shares, unrestricted shares which you provided
for Sandra? Why was that a magic number?
A. It appeared to be -- well, that number
came originally from our S1 filing. When we were going
through the public process, it appeared that our lawyers
felt that that was the amount of shares that they would
allow us to register at the time we were going through
in early 2009. In addition to that, in the early
shareholders, sorry, the original shareholders in 310
had also said that basically as a limit for anyone that
John Bordynuik - 122
had, let's say, a low or almost no cost basis for their
stock, that's the kind of deal they were going to do.
In other words, they didn't want
millions of shares going out to somebody that had
absolutely no cost basis and just be happy to dump it
out at a penny or two a share.
620 Q. What do you mean by cost basis?
A. What the stock costed in the end, what
they really paid for it.
621 Q. They paid a tenth of a penny for those
stocks?
A. No, I mean what the John Bordynuik Inc.
shareholders paid for it. They didn't pay a tenth of a
penny. It's in their filings what they originally paid
for their stock. I don't recall exactly what it was
but --
622 Q. Are you talking about the original
shareholders?
A. In 310, yes.
623 Q. So 300,000 was a number that was arrived
at as the maximum that that who would get?
A. Someone would get if they had almost a
no or low cost basis for their stock.
624 Q. All of the shareholders of JBI Delaware
were buying them at a low or no cost basis?
John Bordynuik - 123
A. No, they didn't. They had a cost basis
of, for example, of I think someone that paid $10,000
for 20,000 shares, that's a 50-cent cost basis. They
paid that in John Bordynuik Inc. Ontario. So it's
unlikely that they would sell all their stock at a penny
a share because they had a significant cost basis for
their shares. It's also how the regulators, I
understand, arrive at what they allow to be registered
or not.
625 Q. But there was no registration of those
stocks in 310 Holdings?
A. There absolutely was.
626 Q. There was a registration statement?
A. In 2006.
627 Q. They had been registered, those stocks?
A. Yeah.
628 Q. But not the ones that you got?
A. The ones that I got?
629 Q. Yes.
A. No, they couldn't be. They are
controlled stock. You can't register controlled stock.
630 Q. Are you planning to give back any shares
to the company?
A. No, no.
MS. KIS: To which company?
John Bordynuik - 124
BY MR. HAWA:
631 Q. To JBI Delaware? You have 3.4 million
shares are you planning --
A. JBI Delaware.
632 Q. Sorry, JBI Nevada.
A. No, I am not. I started with -- I did
learn it was 40,250,000. And then I had actually
returned a total of, it was between either executives or
return stock to the treasury of 35 million total.
MS. KIS: What do you mean between
executives?
THE WITNESS: Well, meaning 33 million
went to the treasury and the other two million was used
to either offset a PIPE, hire a CFO, something for JBI.
So in actual fact I was at 5.23 million. There was
another million that went back. So I was 4.23 million
as of May of 2012.
BY MR. HAWA:
633 Q. And since then you sold 800 of those?
A. That's correct.
634 Q. Those are the only ones that you've ever
sold in 2012?
A. Yes.
635 Q. You plan to give back no more shares?
You are holding on to the 3.4?
John Bordynuik - 125
MS. KIS: Do you mean return to
treasury?
BY MR. HAWA:
636 Q. Yes.
A. That's correct.
637 Q. Why did Pat Widdis receive 500 shares
unrestricted?
A. I don't know how many she received. I
would have to see some documentation. But, in any
event, if she received more than 300,000 it was because
her cost basis was fairly high. She did not have a cost
basis of let's say a penny a share.
638 Q. Did anybody else receive more than
300,000 shares, unrestricted shares?
A. I think Wendy Pinder did, Steve Doede's
wife. She put in cash over $150,000. So that was
more --
639 Q. Put in cash into JBI Ontario?
A. Yes, that's correct. However, Steve
Doede, her husband, took the 300,000 share deal that
Sandra did, and he originally had 1.2 million shares but
his cost basis was very, very low like hers.
640 Q. So he was not a PIPE?
A. That is correct.
641 Q. Steve Doede?
John Bordynuik - 126
A. But his wife was.
642 Q. His wife was. But that was a strategy
that you devised? It was not a requirement that that
strategy of --
A. It was.
643 Q. -- distinguishing between PIPE and
non-PIPE in order to provide them with restricted or
unrestricted shares?
A. No, this is something that I devised.
It's something that the shareholders had agreed to as
well. I mean, I don't know any company that would
agreed to hand out a bunch of stock to somebody with no
cost basis. They just won't allow it. And even if they
did, the regulators wouldn't. That is why they have
registration processes to ensure people that have low
cost basis don't go and flood the market and destroy the
capital for everyone else.
644 Q. Did you not advise Sandra that she could
get 300,000 per quarter, and that she was restricted to
selling 1%?
A. Never. That's impossible. Um, if she
took restricted stock, and if ever it met all the rules
and regulations to be sold there were even then, even if
you met everything to actually take affiliate control
stock and sell it. There were limitations imposed by
John Bordynuik - 127
the SCC of how much you could sell every quarter. They
have a formula for that. It's not 300,000. It's a
specific formula, but it is a very low amount and it is
based on trading volume per week, the amount of issue
notes in shares, 1% maximum of all of that of the stock
owned. There is a number of metrics that they use to
limit affiliates of selling stock.
645 Q. Did you advise her of that?
A. Yes.
646 Q. About the 300,000 per quarter limit?
A. I don't think that there was.
MS. KIS: Counsel, sorry, that was not
his evidence, right? He just explained to you that he
didn't think that it was 300,000 and that it was based
on a formula. Now, you reframed it for him as he
represented it as it was 300,000 per quarter limited.
THE WITNESS: I never stated it was
300,000. I don't even think that is under the rules.
BY MR. HAWA:
647 Q. You said earlier that all of the JBI
Delaware shareholders had agreed to forfeit their
shares?
MS. KIS: For what?
BY MR. HAWA:
648 Q. As a result of, as a result of their
John Bordynuik - 128
taking JBI Nevada's shares, is that correct?
A. They agreed to unwind the transaction.
649 Q. To unwind the transaction?
A. Yes.
650 Q. So who then would own those shares? Did
they go back to treasury?
MS. KIS: Counsel, you've asked this
question already.
THE WITNESS: You asked me that and they
have been cancelled.
BY MR. HAWA:
651 Q. Have they been cancelled formally, all
their shares?
A. I think so.
652 Q. Are there any outstanding shareholders
that you know of in JBI Delaware?
MS. KIS: You asked that question,
counsel.
BY MR. HAWA:
653 Q. Currently?
A. I don't know.
MR. HAWA: Subject to any answers to
questions taken under advisement, and subject to your
undertakings, I conclude the examination.
MS. KIS: No re-examination.
John Bordynuik - 129
-- UPON COMPLETION OF EXAMINATION AT 1:40 p.m.
Certified correct
________________________
Phyllis Doel, C.S.R., R.P.R.
Chartered Shorthand Reporter
Registered Professional Reporter
Commissioner of Oaths (expires March 30, 2015)
** This document must bear the original signature and
certification of the Reporter in Attendance at the
examination of the witness in the above matter. Absence
of this certification and signature is indication this
document has been reproduced without the permission of
Nimigan Mihailovich Reporting, and as such, is not an
original document and, therefore, in direct
contravention of Ontario Regulation 587/92, Courts of
Justice Act, January 1, 1990. **
depo gate undertaken on 5.1.13 .. as for this
Quote:
AGAIN, DID WE SHAREHOLDERS MISS SOMETHING? HAS THE PROCESS BECOME HIGHLY SUCCESSFUL?
this actual P2O investor .. never CONfuses stock manipulation with P2O's achievements"
I am a disgruntled but *actual* JBII/PTOI investor who starting posting nothing but pro JBII/PTOI posts in January 2011 through the fall of 2013. I showed extreme patience but my tone changed after waiting for JBII/PTOI's much anticipated Processor 3 only to realize that after months running Processor 3 the company's behavior let on that they didn't have what they claimed they had; or at least weren't in a position to help shareholders realize profits promised. Feel free to look back to my 2011, 2012 posts showing my blinded steadfast support of the company who I now believe took advantage of my faith and trust and deceived me throughout. I'm as real as they get! I invested thousands and still hold a very small amount of shares today.
Also, I haven't heard of "depo gate" but using the word "gate" insinuates scandal and what I posted yesterday was a quote from a Bordynuik interview where he claimed the following:
"I haven't sold a share and our management team is not on payroll. We get paid when the process is highly successful. We get nothing otherwise."
I then pasted a Bordynuik response from a transcript of the Cross-Examination on an Affidavit sworn at the office of Nimigan Mihailovich Reporting, Hamilton, Ontario. Feel free to keep scrolling down through the court file below as you'll see I've boldfaced my previous paste in red. I believe my post and all posts to be factual as this isn't a game to me.
This *actual* JBII/PTOI investor is showing justifiable, and IMO expected, frustration with the wealth accrued by John Bordynuik in 2012 alone based on the statements made by Bordynuik that he'd do different above.
According to salary.com, in 2012 Bordynuik had a base pay of $261,052, received $78,350 in bonuses + non-equity incentive compensation and received $1,270,171 in option award value. salary.com claims Bordynuik made $1,609,573 in total compensation. Feel free to click the link and look for yourself.
Again, this *actual* investor's question stands? HAS THE PROCESS BECOME HIGHLY SUCCESSFUL?
Welland Court File No:3612/12
Court File NO.:CV-12-2474-00
ONTARIO SUPERIOR COURT OF JUSTICE
B e t w e e n:
SANDRA ELSLEY
Plaintiff
- and -
JOHN BORDYNUIK
Defendant
---------------------
The Cross-Examination on an Affidavit sworn December 28,
2012, and January 28, 2013, of, John Bordynuik,
defendant, taken upon an oath in the above action this
1st day of February, 2013, at the office of Nimigan
Mihailovich Reporting, Hamilton, Ontario.
----------------------
A P P E A R A N C E S:
Counsel for the Plaintiff Frederick Hawa
Frederick Simon Hawa
Counsel for the Defendant Renata Kis
Ross & McBride
John Bordynuik - 1
JOHN BORDYNUIK
having been duly sworn, was
examined and testified
as follows:
-- UPON COMMENCING AT 10:09 a.m.
MR. HAWA:
1 Q. Good morning, sir?
A. Good morning.
2 Q. Could you please state your name for the
record?
A. John William Bordynuik.
3 Q. Mr. Bordynuik, you are familiar with the
plaintiff --
A. Yes.
4 Q. -- Ms. Elsley.
A. Yes.
5 Q. How old are you?
A. 43.
6 Q. And what do you do?
A. I am the corporate, I am the chief
technology officer of JBI, chief of technology, sorry,
at JBI.
7 Q. Where is this company based?
A. In Thorold, Ontario.
8 Q. Thorold, Ontario?
John Bordynuik - 2
A. Yes.
9 Q. Does it have a U.S. office?
A. Yes, it does.
10 Q. Is it registered as a U.S. corporation?
A. Yes, it is.
11 Q. So the Thorold office is a registered
place to carry on business?
A. Well, we have subsidiaries that are
Canada corporations and so, no, the Thorold office is
registered, as I understand, as our main office.
12 Q. The Thorold office is your main office?
A. Yes.
13 Q. So what is the significance of the
Nevada registrations?
A. The significance of the Nevada
registrations was the state in which the public shell
entity was incorporated.
14 Q. Now, is the company still incorporated
in the State of Nevada? Is it still a Nevada
corporation?
A. Yes.
MS. KIS: Counsel, as you know, there is
a couple of corporations at issue here. So maybe you
want to clarify which company when you reference the
company.
John Bordynuik - 3
BY MR. HAWA:
15 Q. JBI Inc. is the name of the company, is
it not?
A. Yes.
16 Q. And that is a company incorporated in
the State of Nevada?
A. Yes, it is.
17 Q. Does it have an address in Nevada?
A. Um, it has, I think that you have to
have -- I don't remember what it's called. Let me
think. You have to have a registered agent in Nevada so
I believe that's the --
18 Q. That's the procedure?
A. Yes.
19 Q. Okay. Now, when did you -- you have
children, Mr. Bordynuik?
A. Yes, I do.
20 Q. How many?
A. With my wife, four total.
21 Q. Four total. And are they, are they
living with you?
A. Um, three are full-time. And one is
part-time.
22 Q. Are they dependents?
A. Yes, they are.
John Bordynuik - 4
23 Q. How old are they?
A. One is 16, 18, 19 -- 16, 18, 19, 20.
24 Q. Are you married?
A. Yes, I am.
25 Q. When did you meet Ms. Elsley?
A. I met her --
MS. KIS: Counsel, sorry, you jumped
right in and it occurs to me that I should put on the
record -- I don't mean to break your flow. It sounds
like a good time to interrupt. You did produce 62 pages
on our office last night. These are purportedly under,
were produced pursuant to the undertakings as
Mr. Abradjian --
MR. HAWA: Undertakings of Ms. Elsely.
MS. KIS: Yes.
MR. HAWA: And that of Ms. Widdis.
MS. KIS: Okay. So you have not made a
distinction which is Ms. Widdis' and which were
Ms. Elsley's. In any event, they came in at about
11:30 p.m. last night. I do appreciate that you got
them to us as soon as you could. Our position with
respect to these documents as well as some of the other
affidavits that were produced and which contain
information that ought to have been produced to the
court when you initially obtained the order, that you
John Bordynuik - 5
know, we'll be taking issue with these productions. We
object to you relying on them for the purposes of the
motion. And we will carefully consider any questions
that you ask pursuant to the evidence.
MR. HAWA: You can state that to the
court when we get to the court. I don't think this is
where you should put that on the record.
MS. KIS: I wanted to be consistent with
Mr. Abradjian's comments at both of his
cross-examinations yesterday.
MR. HAWA: Consistent with his comments?
MS. KIS: Yes.
MR. HAWA: Regarding?
MS. KIS: The affidavits that were
filed. The three affidavits that you filed after the
initial hearing that contained information that ought to
have been contained in the initial affidavit.
MR. HAWA: You can object to that at the
motion.
MS. KIS: I put it on the record here,
counsel. Thank you.
MR. HAWA: Thank you.
26 Q. Now, when did you meet Ms. Elsley?
A. In the early 2000s.
27 Q. In the early 2000s?
John Bordynuik - 6
A. Somewhere in there.
28 Q. You developed a romantic relationship?
A. Not then.
29 Q. Not then. Where did you meet
Ms. Elsley?
A. I met her in her home.
30 Q. Met her in her home?
A. Yes.
31 Q. And when did your relationship become
more of a personal relationship?
A. Um, in probably mid- to late 2006.
32 Q. Mid- to late 2006. Where were you
working then?
A. I was doing a job for, at that time, I
was working at -- well, two things AI Applications, and
I was also doing, I was designing a medical cart for
Rubbermaid.
33 Q. And now you met Ms. Elsley in early
2006, but were both enterprises your business?
MS. KIS: Sorry, I think that his
evidence was that he met Ms. Elsley in early 2000.
THE WITNESS: That's correct. She was
providing --
MR. HAWA:
John Bordynuik - 7
34 Q. You became more intimate around 2006?
A. Yes, that's correct.
35 Q. Around 2000, what were you doing around
2000, between 2000 and 2006?
A. Sure.
MS. KIS: Counsel, how is it relevant?
MR. HAWA: It is relevant.
MS. KIS: Why?
MR. HAWA: It is relevant because of the
allegations that we made and Mr. Bordynuik's made about
his pecuniosity?
MS. KIS: Go ahead.
A. Certainly she was working on the west
coast for Paul Allen under Vulcan Northwest.
BY MR. HAWA:
36 Q. When was that?
A. 2002 to, through to 2004.
37 Q. And you were working for Vulcan, which
is a subsidiary of Microsoft, is that what it is?
A. No, it isn't. Paul Allen is one of the
co-founders of Microsoft. He had his own company, his
own entities from the sale of his Microsoft shares, and
he hired me to restore his computers and to actually
several things; recover the original Microsoft data in
1975, restore his original computers, restore a bunch of
John Bordynuik - 8
computers for the museum, and paid me a little over a
million dollars for that.
38 Q. When did you come back to Canada?
A. I think it was 2003 or 2004.
39 Q. 2003, 2004. What did you do then?
A. Then I developed, I was doing -- I did
two things. I did a dirty bomb detector. And I also
did an automation system, and I developed a board that
could control just a bunch of devices.
40 Q. Did -- was -- were you working on your
own accord, in your own business?
A. Yes.
41 Q. Did you make any money in those
businesses?
A. It paid me an income.
42 Q. It paid you an income?
A. Yes.
43 Q. Did you file tax returns?
A. Yes, I did.
44 Q. How much did you make in 2004?
A. I couldn't tell you.
45 Q. Approximately?
A. The Vulcan stuff, I couldn't tell you.
46 Q. 2005?
A. No idea.
John Bordynuik - 9
47 Q. Did you have assets in 2006?
A. Yes, I did.
48 Q. Approximately how much?
A. I had a house in Niagara-on-the-Lake,
and I had a bunch of furniture. I had a patent. I had
somewhere around, somewhere around probably a million.
49 Q. That's, that's including the value of
the intellectual property?
A. No.
50 Q. That's the value of the house and your
cash and other --
A. Yes, I made significant money from the
old computers and --
51 Q. Now, you then met Ms. Elsley and moved
in with Ms. Elsley, is that correct?
A. In 2007.
52 Q. 2007?
A. Yes. We were deciding which home to
move into, mine or hers.
53 Q. You moved to hers?
A. She wanted us to.
54 Q. Where was your other home?
A. My home was on Niagara-on-the-Lake, Line
3. It was a large estate, Concession 2, Line 3.
55 Q. Was it fully paid for?
John Bordynuik - 10
A. No, it was not.
56 Q. No? Now, when you moved into her home,
who paid the bills?
A. I think that we both did.
MS. KIS: What bills do you mean,
counsel?
BY MR. HAWA:
57 Q. All of the household bills and household
expenses, did you contribute to those expenses?
A. Yes.
58 Q. From your own resources?
A. Yes.
59 Q. Did you file income tax returns in 2006,
2007, and 2008?
A. Yes, I did.
60 Q. Would you undertake to provide me with a
copy of your tax return?
MS. KIS: We are going to take that
under advisement, counsel. I am still not convinced
it's entirely relevant. You've asked your questions and
he has given fairly fulsome and responsive answers to
those. I'll take it under advisement.
-- UNDER ADVISEMENT
MR. HAWA: Would you provide me with a
income tax return from the time that you came back to
John Bordynuik - 11
Canada?
MS. KIS: I'll take it under advisement.
-- UNDER ADVISEMENT
BY MR. HAWA:
61 Q. When did you come back from Paul Allen's
enterprise?
A. It was 2003 or 2004.
62 Q. That is when you returned to Canada?
A. Yes.
MR. HAWA: So would you undertake to
provide me with income tax returns for 2004 and 2005?
MS. KIS: We are going to take it under
advisement.
-- UNDER ADVISEMENT
MR. HAWA: Okay. Would up undertake to
provide with a financial statement for the year, the
financial statement of your net worth in 2006, 2007, and
2008?
MS. KIS: Counsel, I don't understand
the difference between a personal financial statement
and tax returns. Why would you need both?
MR. HAWA: There is a difference between
income and assets, Ms. Kis.
MS. KIS: A tax return set out?
MR. HAWA: No, of course not.
John Bordynuik - 12
MS. KIS: Take it under advisement.
-- UNDER ADVISEMENT
MS. KIS: What was the date for the
financial statements?
MR. HAWA: Financial statements for
2006, 2007, and 2008, personal financial statement, just
with the rough net worth with underlying documents.
63 Q. So you are saying, would you say, it's
wrong if Ms. Elsley alleges that she paid all the bills
and financed the entire operation that you were
attempting to undertake in 2006, 2007 and 2008?
A. Absolutely.
64 Q. Would you say that she is lying if she
said she maxed her credit cards, maxed her lines of
credit, liquidated her RSPs, mortgaged her home all
during the period of time when you began living with Ms.
Elsley?
A. When I met Ms. Elsley in 2006, she had a
360,000 line of credit. She had two $25,000 maxed Royal
Bank cards. She had a maxed CIBC. She had a lawsuit
against her and she was a mess.
65 Q. When you met her in 2006?
A. Yes.
66 Q. When you moved in 2006, you met her
prior?
John Bordynuik - 13
A. Well, I am referring between 2006
and 2007 in that area.
67 Q. Yeah.
A. When I, after I was in the house for a
while, I learned that she was completely broke.
68 Q. Had she been assisting you in any way
prior to that before you moved in?
A. Absolutely not.
69 Q. Did she assist you after you moved in
with your enterprise? First, it was A1 and then it was
JB, is that right?
A. Yes. In JB, she did an investment from
her locked RSP for $120,000 in the October or November
of '06.
70 Q. So why did you feel compelled to first
give her 50% of the company?
A. I didn't.
71 Q. Well, you drafted a shareholders
agreement where she would be 50% owner.
MS. KIS: Counsel, what share purchase
agreement are you talking about? What company are you
talking about?
BY MR. HAWA:
72 Q. Did you not draft a share purchase for
JBI Ontario wherein she would be a 50% owner?
John Bordynuik - 14
A. No.
MS. KIS: What document?
MR. HAWA: I am just asking a question.
THE WITNESS: In fact, she couldn't
be --
MS. KIS: You are asking a question
about a specific document, counsel. Can you put that to
the client.
BY MR. HAWA:
73 Q. I am not going to pull the document yet.
I am asking a question. Did you have any kind of
agreement with her with regards to JBI Ontario?
A. Yes.
74 Q. What kind of agreement did you have?
A. Well, we signed a number of documents
because it involved her locked RSP so it involved her
owning a small percent of the company.
75 Q. What percentage was that?
A. It was around 1 to 5%.
76 Q. Of JBI Ontario?
A. Of John Bordynuik Inc. Ontario.
77 Q. 1.5?
A. 1 to 5. Somewhere in there.
78 Q. Did you sign a shareholders agreement in
that regard?
John Bordynuik - 15
A. Yes, we did. Both of us.
79 Q. So you provided her shares of JBI
Ontario as a result?
A. That's correct.
80 Q. Certificate included?
A. That's correct.
MR. HAWA: Would you undertake to
provide a certificate for JBI Ontario?
MS. KIS: We'll take it under
advisement.
-- UNDER ADVISEMENT
A. Hold on a sec. I could provide the
document, but she has the certificate. I can only
provide the documentation showing --
MR. HAWA: Could you provide any
resolution of JBI Ontario wherein in the resolution you
issue shares to her?
MS. KIS: We'll take it under
advisement, counsel. I am not sure how readily
available some of that document is. It's all under
storage. So we'll take it under advisement.
-- UNDER ADVISEMENT
BY MR. HAWA:
81 Q. Do you have a corporate minute book left
for JBI Ontario?
John Bordynuik - 16
A. Somewhere at the new company.
MR. HAWA: Would you give me a copy --
would you undertake to provide me with a copy of the
resolution regarding all outstanding shares of JBI
Ontario and a shareholders ledger?
MS. KIS: We'll take it under
advisement.
-- UNDER ADVISEMENT
MR. HAWA: Okay. So you said --
MS. KIS: Hold on, counsel. You are
going very fast. I want to take proper notes to get
this to you if we are going to produce it somewhat
expeditiously. So you want an under advisement of all
outstanding --
MR. HAWA: Under advisement.
MS. KIS: You want an undertaking. I am
giving you an under advisement.
MR. HAWA: I want a copy of the
resolutions authorizing shares of JBI Ontario. I want a
copy of any resolution authorizing and issuing shares to
any shareholder of JBI Inc. Ontario.
MS. KIS: Of any shareholder.
MR. HAWA: Yep. Excuse me. I want a
copy of the resolution stating the number of outstanding
shares of JBI Ontario and a copy of the resolution
John Bordynuik - 17
issuing shares to Sandra Elsley.
-- UNDER ADVISEMENT
BY MR. HAWA:
82 Q. So let me ask you. How many shares are
outstanding in JBI Ontario when she first got involved?
A. I couldn't tell you.
83 Q. Okay. Now, when Sandra first became
involved, you were with AI, is that correct?
MS. KIS: Sorry, counsel, is the
question when him and Sandra first became involved
romantically?
BY MR. HAWA:
84 Q. In 2006.
A. AI was John Bordynuik Inc. was already
incorporated.
85 Q. In?
A. In July 2006, I think.
86 Q. Were you the only shareholder initially?
A. Yes, I was.
87 Q. Then she became the second shareholder?
A. Yes.
88 Q. You say it was about 1 to 5% of the
outstanding shares?
A. Yes.
MR. HAWA: Could you provide me with a
John Bordynuik - 18
shareholders ledger at that time when she was the second
shareholder?
MS. KIS: We'll take it under
advisement.
-- UNDER ADVISEMENT
BY MR. HAWA:
89 Q. Now, I will jump a little bit, but why
did she become a 13% holder of JBI Delaware?
A. We had approximately seven shareholders
at around late, trying to get the time here, around
late 2007. We all sat down and decided on this share
structure so additional shares were issued to some
people for nominal amounts.
90 Q. That it around the end of 2007?
A. Yes.
91 Q. By then you had about seven
shareholders, you said?
A. I think so. Somewhere around there.
92 Q. So around then, that is for JBI Ontario
you provided her with enough shares to make it 13%?
A. That's correct.
93 Q. I see. So she became a 13.1%
shareholder of JBI Inc. Ontario?
A. That is correct.
94 Q. At around the end of 2007?
John Bordynuik - 19
A. Yes.
95 Q. Did anybody lend money to the company at
that time?
MS. KIS: Which company, counsel?
MR. HAWA: JBI Ontario.
A. Yes.
96 Q. Who?
A. Malcolm Stark.
97 Q. How much did he lend?
A. I couldn't tell you.
98 Q. Who else?
A. Pat Widdis.
99 Q. And how much did she lend?
A. I couldn't tell you.
100 Q. Was it around 200,000?
A. Maybe.
101 Q. Was she a shareholder?
A. Not at that time, no.
102 Q. So she was just a lender?
A. Yes.
103 Q. Did she become a shareholder of JBI
Ontario?
A. Yes, she did.
104 Q. She did. What about the other lenders,
did they become shareholders as well?
John Bordynuik - 20
A. Yes, they did.
105 Q. Were they both shareholders at the same
time or lenders first and then shareholders?
A. No, they decided to convert debt to
equity in 2008.
106 Q. In 2008?
A. I believe so, yes.
107 Q. So the total debts of these seven
shareholders who lent money, are these the ones that
lent money to the company, the additional seven
shareholders?
A. Yes.
108 Q. They lent money and became the initial
shareholders?
A. No, no, the initial seven shareholders
were I think was Brian Seburn.
MS. KIS: Spell the last names for the
reporter.
A. S-E-B-U-R-N, John Papavicky (ph), and I
can't spell that one. There was myself, Sandra Elsley,
a trust established for my children. There was -- it
was staff. I just don't remember who.
109 Q. There was seven shareholders?
A. Yes.
110 Q. Aside from the lenders?
John Bordynuik - 21
A. That's correct.
111 Q. And how many lenders were there?
A. I couldn't tell you.
112 Q. What about, you couldn't tell me. Was
it 3 or was it 17?
A. Maybe. I would be guessing. Half a
dozen.
MS. KIS: Don't guess, John.
THE WITNESS: I don't know.
BY MR. HAWA:
113 Q. Well, it was not 100 and it was not 2?
A. That's correct.
114 Q. It was a few, okay. Now, the lenders
then also became shareholders?
A. Yes.
115 Q. In addition to the seven?
A. Yes.
116 Q. That is around the end of 2007,
beginning of 2008, is that correct?
A. It was somewhere in that time period.
117 Q. And the primary business of JBI Ontario
was the tape legacy, tape legacy data reading business,
right, the legacy data reading business, was that
correct?
A. We were sole sourced by NASA to read
John Bordynuik - 21
their data.
118 Q. To read their data. Did the company
have revenues?
A. Yes, it did.
119 Q. Approximately how much in '07?
A. Maybe 40 or 50,000.
120 Q. In '08?
A. I couldn't tell you.
121 Q. Okay.
A. We were going through a sole source
process with NASA, which took a lot of time.
122 Q. Yes. Is it a patented technology?
A. Yes. We filed for patent protection.
It is not patented yet, but we filed for patent
protection.
123 Q. Yes. Now, during that time, it seems
that the number of shareholders increased, is that
right?
A. That is correct.
MS. KIS: What timeframe, counsel?
MR. HAWA: The end of '07 and beginning
of '08.
124 Q. Was Sandra Elsley instrumental in
contacting new shareholders?
A. She contacted her, some of her family
John Bordynuik - 23
and friends, and I understand she contacted others that
I have learned of more recently.
125 Q. There was about 252 shareholders in
around 2008, is that correct?
A. I couldn't tell you what the total
number was.
126 Q. It was a few hundred, though, wasn't it?
A. It was in the hundreds.
127 Q. Was there an offering memorandum or
prospectus done?
A. There was no prospectus done. There was
a private placement document done.
128 Q. Like an offering memorandum?
A. Something like that.
MS. KIS: The timeframe you are dealing
with is 2008, is it not?
BY MR. HAWA:
129 Q. The end of 2007, 2008.
A. That's when we started that offering.
130 Q. Yeah. And so did you contact any
shareholders and sell shares?
A. Yes, I did.
131 Q. How many shareholders did you contact?
A. Quite a few, probably 60, 70.
132 Q. And the balance were contacted by
John Bordynuik - 24
Sandra?
A. No.
133 Q. No?
A. Not at all.
134 Q. Aren't most of those shareholders her
contacts, her friends, her relatives?
A. No, they are Steve Doede's contacts and
friends. They are Brian Seburn's contacts and friends.
They are Katie Matakowski's family and friends. They
are Steve Clark's family and friends and many other
staffs family and friends. In addition to that some of
the people we did business with like our landlord and
other people we met through this business.
135 Q. The 252 shareholders, was there any
restrictions on the minimum amount that they could
invest?
A. I don't recall.
136 Q. Some of them were small shareholders,
weren't they, a few thousand shares?
A. Yes.
137 Q. You did a consolidation, didn't you, or
you did a share split in JBI Ontario?
MS. KIS: When, counsel?
MR. HAWA: Sorry?
MS. KIS: When was the timeframe?
John Bordynuik - 25
BY MR. HAWA:
138 Q. In around 2008, wasn't there a share
split of 125 to 1?
A. Something like -- I don't recall exactly
what that was.
139 Q. You did that in JBI Ontario?
A. I don't know if that happened in JBI
Ontario or JBI Delaware. I'd have to look at the
records.
140 Q. Or you just transferred the shares 125
to 1 basis to Delaware, right?
A. I couldn't tell you. I would have to
see the agreements.
141 Q. Now, you then took the shares. You had
252 shareholders and the raise was about $3 million, was
it not?
MS. KIS: What do you mean "the raise",
counsel?
BY MR. HAWA:
142 Q. The raise from the shareholders. You
raised about $3 million, isn't that correct?
MS. KIS: From the initial --
MR. HAWA: -- 252 shareholders.
BY THE WITNESS: Referring to in the --
143 Q. Around 2008 for JBI Ontario?
John Bordynuik - 26
A. JBI Ontario in, somewhere by June or
July I believe the offering had finished the PIPE, and
it was, I don't know how many shareholders there were.
It was hundreds but, in any event, it was around
three million.
144 Q. It was around three million. So that
was the PIPE and all 252 came into this investment,
correct?
A. You're saying 252?
145 Q. There were several hundred shareholders
as you said, came into this investment?
A. Yes.
146 Q. Now, so you characterize that as a PIPE.
Isn't that a U.S. acronym, Private Investigator Public
Enterprise?
A. We called it at the time it was Public
Investment Private Equity, and we also had on the U.S.
side, I think it's Private Investment and Public Equity.
So there is two different usages of it.
147 Q. So in Ontario you are characterizing it
as a PIPE, but it was a different usage?
A. Yes.
148 Q. But in Ontario you also characterize it
as an IPO, is it not?
A. That's another term that could be used
John Bordynuik - 27
for it, yes.
149 Q. It was not really an IPO within the
rules of the security laws in Ontario?
MS. KIS: Counsel, that's a legal
question.
BY MR. HAWA:
150 Q. Did you get legal advice? Did you get
legal advice on issuing shares to all these
shareholders?
A. Yes.
151 Q. And you were told you could sell these
shares to everybody that participated?
MS. KIS: Counsel, isn't that privileged
information, what information Mr. Bordynuik would have
received from his lawyers?
BY MR. HAWA:
152 Q. In any event, you said that there were
two kind of PIPEs now. The one in Ontario, what did you
call that again?
A. We called it a, it was either a PIPE.
There is a number of different terms to use for it. The
bottom line is an investment in a company.
153 Q. Right. So you called that initial
investment by the few hundred shareholders in Ontario a
Private Investment Public Equity?
John Bordynuik - 28
A. No, public Investment Private Equity,
something like that.
154 Q. And you reversed that for the U.S. PIPE?
A. That's right.
155 Q. So that's your understanding of a PIPE?
A. Yes.
156 Q. Now, who was not in the PIPE?
A. I couldn't even begin to --
157 Q. Of the several hundred initially in
Ontario, were they not all part of that?
A. Well, Sandra Elsley wasn't.
158 Q. Why not?
A. She didn't invest in it.
159 Q. You said earlier she invested $120,000.
A. She invested 120,000 in 2006. That has
nothing to do with a PIPE in 2008.
160 Q. Okay. But you allocated 13% to her, in
any event?
MS. KIS: 13% of what?
BY MR. HAWA:
161 Q. Of the shares of JBI Ontario?
A. That is correct.
162 Q. And the rest got their proportional
number of shares in JBI Ontario pursuant to their
investment in that so-called PIPE?
John Bordynuik - 29
A. Yes, but Sandra's 13% was much later.
In the early stage, it was maybe a percent or two. It
was not very much.
163 Q. But it became 13.1 around the end of
2007 beginning of 2008?
A. Somewhere there, yes?
164 Q. And that's when you raised the money, is
it not? When did you raise the money?
A. We were raising money I think it was
during that time or near that time.
165 Q. So that, so that so-called PIPE was
around the end of 2007 and beginning of 2008?
A. Yes, I believe so.
166 Q. The amount of money raised was about how
much?
A. 3 million.
167 Q. $3 million. Did JBI Delaware, who you
purchased in 2008, right? You purchased JBI Delaware
June 2nd, 2008, isn't that correct?
A. I couldn't tell you the exact date.
168 Q. Okay. Did it raise any money with a
PIPE?
A. No.
169 Q. Did it raise any money at all?
A. No.
John Bordynuik - 30
170 Q. So you had this company with this
technology and some cash in Ontario around the beginning
of 2008, correct?
MS. KIS: That's JBI Ontario you are
referring to, counsel?
BY MR. HAWA:
171 Q. JBI Ontario?
A. That's correct.
172 Q. And you made a decision. Now, from
those, did you draw a salary from that money?
MS. KIS: From what monies?
BY MR. HAWA:
173 Q. From the monies raised by the
shareholders and JBI Ontario?
A. All employees did.
174 Q. How many employees did you have?
A. I think that we had maybe seven or eight
at that time, seven or eight at least. Plus, we had all
the tape reading people. Part-time people, we had quite
a few. Full-time people, we probably had seven or
eight.
175 Q. You made a decision to go public in the
U.S., right?
MS. KIS: When you say, you, there is
three separate corporations we also talked --
John Bordynuik - 31
BY MR. HAWA:
176 Q. You, John Bordynuik, made the decision
to go public in the U.S.?
A. All of the staff, we all got together,
including Sandra Elsley, and decided to do that in 2008.
177 Q. You purchased JBI Delaware for that
purpose?
A. That is correct.
178 Q. That was in June of 2008 from a
Ms. Sheila Hunter, is that right?
A. Yes, that's correct.
179 Q. You purchased how many shares of JBI
Delaware?
A. I couldn't tell you.
180 Q. 58 million. Sorry, 100,000, does that
sound reasonable?
A. That's possible.
181 Q. For how much, do you remember?
A. It was very little.
182 Q. About $30,000, is that about right?
A. It might be.
183 Q. So you paid $30,000 for the shell
approximately for JBI Delaware. You paid 30,000 for JBI
Delaware?
A. Anslow & Jaclin was working with us to
John Bordynuik - 32
go public so they set up the structure for us to do
that.
184 Q. Yes, they set up the structure for you
to do that?
A. Yes.
185 Q. So where did the $30,000 come from?
A. It came from me.
186 Q. John Bordynuik or JBI Inc.?
A. John Bordynuik.
187 Q. You paid for that. Where did the money
come from, from your bank account or did someone lend it
to you?
A. No, it had to come from, it had to come
from John Bordynuik Inc. Ontario owed me some money, and
it had to come from that.
188 Q. I see. So you purchased the shares of
JBI Delaware, which was a dormant shell really, was it
not?
A. No, it was specifically set up to, it
was a blank cheque company specifically set up by Anslow
& Jaclin to go public.
189 Q. It was doing an initial S1 an IPO
instead of having been public. It had not been public,
is that what you say?
A. It never had been public.
John Bordynuik - 33
190 Q. I see.
A. It had been I believe reporting. Maybe
not. No, I would be guessing.
191 Q. It must have been active in the public,
otherwise, why would you pay $30,000 to incorporate
essentially?
A. Well, in order to get a blank cheque
company, they costed a lot more at that time. There
were three different tiers of company. You just
couldn't take a regular company. And then I think it
had something to do with the fact that it was registered
with the SCC. There was something there, but it was
referred to as a blank cheque company. It was not
trading. Its securities had not been through any kind
of registration or any kind of offering. It had just
been created for the sole purpose of creating a vehicle
for a company to merge into and then go through the
process of going public.
192 Q. So you made the decision -- now in the
reporting there, it indicates that as of 2008, JBI
Delaware had $2.6 million. But you wouldn't agree with
that, would you?
A. In what, reporting?
193 Q. Well, JBI Delaware had no money, right?
A. That's correct.
John Bordynuik - 34
194 Q. Now, you merged JBI Ontario in February
of 2009 with JBI Delaware, right? You did a share swap,
did you not?
A. There was some kind of transaction that
Anslow & Jaclin set up to acquire the shares of JBI
Ontario.
195 Q. Do you remember how many shares were
issued by JBI Delaware?
A. I have no idea.
196 Q. Does 58 million sound reasonable?
A. If we have the documents, I can look at
them and verify that.
197 Q. Let me put it this way. Sandra Elsley
was issued 7.7 million shares, isn't that correct,
7.75 million shares?
MS. KIS: Counsel, I don't know if there
is a reason why. If you have the supporting document
that we can reference, it would probably be easier
rather than him guessing. It's your examination. It
just seems --
MR. HAWA: I don't really want to get
into the specifics of the numbers.
198 Q. I just want to advise you that you
provided, when I asked you and you confirmed you
provided Sandra Elsley 13.1% of the shares of JBI
John Bordynuik - 35
Ontario, right?
MS. KIS: At what time?
MR. HAWA: This is in 2007 and 2008.
199 Q. Now, you said that earlier, okay. You
said that earlier, you provided her with 13.1%.
MS. KIS: Counsel, I don't think that
was exactly his evidence.
MR. HAWA: That was his evidence that
she became a 13.1% shareholder of JBI Ontario.
MS. KIS: It is the "you gave her" that
I have an issue with, counsel. I think the evidence
that my client has given is that there was a meeting
that this was discussed among all seven shareholders of
JBI Ontario. It is going to make the record incredibly
confusing if we are talking about you and we mean JBI
Ontario and Mr. Bordynuik at the same time or if we mean
JBI Ontario or JBI Delaware.
BY MR. HAWA:
200 Q. You, John Bordynuik, provided, and JBI
Ontario and you made the decision to provide her with
13.1%. Why did you increase it to 13.1? It was 1 to
5%. Why did you increase it, or why did you or JBI
Ontario increase it to 13.1?
A. It was a meeting that we had at that
time. I don't recall why.
John Bordynuik - 36
201 Q. When you then merge with JBI Delaware,
she then again owned 13.1%, did she not, of JBI
Delaware?
A. We had completed a share swop agreement.
But from what I recall, the share swop itself never
actually occurred.
202 Q. But the S1 listed the shareholders, did
it not?
A. Yes, it did.
203 Q. It listed all the shareholders including
Sandra Elsley, right?
A. Yes, it did.
204 Q. On the JBI Delaware registration of
shares?
A. Yes, it did.
205 Q. On that, am I wrong to say that she
owned 13.1% of the outstanding shares?
A. She owned 13.1% of the outstanding
shares in JBI Delaware. That is what we were telling,
yes, the structure would be in early 2009.
206 Q. Early 2009. We are in agreement on
that?
A. Well, what we are saying that is what we
are proposing the structure to be, and we are also
proposing what the registered shares would be.
John Bordynuik - 37
207 Q. Yes, yes.
MS. KIS: Counsel, do you object if I
put, you produced the S1 in your motion record.
MR. HAWA: It's in the motion record,
yes.
MS. KIS: So I am asking if you object
to me putting this to him.
MR. HAWA: We are in accord on it.
208 Q. That was around February 9th of 2009,
isn't that right?
A. The share --
209 Q. The merger?
A. The share swop occurred on February 9th,
2009. That was when the agreement was executed.
210 Q. Yes. Now, within a couple of months of
that, you purchased the shares of 310 Holdings, isn't
that right?
A. On either April 23rd or April 24, I
purchased shares, not from the company. I purchased
them from the majority shareholder of 310 Holdings, the
public company.
211 Q. Nicole Wright?
A. Yes, that is correct.
212 Q. How did you find Nicole Wright?
A. A number of capital companies were
John Bordynuik - 38
contacting us at that time, because going public in the
U.S. was near impossible after the financial collapse
and all the problems. So I believe at some point a
Beverly Hills Capital had contacted me about, we had
originally looked at trying to get a public company
shell that was trading, but it was impossible in '08.
And '09, because the markets had crashed, they were very
inexpensive.
213 Q. So you bought control for $80,000,
right?
A. That is correct.
214 Q. So Beverly Hills Capital approached you,
and there was another few of these companies that were
shareholders. It was a shareholder, wasn't it, Beverly
Hills Capital?
A. There was about 20.
215 Q. Shareholders?
MS. KIS: Of what?
MR. HAWA: JBI, JBI Nevada.
THE WITNESS: No, 310 Holdings.
BY MR. HAWA:
216 Q. That became JBI Nevada?
A. And I spoke with Nicole Wright and --
217 Q. Beverly Hills Capital put you in touch
with her?
John Bordynuik - 39
A. Yes.
218 Q. And they contacted you ad hoc because
they picked up that you were now involved trying to go
public in the U.S., is that how Beverly Hills --
A. We had many of those.
219 Q. You had many of those people calling
you?
A. Oh, yes.
220 Q. To try to sell you a shell?
A. That's correct.
221 Q. And a trading shell, so to speak, a
clean shell, a trading shell?
A. Trying to sell us a way to go public
that would have been prohibited before.
222 Q. So Beverly Hills Capital. Who was the
person who contacted you from Beverly Hills Capital?
A. Mark Portabello and --
223 Q. Mark Portabello. And Westside Capital
another shareholder, do you know about them?
A. I can't recall.
224 Q. There were a few corporate shareholders,
weren't there, Beverly Hills Capital included?
A. There always is.
225 Q. And Nicole Wright had the majority of
stock, did she not?
John Bordynuik - 40
MS. KIS: In which company?
BY MR. HAWA:
226 Q. We are talking about 310 Holdings JBI
Nevada?
A. In 310 Holdings, Nicole Wright owned the
non-trading control stock.
227 Q. Non-trading control stock. When you say
non-trading, does that mean after a holding period it
would become trading?
A. No, there are more, there are more tests
than just that, and it's an affiliate stock. It has a
totally different meaning then the other stock. Her
stock was not registered. The other stock was
registered.
228 Q. But it could be registered, could it
not?
A. If the company, well, if the company
filed a registration statement and went through the full
registration process with the SCC.
229 Q. In order to register the stock for
trading?
A. That's right.
230 Q. And then there would be a holding period
and then it would be saleable?
MS. KIS: Counsel, isn't that a legal
John Bordynuik - 41
question.
MR. HAWA: It is. He may know it as a
fact.
MS. KIS: If you are asking his
understanding, I am comfortable with it, but asking for
it as a legal point.
BY MR. HAWA:
231 Q. Well, I am asking for your
understanding.
A. My understanding is, in order for a
stock to be even tradeable, a few things had to occur;
one, the company would have to file a Super 8-K. It
would have to be current in its filings, hold the stock
for no less than one year, meet the nominal operations
and other conditions placed by FINRA and the SCC. There
were a number of them for that kind of a company.
232 Q. The, you purchased 40 million or
42 million shares from Nicole Wright?
A. It's in the documentation.
233 Q. Well, you state in your defence that it
was $42,250,000, is that correct?
MS. KIS: What tab is that at, counsel?
MR. HAWA: That is in your affidavit,
the first affidavit in the initial motion record and --
MS. KIS: I think it's tab B, counsel.
John Bordynuik - 42
MR. HAWA: Tab B?
MS. KIS: Yes.
MR. HAWA: Of the -- it is tab B. I
just have the affidavit because that's how you sent it
to me. I don't have it bound. I suppose you were in a
rush at the time. Tab B --
A. I said I purchased 40,250,000.
MS. KIS: It's paragraph 26 of the
Statement of Defence, counsel.
MR. HAWA: There is paragraph 26 and
then there is paragraph 40, which says 42 million shares
and paragraph 41 says 42,250,000 shares?
MS. KIS: What is the other?
MR. HAWA: And paragraph 39 says the
same.
234 Q. How many was it?
A. It's in the filings. It was all the
shares that she owned. It was already filed with the
SCC and it's public.
MS. KIS: We can undertake to get you
whether it was 40 or 42.
-- UNDERTAKING
BY MR. HAWA:
235 Q. Okay. Of the 42, you purchased the 42
or 40 million shares of JBI Nevada, which was, we'll
John Bordynuik - 43
call it JBI Nevada. It was 310 Holdings Inc. It became
JBI Inc. which is JBI Nevada?
A. Later in 2009, it did, yes.
236 Q. Later in 2009.
A. Could I get some water?
-- OFF THE RECORD DISCUSSION
--- BACK ON THE RECORD AT 10:53 a.m.
BY MR. HAWA:
237 Q. So I just want to back up, and I wanted
to ask you a question about the PIPE. The only PIPE
that raised money, so to speak, for -- prior to, prior
to your acquisition of JBI Nevada, was the PIPE that you
did in Ontario, isn't that correct?
MS. KIS: For JBI Ontario.
BY MR. HAWA:
238 Q. For JBI Ontario?
A. Yes.
239 Q. Now, so you characterize that offering
to the shareholders where a few hundred came in in
Ontario as the PIPE?
A. Well, 1, 200. It could be up to even
300 somewhere in there, somewhere in the lower, not 100.
240 Q. I understand. Now, of the few hundred
were the majority of them in the PIPE, of the few
hundred shareholders in Ontario, did the majority come
John Bordynuik - 44
in when you did do the PIPE in Ontario? You had seven
shareholders initially, as you said?
A. Yes.
241 Q. Sandra was one of them?
A. Yes.
242 Q. Were they part of the PIPE, those seven,
or were they not?
A. Some of them chose to be.
243 Q. So they invested more money, is that the
idea?
A. That's correct.
244 Q. And some did not of the seven?
A. I don't recall. They might have. They
may not have. I know that Sandra Elsley did not. I am
trying to recall if anyone else didn't.
245 Q. She may have been the only one who
didn't?
A. I don't know if that's a fair statement
but --
246 Q. What about Pat Widdis? How did she
become an investor in the PIPE?
A. I think that she converted her debt to
equity and invested in the PIPE. I think it was both, I
believe.
247 Q. So when she converts her debt to equity
John Bordynuik - 45
that is called participation in the PIPE. It's just
automatic?
A. Yes.
248 Q. I see. And Sandra could not convert her
shares into PIPE shares?
A. She didn't have to.
249 Q. She didn't have to because she owned
shares?
A. Yes.
250 Q. You make some distinction between PIPE
owners and PIPE participants and non-PIPE participants
in order to qualify for proportionality in JBI Nevada.
Do you recall that, or should I take you through it?
A. Well, I recall that there were issues
with it. If you're referring to when I bought 310
Holdings and decided how the shareholders in John or
gosh --
251 Q. JBI Delaware?
A. Yes, could move over to 310. That was
also with the original shareholders of 310.
252 Q. And you made some distinction between
PIPE holders and non-PIPE holders?
MS. KIS: At that time?
THE WITNESS: At that time, yes.
John Bordynuik - 46
BY MR. HAWA:
253 Q. So when you send out your bulletin or
newsletter, you send it out to all the shareholders of
JBI Delaware to advise of your plans with JBI Nevada,
did you not?
A. Which bulletin?
254 Q. I'll take you to --
MS. KIS: I know what you are talking
about, counsel. It's the supplementary motion record.
And it is tab L.
MR. HAWA: There it is.
MS. KIS: And it is a forward --
MR. HAWA: Is it tab L?
MS. KIS: It is an e-mail from Best Real
Estate Buy Incorporated to Mr. Bordynuik, but it's
forwarding or attaching --
MR. HAWA: Mine is not tab L in the
supplementary. Let's get it straight, the initial
responding materials, the initial responding materials.
MS. KIS: No, the supplementary?
MR. HAWA: Is that it, the e-mail that
you provided?
MS. KIS: It is that. Three pages in.
MR. HAWA: Okay. Good enough.
MS. KIS: What I am saying from this
John Bordynuik - 47
e-mail address at the end of it, it actually attaches
the e-mail that went to the shareholders.
BY MR. HAWA:
255 Q. So is this the one to the shareholders
of John Bordynuik Inc. now, we are looking at? It's
page 2, is it not?
A. Right. We had, at that time, we managed
-- there was some kind of an e-mail subscription program
through I Contact that would allow us to send updates to
folks that had put their e-mail address in the PIPE
share subscription documents.
256 Q. Put their e-mail address in the PIPE
subscription documents. Now, are you saying that they
would be entitled to, because you are promising the JBI
Delaware shareholders you would be going public soon,
but you couldn't do it?
A. We are trying. FINRA had sent us a
letter stating that they would not allow the stock to be
Rule 144, except under rule 144.2. We also had a
significant comment letter from the SCC, plus, with all
the challenges of Anslow & Jaclin and trying to bring
anything public was near impossible, we realized that
going public with Delaware was going to be virtually
impossible at that time.
257 Q. And so --
John Bordynuik - 48
A. And restricted stock.
258 Q. So you made a quick decision. Within
two months you bought -- Beverly Hills Capital contacts
you and you buy 310 Holdings?
A. That's correct.
259 Q. And you had been, of course, contacted
prior to April by Beverly Hills. So you bought, you
merged with Delaware. But prior to your acquisition of
JBI, you had been looking and talking. When did you
first start contacting companies like Beverly Hills?
You say they were always contacting you?
A. No, after the crash had occurred in the
spring of 2009, we were getting contacted by companies.
We were getting contacted in 2008 after I had purchased
the Delaware shell. However, the price and cost of
those things were so high and the amount of stock that
would be remaining or that would be held by the original
founders were so high that it was not worth doing.
260 Q. But you had not planned on doing it
initially when you merged Ontario, JBI Ontario and JBI
Delaware in February of 2009? You were planning at that
time by February to take Delaware public, right?
A. That's correct. We tried really hard to
do that.
261 Q. You tried hard to do that between
John Bordynuik - 49
February and April?
A. Yes.
262 Q. So, but prior to April you had been
already engaged in talks to purchase another public
shell?
A. Not too far, not to much earlier,
because it didn't take all that much. It was a very
small company. It had basically no operations. So it
didn't --
263 Q. When did you make first contact with
Beverly Hills Capital?
A. It might have been some time in April.
264 Q. So you made a quick decision --
A. Yes.
265 Q. -- to buy that shell?
A. Yes.
266 Q. Because Delaware was stagnating?
A. No, not at that time, no. It was, I
actually thought at that time it was an insurance
policy. I looked at it that way for the cost of the
80,000 shares in the event that there were problems or
anything. It was just finally, it was something that we
originally wanted to do in '08 but just couldn't.
267 Q. I see. So you were assuring the
shareholders of Delaware that you would be going public.
John Bordynuik - 50
You didn't do it through Delaware. You further assured
them that you would be doing it through JBI Nevada?
A. I didn't assure anybody. I tried my
best. We did everything that we could to get our
financial statements in to get everything into the SCC
to get Delaware public. That's the way that we wanted
to go public. That was the most cost-effective route.
268 Q. And anybody who participated, as you
say, in that PIPE in Ontario that became part of
Delaware who became part of Delaware, they were not
distinguishable when they became part of Delaware when
the shareholders of Ontario, the PIPE shareholders in
Ontario became shareholders of Delaware?
A. What do you mean "they were not
distinguishable"?
269 Q. The ones who are PIPE owners, as you
say, PIPE participants in Ontario, as opposed to the
ones that weren't. As you said earlier, the ones who
were not PIPE participants were a small number,
including Sandra Elsley, right?
A. Yes.
270 Q. Once they all took shares of JBI
Delaware on the merger, you didn't really distinguish
between them, did you?
A. Well, they were in the filing.
John Bordynuik - 51
271 Q. Which filing?
A. The S1 filing.
272 Q. They were distinguished in the S1 filing
in what way?
A. Well, they were commented by how they
acquired their shares, who they were.
273 Q. What do you mean by "how they acquired"?
They all acquired the shares in the same way, in a share
swop, didn't they?
A. That isn't good enough for the SCC. You
have to say how you acquired your shares in the original
entity.
274 Q. In the original entity?
A. Yes. Or what your relationship was to
the company. All of that had to be disclosed.
275 Q. Okay. So there was some distinction
between the Ontario PIPE and the Ontario non-PIPE
shareholders in the Delaware filings?
A. I believe so, yes.
276 Q. In what way? Can you show us on the S1
filing?
MS. KIS: It is tab G of Ms. Elsley's
first record. I am just going to point, counsel, that
it's a 70-page document.
MR. HAWA: Yes, there is a shareholder's
John Bordynuik - 52
list, page 108.
MS. KIS: I guess I am saying to you
there is some notations with respect to various
shareholders on page 114.
MR. HAWA: 114.
MS. KIS: Yeah. There is some footnotes
that start at, on 113. I am just telling you I don't
know if there is something else contained in the pages
responsive to your questions. If there is, I will
advise you outside of the examinations once I've had a
chance to review all 70 pages, whatever Mr. Bordynuik
can glean from these pages in a short amount of time.
-- UNDERTAKING
THE WITNESS: That is certainly one.
BY MR. HAWA:
277 Q. Where is the, is it something that comes
to you quickly as far as --
A. Well, 114 and 113 is all the footnotes
of who many people are, what the relationship with the
company is.
278 Q. The relationships?
A. Yes.
279 Q. But not PIPE and non-PIPE investors in
JBI Ontario? No distinction there, is there?
A. It does tell them how they became or how
John Bordynuik - 53
they got some shares, like, Larry Maxwell in the course
of ordinary business and at the time of the purchase he
had no agreements or understandings directly or
indirectly with any person that distributed the
securities so at the time that he purchased his shares.
So it is saying 24 is Larry Maxwell. There is also --
280 Q. There is no reference to Sandra Elsley
whatsoever, is there?
MS. KIS: In the note?
A. Yes, there is.
281 Q. Okay.
A. Number 21, "Sandra Elsley was an
employee and non-signing officer of the registrant
subsidiary company until October 2008. Her employment
was terminated with cause in October of 2008 and has no
role in JBI and is now a common shareholder."
282 Q. Okay. So there is no identification of
her as non-party to this? There is no distinction
between her and the other shareholders?
A. Yes, there is in this document. Not in
that particular paragraph but --
283 Q. Just take a few minutes to look at the
document.
MS. KIS: Do you mind if we go off
record to do that?
John Bordynuik - 54
MR. HAWA: Yes, go off the record.
-- OFF THE RECORD DISCUSSION
--- BACK ON THE RECORD
MS. KIS: Counsel, we have taken a look
at this S1 document at tab G of Ms. Elsley's first
motion record. We have been through it. There are some
notations. Like I said, it's a 70 page document, so
we'll undertake to review it thoroughly and provide you
with any indication where there is a distinction made
between the PIPE and non-PIPE, you said alleged PIPE,
and alleged non-PIPE, JBI Ontario participants and
shareholders.
-- UNDERTAKING
MR. HAWA: And if there is a distinction
in that S1 document between those shareholders?
MS. KIS: Yes.
MR. HAWA: Would you also undertake to
provide me with a list of non-PIPE shareholders in JBI
Ontario?
MS. KIS: Yes, if we can find that
information.
MR. HAWA: If you can find that
information.
-- UNDERTAKING
284 Q. Now, you -- this, going back to this.
John Bordynuik - 55
Going back to tab L at, in the supplementary responding
motion record. It's an e-mail from John Bordynuik to B.
Molodynia, and it also states to all shareholders of
John Bordynuik Inc.?
MS. KIS: Sorry, counsel, I put it aside
for a second.
BY MR. HAWA:
285 Q. Would you agree that that e-mail is
assuring the shareholders that JBI Inc. or 310 Holdings
will be public soon and their shares will be tradeable?
A. In this e-mail advising we will be
public next week.
286 Q. Would you agree that you are also
assuring them that they are getting their shares in
direct proportion to their holdings in JBI Delaware?
A. No.
287 Q. No?
A. No, because I actually mention later in
the document that Q & A that any shareholder did not
participate in the three million PIPE, he only received
a maximum of 300,000 free trading stock --
288 Q. Hold on, please. I am asking you are you
not assuring them they will be getting the same
proportion of stock in JBI Nevada as they had in JBI
Delaware?
John Bordynuik - 56
A. I was advising the PIPE holders that
they were.
289 Q. Yes. And that's, of course, by far the
majority of the shareholders, right?
A. Yes.
290 Q. So you were drawing a distinction
somehow between the majority PIPE holders and the few
non-PIPE holders?
A. That's correct.
291 Q. Did someone advise you to do that?
A. No. It's just the way that it was.
292 Q. Why did you do that?
A. Why did I do what?
293 Q. Why did you distinguish between the
so-called PIPE holders, which were by far the majority
and the ones that didn't participate in that PIPE in JBI
Ontario?
A. Well, because the PIPE holders would
want to know how this affects everyone in the company.
So I outline in here that some employees, myself, were
receiving, receiving either less stock or different
stock that was not free trading and subject to
restrictions or what have you. So it was important to
outline what the deal was to disclose it.
294 Q. So all PIPE owners were getting
John Bordynuik - 57
unrestricted stock?
A. Yes.
295 Q. Even if it was over 300,000 shares?
A. That's correct.
296 Q. So if you would be a PIPE holder and
get, if you participated in the PIPE in Ontario, you are
saying that you would get an unlimited number of
unrestricted stock?
A. No, the issue was it was a cost basis.
So if you put $1 million in the company, and you had
2 million shares, you were going to get, you had a cost
basis of 50 cents a share, you were going to get those
shares from the original shareholders.
297 Q. You were going to get the shares from
the original shareholders of JBI Nevada?
A. That's correct.
298 Q. So you made that arrangement with the
original shareholders of JBI Nevada that they give up
their shares for a minimal amount of money?
A. Yep, that's usually how these deals are
done.
299 Q. In order to accommodate all of the
shareholders that were expecting a proportional number
of shares as they had in JBI Delaware?
MS. KIS: Say that question again,
John Bordynuik - 58
counsel, I am sorry.
BY MR. HAWA:
300 Q. You made the arrangement with the
shareholders of, the previous shareholders, these
corporate shareholders like Westside Capital and Beverly
Hills Capital, you made these arrangements for nominal
amounts, an insignificant amount of money?
A. It was not always that, no.
301 Q. It was a tenth of a cent, wasn't it?
A. Some weren't.
302 Q. Most of the share purchase agreements
were for a tenth of a penny, were they not?
A. Not all of them. There were some people
that paid more.
303 Q. From the other shareholders of JBI
Nevada?
A. No, from the original shareholder.
304 Q. Of JBI Nevada?
A. No, of 310 Holdings.
305 Q. Of 310 Holding, which is JBI Nevada?
A. We are at this period of time where the
company has stated throughout these documents is 310
Holdings. I am trying to be consistent with what time
period we are at.
306 Q. Right. So you are saying that a lot of
John Bordynuik - 59
them paid a tenth of a penny, did they not, the
shareholders from Westside Capital?
A. Yes.
307 Q. A tenth of a penny for their shares. It
was a nominal amount, was it not?
A. Yes.
308 Q. And those shareholders that paid a
nominal amount to these other shareholders of 310, they
got a proportionate number of shares. They just didn't
buy any amount of shares that they wanted for a tenth of
a penny, did they not?
A. No, they couldn't or they could buy on
the open market or --
309 Q. Anybody could buy on the open market.
Anybody could buy on the open market, I suppose. There
was a listing, wasn't there?
A. Yes.
310 Q. Yes. But that is not the way that it
was being done. It was not being done on the open
market. It was being done through the shareholders of
JBI Nevada who agreed to sell their shares for a nominal
amount of money, correct?
A. Correct.
311 Q. Back to the shareholders of JBI
Delaware?
John Bordynuik - 60
A. Correct.
312 Q. And this had nothing to do with 310.
These were transactions that you arranged between the
shareholders?
A. I didn't arrange it. It was arranged by
Beverly Hills Capital and some other brokers there. I
negotiated it. That was it.
313 Q. You negotiated it, because JBI Nevada
had no interest in any of this, did it? 310 had no
interest in any of this?
A. 310 Holdings was a new company that had
plastic to oil and wanted to bring the tape business
into it and with them.
314 Q. Yes. But you have these few hundred
shareholders of JBI Delaware who promised to go public
for a number of months. Now, finally, they are going
public through another vehicle, right?
A. Right.
315 Q. So in order to orchestra that, they were
getting these PIPE holders, which were by far the
majority, as you said, these PIPE holders were getting a
proportionate number of shares from the existing
shareholders from JBI Nevada/310 Holdings, correct?
A. That's correct.
316 Q. So it was not that they can access as
John Bordynuik - 61
many shares as they wanted from the pre-existing
shareholders, correct?
A. They could go to them and do that if
they want. It was a public information that I bought it
April of 2009.
317 Q. But that's not the way that it was being
done. They were getting a proportional number of shares
in JBI Nevada/310 Holdings in order to accord with their
shareholdings in JBI Delaware?
A. The PIPE people did.
318 Q. The PIPE people did.
A. My dad, Steve Doede, Sandra, myself did
not.
319 Q. But you offered Sandra that, did you
not? You did? You got 40 million.
A. No, I had to return most of them.
320 Q. Why did you have to?
A. Because that was the only way that the
company was going to be able to raise capital for the
best interest of the shareholders.
321 Q. But that was a business decision that
you made in order to benefit the shareholders of 310
Holdings, right?
A. Yeah, and at that time, too, I also
communicated that with the original shareholders when
John Bordynuik - 62
this deal was closing that it was part of it.
322 Q. Now, your percentage, your initial
percent, the 40 million shares in JBI Nevada 310
Holdings, approximated the percentage that you had in
JBI Delaware, did it not?
A. When I took the 40 million shares from
Nicole Wright.
323 Q. Yes.
A. It was, however, there was already an
agreement in place to return stock to the treasury.
324 Q. An agreement with who?
A. With the original shareholders and
Nicole Wright that I was returning X number of shares to
the treasury.
325 Q. So when you acquired shares from Nicole
Wright, there was an agreement with the shareholders
that you would be returning how many shares back to the
treasury?
A. At that time, it was 21 million.
326 Q. So there was a written agreement to
that?
A. Yes.
MR. HAWA: Would you undertake to
provide me with a copy of that agreement with the
shareholders?
John Bordynuik - 63
A. Yes.
-- UNDERTAKING
327 Q. Who were the shareholders with whom you
made the agreement, Nicole Wright?
A. Nicole and I. But it was also, I mean,
there were the --
328 Q. Well, Nicole was getting out of it. She
had no interest whether or not you returned shares,
right?
A. She certainly did, because she was
facilitating the deal with Beverly Hills Capital.
329 Q. Facilitating what deal?
A. The deal to buy 310 Holdings.
330 Q. Well --
A. I am buying 310 Holdings stock from her.
331 Q. Yes.
A. So the way that works --
332 Q. She doesn't need Beverly Hills Capital
for that. She just needs to sell them to you?
A. No one in the world is going to buy
someone's control stock without having some kind of deal
for the rest the company.
333 Q. No, you mean the rest of the company
wants that deal and somehow has -- somehow they were
able to assert their rights against Nicole Wright and
John Bordynuik - 64
you to make that deal to transfer shares back, isn't
that correct?
MS. KIS: I don't understand that
question.
BY MR. HAWA:
334 Q. Well, I don't understand your
transaction. And I don't understand why Nicole Wright
would even care whether you transferred shares back to
the company, to the treasury. Why would she care if she
sold you all her shares?
A. Well, it's really simple.
335 Q. Unless she has an obligation to the
other shareholders?
A. Well, she did.
336 Q. As part of her agreement with the other
shareholders?
A. Right.
MR. HAWA: Would you undertake to
provide me with any agreement that Nicole Wright had
with the other shareholders?
A. I wouldn't have that. What I have is
what I was told.
337 Q. So you have an agreement that obligated
you to provide the shares back?
A. That's correct.
John Bordynuik - 65
338 Q. 21 million of those shares?
A. That's correct.
339 Q. Any more?
A. No.
340 Q. So of the 40 million or 42 million,
depending on what you read, you are obligated to give
back 21 million?
A. That's correct.
341 Q. You could hold the balance?
A. Yes.
342 Q. So --
A. I could hold the balance of controlled
stock restricted shares, yes.
343 Q. Yes. And eventually you could file an
S1 on those restricted shares and sell them after a
holding period, is that correct?
A. Two or three years down the road.
344 Q. That's your understanding?
A. Yes.
345 Q. But of the 42 million you gave, you say
in your defence, that you gave back 33 million?
A. I did.
346 Q. So why the additional 12 million?
A. Well, it's very simple. In order to
grow the company and to keep the value where it was at,
John Bordynuik - 66
it was better if I returned my shares to the treasury
and built more value in the company, therefore, making
the smaller amount of shares worth more.
347 Q. So, but it was of it -- yes, but then
you lose your shares. It benefits other shareholders
but you?
A. And me, and me because my shares go up
too then what I have left.
348 Q. They go up but you give up shares. They
might go up because there is less, there is less
dilution?
A. If I have 100 shares that is worth
$50 or 50 shares that is worth $100, it's the same
thing.
349 Q. Yes.
A. And it did go up a lot. Look at the
company now.
350 Q. But, so you had some decide in that you
felt it would improve your share value?
A. Not only improve the share value, it
also attracted very large investors because they saw
that I had an interest in building this company. This
is not uncommon.
351 Q. It's not uncommon. I don't know if it's
common or uncommon, but it was at a time when Sandra
John Bordynuik - 67
Elsley was denied her 7.7 million shares?
MS. KIS: Sorry, what is the question
there, counsel?
THE WITNESS: Denied? No, she wasn't.
BY MR. HAWA:
352 Q. So at one point you say that the company
used the shares as collateral in your defence. In your
first affidavit you say that, and I'll take you to the
first affidavit. You indicate at paragraph 15, "That
JBI has in the past used my shares as collateral for
financing." Now, does that mean, are those the shares
that you give back to the company?
A. No, they are stock that I hold.
Generally, when you have financing, investors want
either a lock on your stock or use them as collateral
for debt. For example, when we acquired PAKIT I had to
use ten million shares as collateral -- sorry, the
outstanding debt of PAKIT.
353 Q. So you gave back the 10 million shares
to the company?
A. Well, that didn't create the collateral.
I still had to use my stock. Giving back 10 million
shares to the company doesn't create any collateral for
anybody. It's destroyed.
354 Q. There is 10 million shares in treasury
John Bordynuik - 68
that can be used as collateral? Are those the ten
million used?
A. No, when you return stock, I mean the
term "return to treasury or struck" is the same thing.
The bottom line is the company can issue stock to
whatever its authorized capital is. There is not some
magical amount that it has in a treasury that it can use
for fantastic purposes. When you return stock to the
treasury, it's gone, wiped, cut, finished.
355 Q. Well, the treasury can reissue them and
sell them?
A. They can reissue them.
356 Q. They have value?
A. They didn't reissue 10 million shares
for the PAKIT debt.
357 Q. You used your own shares?
A. Yes, I did.
358 Q. For what, the remaining 20 million?
A. At that point I think I had -- I think
so, yes.
359 Q. You made a decision to return another
12 million shares. Your defence states 33 million?
A. That's correct, total.
360 Q. Total?
A. Yes.
John Bordynuik - 69
361 Q. Did you get any consideration at all for
that besides the business decision that it would be good
for the company and the shareholders?
A. No. The only thing that I ever got for
one small batch of them was some preferred stock to
ensure that the company couldn't be taken over in the
short term. However, the preferred stock had no value.
And there was an agreement to return that to the
treasury too. So it was just a short term measure to
ensure that the company was stable during its
fast-growing stage.
362 Q. So the preferred stock had no value?
A. Had nothing.
363 Q. Because it was not convertible to
common, was it?
A. No, it was not. It had no dissolving
rights, no dissolution rights. It had nothing.
364 Q. But it had super voting rights 100 to 1?
A. That's correct. That is to ensure that
no one can come in and take out the company. That was
it.
365 Q. Do you still own those preferred's?
A. There is an agreement in place. I have
them. However, the preferred's are limited to just
putting in place right now a Board of Directors of five
John Bordynuik - 70
board members and then retired to the treasury. That's
all that is left of them now.
366 Q. I see. And if they had been
convertible, they would be worth much more, if they had
been convertible to common?
A. If they had been convertible, the
company would have been worth a heck of a lot less,
because any shareholder looking at the company would say
that these --
367 Q. That John Bordynuik owns all this, yes?
A. Yeah, and what the company really has,
say, 150 shares outstanding versus 45.
368 Q. How many shares are issued and
outstanding now, any idea?
A. Well, I think somewhere around
100 million.
369 Q. 100 million. So at the time of the, at
the time of the transfer of shares to the shareholders,
most of them got unrestricted shares, is that correct?
MS. KIS: This is the time when JBI
Delaware shareholders got 310 shareholdings?
MR. HAWA: Yes.
MS. KIS: Okay.
A. The shareholders entered into a
transaction to purchase the registered stock from the
John Bordynuik - 71
original shareholders. So it was unrestricted because
it was registered, that is correct.
370 Q. I am not asking you to speculate. But
had you not identified enough pre-existing shareholders?
Were the Delaware shareholders to get shares from you?
A. No.
371 Q. No?
A. No, not at all.
372 Q. You identified enough prior shareholders
of 310 in order to satisfy all of the Delaware
shareholders?
A. That is correct.
373 Q. Did all of the Delaware shareholders,
but for the couple of non-PIPEers, did all the Delaware
shareholders participate and get shares in Nevada in 310
Holdings?
A. I think actually two, maybe a handful
never came in.
374 Q. Never came in?
A. They were very small and nothing
happened.
375 Q. The rest became shareholders?
A. Yes.
376 Q. Now, altogether, there were a few
hundred of them, as we said. But JBI Nevada/310
John Bordynuik - 72
Holdings had thousands of shareholdings, right?
A. It had -- at what time?
377 Q. At that time?
A. Oh, it, it had many. I couldn't begin
to fathom an exact count, because it's near impossible
to get that.
378 Q. Yes, but the transfer agents would have
that?
A. No, they don't. The transfer agents
only have paper certificate holders. All of the
registered stock sits into a street name called CEDE &
Company. It's a term used by transfer agents to state
that the shares are held in the public market. You have
no idea who they are, how many shares they have or what
they own. It's really difficult to find out. You might
be able to find out through a proxy statement or
something like that. It's very difficult.
-- OFF THE RECORD DISCUSSION
--- BACK ON THE RECORD
BY MR. HAWA:
379 Q. All right, Mr. Bordynuik, you will
undertake to provide us with an agreement between you,
Nicole Wright, and the other shareholders of JBI -- 310
Holdings Inc. of Nevada regarding your obligation to
provide back 20 million shares.
John Bordynuik - 73
A. 21 million shares.
380 Q. 21 million shares, sorry?
MS. KIS: When you say JBI Nevada, you
mean 310 Holdings?
MR. HAWA: I do, yes.
MS. KIS: To the extent that that
agreement exists in that context, we will provide it.
If there is some other agreement between Mr. Bordynuik
and Nicole write, we'll just produce that, and I will
get you whatever we have in that regard.
MR. HAWA: Okay.
-- UNDERTAKING
381 Q. The other shares you said were yours to
use as you please, but you also gave back another
12 million or so?
A. Yes, I did.
382 Q. So then you, in total, you have given
back to treasury of JBI Nevada, you have given back
33 million shares?
A. Somewhere around 33 million.
383 Q. For a nominal consideration, except for
your business. None as you say?
A. Other than the fact that the value of
the company went -- because of it.
384 Q. I see. Because --
John Bordynuik - 74
A. Yeah.
385 Q. The balance of the shares was about
9 million then that you have held and used and sold, is
that correct?
A. No, I had 40 million. Maybe it would be
seven left at that point.
386 Q. If there was 40 million. If it was 42,
according to your defence, then it would be more, right?
A. Right.
387 Q. How many shares have you now left
remaining?
A. Somewhere around 3.4 and change.
388 Q. 3.4 and change. So you presumably sold
three and a half to five and a half million shares?
A. No, I did not.
389 Q. No?
A. No, not at all.
390 Q. Okay. You said that you have given back
33 million so you would have had seven --
A. Well, my shares were also used for other
purposes for the company. They were used to pay for
hiring our CFO.
391 Q. Your own personal shares?
A. Yes.
392 Q. These are the remaining 7 or 9 million
John Bordynuik - 75
shares --
A. Yes, that is correct.
393 Q. -- were used to hire a CFO?
A. Yes.
394 Q. So you paid the CFO with shares?
A. Yes, I did.
395 Q. I see. Who is the CFO?
A. Mattingham.
396 Q. Mattingham?
A. Yes.
397 Q. That is the new CFO that you made a deal
with?
A. Yes.
398 Q. How many shares did you provide to him?
A. 400,000.
399 Q. Of your own shares?
A. Yes.
400 Q. You did that for the sake of the
corporation?
A. Absolutely. We needed a CFO really
badly.
401 Q. Out of the goodness of your heart?
A. No, out of the goodness of the fact that
we had really poor accounting, and we needed someone
really good. And without that, the company would be
John Bordynuik - 76
worthless.
402 Q. I see. Once again, no other shareholder
is stepping up to provide shares but you?
A. Well, I wish there was.
403 Q. Okay. Anybody else did you provide
shares to, any other service provider or, of the 7 or
9 million remaining?
A. I need to review all my returns and
share distributions were filed with the SCC. It's a
one-page document. If I have that, then I can go
through it with you. It outlines exactly where they
went to, who, when and why.
404 Q. These are all restricted shares?
A. Yes, they are. They are affiliate
shares.
405 Q. Now, are they any good to
Mr. Mattingham? Can he sell them?
A. No.
406 Q. Until what happens, to your knowledge?
A. To my knowledge, he has to wait at least
a year. We have to be current in our filings. And I
think that is it, because I became a non-affiliate.
407 Q. Because you have --
A. -- less than 5%.
408 Q. I see. Of the shares?
John Bordynuik - 77
A. Yes.
409 Q. Outstanding?
A. Yes.
410 Q. Does that apply to you as well?
MS. KIS: What?
BY MR. HAWA:
411 Q. Does the same rules apply to
Mr. Mattingham's share apply to you as well now that are
a non-affiliate with less than 5%?
A. That is correct. I held them for three
years. I was finally able to --
412 Q. To sell?
A. Unrestricted, sell them.
413 Q. Yes, but you didn't have to hold them
for three years?
A. Oh, I had to hold them a long time.
414 Q. Depending whether you were over 5% or
under 5%?
A. You had to be under 5%, because it's a
affiliate control stock. I had to wait three months
after I was no longer an affiliate.
415 Q. Yes.
A. As well, I also had to meet all of the
requirements under the non-affiliate status, which means
no longer a board member, under 5%, had not been an
John Bordynuik - 78
affiliate for over three months and had already held the
shares for at least a year and that the companies, in
the time that I held them for at least a year, the
company was current at all times in its filings. If
it's not, it resets the clock. It sucks.
416 Q. How many shares have you sold?
A. For consideration?
417 Q. Yes.
A. 850,000.
418 Q. In the market?
A. Yes.
419 Q. And you have 3.2 remaining?
A. No, I didn't say that. 3.4.
420 Q. 3.4 million shares?
A. Yes.
421 Q. Did you advise Sandra of this PIPE and
non-PIPE distinction that you would be making when it
came to shares of 310?
A. What period? What time?
422 Q. Did you ever advise her?
A. Yes.
423 Q. When, what period?
A. We discussed that in May and June of
2009.
424 Q. 2009?
John Bordynuik - 79
A. Um hmm.
425 Q. What did you tell her?
A. I told her the challenges that we had,
we got -- probably advised her on or about the date we
got the FINRA letter discussing the limitations of the
restricted stock and then the DB SCC comment letter.
Sorry, I'll turn that off. We had discussed it in May
or June. She was asking for updates I believe from time
to time on the 310. And I sent her, in addition to
that, I sent her copies of, we were also discussing a
settlement over all the outstanding issues, the debt
with her and everything else. So that was all going on
at the same time. It was just rolling on forever. And
at that same time, we had provided settlement documents,
various settlement documents to her.
426 Q. In the end of 2008 you provided some,
didn't you?
A. And 2009.
427 Q. The settlement document in 2009 was to
settle, that is Exhibit M of your affidavit, is it not?
A. That's correct.
428 Q. That --
MS. KIS: Hold on. Take a look at it.
THE WITNESS: Sorry.
MS. KIS: That's okay.
John Bordynuik - 80
BY MR. HAWA:
429 Q. The so-called settlement agreement.
A. It's a very real settlement agreement.
430 Q. And to your understanding 300,000 free
trading shares were about the same value as 7,775,000
shares?
A. At that time?
MS. KIS: Sorry, counsel, what was the
question?
BY MR. HAWA:
431 Q. To your understanding you gave her two
choices; to own 7,775,000 shares of non-eligible 144
restricted stock or take the 300,000 free trading
shares. Isn't that the choice that she made?
A. We put those two choices to her. The
significance is, does anyone want to take the risk with
the restricted stock because most of these public
companies don't last six to ten months, especially with
all the litigation going on with public companies? And
it was her choice to decide that. I was encouraging her
to take the restricted stock. However, there were
significant limitations on it as there was mine.
432 Q. And the limitations are represented
there, are they not?
A. Yes, they are.
John Bordynuik - 81
433 Q. And one of the limitations, the shares
have not been registered. So if you choose the
restricted stock, you say, you are hereby advised or the
agreement says the following: "The shares have not been
registered for sale and the company will not seek the
registration of them."
A. That's correct. We were not planning to
go through a registration statement. These shares would
be coming from -- the treasury of the company would have
to issue the stock to her.
434 Q. And is the company the only, the only
person who could register these shares?
MS. KIS: You mean, JBI Nevada and 310
Holdings?
BY MR. HAWA:
435 Q. In 310 Holdings and JBI Nevada?
A. Yes.
436 Q. So if she took 7,775,000 shares, she
would not be able to sell them whatsoever unless the
company cooperated and registered them?
A. No, I am not saying that. I said they
have not been registered for sale. Meaning that these
aren't, this isn't stock that has been gone through a
registration statement.
437 Q. Right.
John Bordynuik - 82
A. So you do not have the exemptions
available to you of registered stock.
438 Q. Yes.
A. The same as mine.
439 Q. Did she have any other avenue to sell
such stock?
A. She could have sold it privately. That
is what people do, or you could wait. The time is
probably around two years.
440 Q. So you are estimating it would be about
two years before she could sell them and the
restrictions would come off?
A. Sure. The reason being, one, 310
Holdings was also a former shell company and the SCC
placed further limitations on share sales of restricted
stock of shell companies because of problems that they
had with that.
441 Q. So if the company has ever been
inactive, it didn't have an active business within it,
it would fall into the shell gap?
A. That's correct.
442 Q. And it would increase the holding
period?
A. That's correct.
443 Q. I am kind of familiar with that. The
John Bordynuik - 83
shares are not eligible, 144 eligible as per 144. What
does that mean "not eligible"?
MS. KIS: You are looking at the second
point there?
444 Q. Yes.
A. That is the FINRA rule that says because
the company was a former shell, you cannot, there are a
series of 144 eligibilities that are required for normal
144 stock. This stock would not be eligible under that
because of Rule 2. First of all, when I purchased the
company, it was a shell. That was the first problem.
And I read that in the next sentence.
445 Q. You say "The holding period is
indefinite at this time"?
A. It is. It was, because we could not
seek -- even if -- my stock that I got from Nicole
Wright, she had held for four years. I couldn't get a
144 restriction on it if my life depended on it, because
it was a shell company. It's indefinite at that time
until it's current and Super 8-K meets the requirements,
twelve-month holding period all that stuff, absolute
minimum.
446 Q. The holding period is, "You will not be
allowed to DTC your shares, nor will you be permitted to
sell your shares on the open market"?
John Bordynuik - 84
A. That is correct. I couldn't sell mine
on the open market and I couldn't DTC them either. You
just can't. They have to be unrestricted.
MS. KIS: I apologize, for clarity what
is DTC?
THE WITNESS: DTC is Deposit Trust
Corporation. That's the CEDE & Company I was referring
to is when you take a stock and you put it in the public
pool and no one ever kind of sees it again, and you have
a number in your account saying how many shares you
have.
MS. KIS: Sorry, counsel.
BY MR. HAWA:
447 Q. Isn't that misleading when you say you
will not be allowed to DTC your shares and will not be
permitted to sell your shares on the open market?
A. No, she couldn't. How could she sell
them on the open market? You couldn't take them to any
broker or you are not allowed to sell them on the open
market. You couldn't go to Royal Bank and say deposit
my stock. I want to sell it. You can't.
448 Q. Doesn't the restrictions eventually come
off?
A. Years down the road.
449 Q. You didn't know how many years?
John Bordynuik - 85
A. We don't know. It could be never. That
was the problem. We don't know. It took a while for
the company to get to the point where we could reach 144
status.
450 Q. Had Sandra taken the first choice?
A. Yes.
451 Q. Three years have elapsed now?
A. Yes.
452 Q. She would have been able to sell some of
those shares?
A. Some, but she would be an affiliate.
453 Q. Yes.
A. So every time we were late, she would be
denied. We were late in every quarter to, till I think
our last quarter was probably the first time we ever
have been on time. Because when you are late, you are
now not in compliance and the Rule 144 rule does not
apply. That is why I paid to bring in a CFO.
454 Q. Wasn't Sandra Elsley promised a salary?
Was she not paid a salary when she started with JBI
Ontario?
A. She was paid a salary, yes.
455 Q. And when did she start providing
services to the company?
A. In, I think that it was around late 2006
John Bordynuik - 86
early 2007, somewhere in there.
456 Q. So she was paid a salary right through
in that period?
A. No, no. She, I don't recall when her
salary started. I provided that in my Affidavit of
Documents or whatever.
457 Q. Around 2008, sometime in 2008?
A. That's possible.
458 Q. So for two years she didn't -- she was
not paid?
A. It would be one year.
459 Q. 2006, 2007 to 2008?
A. You can't say 2006. The company was not
incorporated until 2006. So we are talking 2007 and '08
it started paying salaries. So a year and change, a
couple months maybe.
460 Q. So she was providing services in that
time without being paid, right? Isn't that a debt to
her?
A. No.
461 Q. No? Why?
A. Well, because you have to document it.
You have to set it up as such. Then you also have to
report it as income to Revenue Canada. She was not
doing any of that.
John Bordynuik - 87
462 Q. So --
A. So --
463 Q. So there was no thought between you that
you might, you would owe her the money later?
A. She was a shareholder in JBI. A lot of
shareholders work at JBI, even to this very day and
don't get paid, and they don't receive any compensation
for it. We are trying to help. My dad is a prime
example. He was working at the recycling centre for two
years without a dollar for it. He cared and it effected
his investment. You don't have to work for it, but then
don't cry if your investment goes south.
464 Q. So you, but she still incurred debt to
the company, that is your position, about 129,000?
A. Yes, she borrowed money. Even the day
after she made the investment, she borrowed money.
465 Q. She made the investment when?
A. October 2000 sometime. It was late
2006.
466 Q. And yet she made the investment. She --
was she providing full-time service to the company?
A. No, not at all.
467 Q. What portion of the time?
A. Oh, maybe 10, 20%.
468 Q. Was she ever full-time?
John Bordynuik - 88
A. In 2008, she was supposed to be, but she
was doing a lot with her practice. So she did a lot of
it there. And she was at home a lot doing it so she was
not really full-time even then.
469 Q. So even in 2008 when she was paid a
salary, she was not full-time?
A. Yes, it was a real problem. She had --
470 Q. Didn't you -- wasn't there an
understanding that you would be paying some of those
debts, that they were not really debts? They were on
the company books to look good?
A. Which debts?
471 Q. The debts that you allege that she owed
the company.
A. In September of 2008, she executed a
loan agreement for $18,000 with the company, after the
PIPE was done for some personal debts, I believe, some
problems that she had. She had a 50,000 payment that
she had to make out to settle one of her own lawsuits
prior to me meeting her with the Coopers, so no.
472 Q. Where did she go to pay for that, that
Cooper debt?
A. It was not a debt. She was either going
bankrupt or settling the Cooper lawsuit. It was either
one or the other. She told them that she was going to
John Bordynuik - 89
file for bankruptcy if they didn't accept $50,000.
473 Q. Didn't -- right. So she had an
obligation to pay $50,000. So you say she borrowed
money from the company?
A. Yes, she did. And she signed a loan
agreement for it and Steve Doede was there. He was the
one that actually wrote the agreement.
474 Q. Was that not just for cosmetics to
satisfy the other shareholders that it was something
that you intended, as John Bordynuik, that you intended
to pay or the company intended to pay?
A. No.
475 Q. No?
A. No.
476 Q. Didn't you intend to pick that up as
part of your obligations to her?
A. I didn't have any obligations to her.
477 Q. Just -- I am going to read an e-mail.
MS. KIS: Pardon, counsel, is this an
e-mail that is found in any of the records?
MR. HAWA: In any of which records?
MS. KIS: One of the four that you filed
or either of ours?
MR. HAWA: No.
MS. KIS: Is it a new document that you
John Bordynuik - 90
said you would not be putting to my client?
MR. HAWA: It is equivalent to that
medical report that you stole and surprised us with
yesterday.
MS. KIS: Is there an allegation of
theft now, counsel?
MR. HAWA: The medical report was taken
right off a computer, and it didn't belong to you to
bring to the agreement -- to the --
MS. KIS: Counsel, are you giving
evidence now on the record?
MR. HAWA: Anyway, I am going to read an
e-mail.
MS. KIS: Well, I think what you need to
do, counsel, is tell me which of these newly produced
e-mails you are going to put to Mr. Bordynuik so I can
decide whether one of these documents are appropriate to
put to him given the position that I put on the record
at the beginning of these examinations.
BY MR. HAWA:
478 Q. You will acknowledge that it said it
doesn't accept that they were loans from the company?
A. Pardon?
479 Q. Sandra didn't really accept them as
loans, did she?
John Bordynuik - 91
A. Yes, she did. She signed them as such
and she received the money on the same day that she
signed those loans and she did them with Steve Doede and
Brian Sebrun. Our I.T. guy actually witnessed them.
480 Q. But she was not being paid for all her
services?
A. Yes, she was. She was paid in 2008 when
she took these loans. She look them in 2008.
481 Q. Prior to that, she was not paid. She
was given credit for that?
A. No. Well, she was in stock, I guess you
could say. The 13%, she went from 1 to 13.
482 Q. Now, this is an e-mail from John
Bordynuik to Sandra dated December 12th. I sent you a
copy of that?
MS. KIS: Is this the bundle of e-mails
you would have sent me at 11:26 p.m. last night?
MR. HAWA: Yes, the bigger one.
MS. KIS: The bigger bundle of the 93
pages, um --
MR. HAWA: You asked for it.
MS. KIS: Counsel, you have an
obligation to produce these as part of your initial
record. You've had them in your possession.
MR. HAWA: No, I have an obligation to
John Bordynuik - 92
produce them as part of our Affidavit of Documents not
as far as this motion is concerned.
MS. KIS: That's right. That is why I
am objecting to asking questions with respect to them.
MR. HAWA: This is a document that I
want to put to Mr. Bordynuik and --
MS. KIS: What is the document, counsel?
MR. HAWA: You can have a look at it and
object to it if you wish. It's an e-mail dated
December 12th. It's about three or four pages in. If
you, I think that you have it there. Do you have it
there?
MS. KIS: It's, "Hi, Sandra, attached
are the agreements."
MR. HAWA: Yes.
MS. KIS: Counsel, this is in our
record.
MR. HAWA: This is in your record?
MS. KIS: Yes. Why don't we reference
the record.
MR. HAWA: All right. The
supplementary?
MS. KIS: Yes. I think it's tab H,
counsel.
MR. HAWA: Okay. Referencing at tab H,
John Bordynuik - 93
of the supplementary responding motion record. E-mail
from John Bordynuik, supplementary motion record, sorry,
of the defendant. E-mail from John Bordynuik to Sandra
dated December 12th, 2008.
"Hi, Sandra, attached are the
agreements. They are quite straightforward. Mutual
non-disparagement, confidentiality, and no more nonsense
on consolidated loan agreements and amounts, since it
looks bad."
What does that mean "since it looks
bad"?
A. The problem that we had at that time
that we didn't know was that loans made to an officer of
the company, prohibits the company from going public
where it creates a lot of problems because of Enron and
Worldcom would give loans to their executives and do
exactly what you were insinuating, trying to "forgive
them or get rid of them." That's not allowed under the
SCC. So what I was attempting to do there was actually
purchase the loans myself through the sale of my own
stock, and then she would owe me the money instead of
the company. It was a significant problem brought to my
attention in December. I went, crap, this is a big
problem. We didn't know about it.
483 Q. "If I can purchase them from the
John Bordynuik - 94
company" and why did you put that in quotation marks
"then I will" purchase the loans from the company?
A. If I can, to get them off the damn books
so that it doesn't prohibit us from going public.
484 Q. Well, you don't really mean purchase
because --
A. Well, because I am purchasing them from
the company, but it's -- that's something I'd have to
do. I would have to actually sell some of my shares,
purchase the loans from the company at face value, and
then I would own the loans.
485 Q. And then you would own the loans and you
would be collecting from her?
A. Yes.
486 Q. But in a sense -- because that's an
honest to goodness purchase, isn't it, if you did
purchase them from the company?
A. I am calling them purchase. It's a
related shareholder purchase. I think it's called an
arm's length transaction or something like that. It
still shows up. It's not as bad, at least, at least the
loan has been paid to the company so it's not
outstanding as far as the company goes and as far as the
public filing goes. It would be the same as if when
Kenneth Lay at Enron borrowed a bunch of money, if
John Bordynuik - 95
someone paid those loans off of the company and took
them personally, the shareholders of the company then
wouldn't have that loan overhanging.
487 Q. Did you have a bank account in 2007,
2008 while you were living with Sandra Elsley, personal?
A. Yes.
488 Q. Did you have any money in the bank
account?
A. Yes.
489 Q. Were you paying any of your ongoing
expenses from that bank account?
A. Yes, I was, all of them. I had
insurance. I had all kinds of things.
490 Q. Sandra Elsley was not financing all of
your lifestyle and your children?
A. Absolutely not.
MR. HAWA: Could you provide me with a
copy of your bank statements at the time.
MS. KIS: I'll take it under advisement.
-- UNDER ADVISEMENT
BY MR. HAWA:
491 Q. 2007, 2008, while you were living with
Sandra Elsley, did you have one personal account?
MS. KIS: Counsel, I don't think this
line of questioning is relevant. I'll take it under
John Bordynuik - 96
advisement.
-- UNDER ADVISEMENT
492 Q. How many accounts did you have?
MS. KIS: I refuse it.
-- REFUSAL
BY MR. HAWA:
493 Q. Did you have any personal accounts?
MS. KIS: Well, he answered the
question.
A. Yes, of course.
MR. HAWA: So you are taking it under
advisement whether to provide me with a copy of that
account in 2007 and 2008 while you were living with
Sandra Elsley?
A. Yes.
-- UNDER ADVISEMENT
BY MR. HAWA:
494 Q. Did the $80,000 you paid to Nicole
Wright come from your personal bank account as well?
A. Yes, it came from a wire transferred
from my personal bank account, and I produced that in my
Affidavit of Documents with the purchase agreement
actually.
MR. HAWA: Is it in your materials?
MS. KIS: I don't think so.
John Bordynuik - 97
MR. HAWA: So it will be provided in
your Affidavit of Documents?
A. Oh, absolutely. The purchase agreement
with Nicole and proof to the lawyer. I had to provide
it anyway.
495 Q. It came from your personal bank account?
A. Yes, it did.
496 Q. With which institution?
MS. KIS: You will see the document when
you see it, counsel. Why is that relevant?
MR. HAWA: Will you undertake to provide
that for this examination?
MS. KIS: Yes.
-- UNDERTAKING
BY MR. HAWA:
497 Q. When you purchased shares, when you
purchased the asset, when -- let's be clear. When 310
purchased the assets from JBI Delaware in or around June
of, June 2nd, June 2nd, 2009, you swopped those assets
JBI/310 swopped those assets, took the assets from JBI
for 809,000 shares, is that correct?
A. That's correct.
498 Q. Were they free trading shares?
A. No.
499 Q. So they were restricted shares?
John Bordynuik - 98
A. They were restricted shares from the
treasury.
500 Q. And they were restricted in the same
manner as your shares were restricted and Sandra's
shares were restricted?
A. Not Sandra's shares, my shares.
501 Q. The shares that Sandra was going to
receive or had an option to receive the 7,000,000,
7.7 million shares?
A. She didn't take an option. My shares
were consistent with my shares.
502 Q. They were consistent with your shares?
A. Yes.
503 Q. Did you take, were those shares
transferred to JBI Delaware?
MS. KIS: What shares, counsel?
MR. HAWA: The shares that were used to
pay for JBI Delaware's assets.
MS. KIS: I don't understand the
question.
BY MR. HAWA:
504 Q. Mr. Bordynuik understands the question.
A. No, I don't actually. I don't
understand how I can transfer the shares to JBI
Delaware. They are not transferred from anything. The
John Bordynuik - 99
company issued shares.
505 Q. Issued shares to pay. So the shares had
to be transferred. The name of JBI Delaware had to
appear on those shares eventually, did it not?
A. Yes.
506 Q. So they should be in JBI Delaware's
treasury, would they not?
A. No, it would not be in JBI's treasury.
Because JBI Delaware's treasury has its own stock, not
310 stocks' treasury.
507 Q. By treasury, I mean in its safe or in
its account. That is what you were to have transferred
JBI, JBI Nevada was to have transferred 809,000
shares --
A. Yes.
508 Q. -- to JBI Delaware?
A. But that changed later with the
statement. So, therefore, the share amount was much
less and that stock still sits in JBI Delaware's name.
509 Q. The share amount was much less?
A. Yes.
510 Q. So it was not 809,000 shares,
ultimately?
A. Well, it was originally. It was not
issued then. Later on when it was issued in January or
John Bordynuik - 100
February of, I think it was 2010 or much later.
511 Q. Were they not issued to your account to
John Bordynuik?
A. No, they were not issued to my personal
account, no.
512 Q. So those shares were not in your name?
A. No.
513 Q. So it was -- the deal was for 809,000
shares, but they were never transferred to JBI Delaware?
A. No, some were. I think that it was
about 200,000.
514 Q. 200,000?
A. That's correct.
515 Q. That's all?
A. That's what is in there, yes.
516 Q. So there are 200,000 shares?
A. Approximately.
517 Q. In JBI's Delaware's name?
A. That's correct.
518 Q. Was a certificate signed in favour of
JBI Delaware?
A. Yes.
MR. HAWA: Would you provide a copy of
that certificate?
MS. KIS: I don't know if it's relevant,
John Bordynuik - 101
counsel. I'll take it under advisement.
-- UNDER ADVISEMENT
BY MR. HAWA:
519 Q. Well, you say at that -- why did you,
why did you change it from 809,000 shares? That was the
agreement at the time.
A. It was an agreement but it was based on
the price of the stock and the value of the assets. We
did not have a great auditor. And when we brought in
Withum Smith, they said it was not properly accounted
for or properly booked. So they then restated that
acquisition to what it should have been.
520 Q. Now, they stated the acquisition. They
valued the JBI Delaware assets?
A. Yes.
521 Q. So initially, and they felt that you
overpaid, that JBI Nevada had overpaid with its stock?
A. No, they felt that it had something to
do with depreciation, and depreciation I believe of the
assets that was the issue. I'd have to go back through
the restatement to understand why. We didn't understand
then because an auditor actually came up and accounted
for every receivable. They accounted for every dollar.
522 Q. They changed them by about 100,000 or
so, right?
John Bordynuik - 102
A. No, it was a lot more than that, I
think.
523 Q. All together, initially, the assets were
valued at $500,000, would you not agree?
A. Yes, I believe so.
524 Q. And then the restatement valued them at
around $443,000, something like that?
A. Something like that, yes.
525 Q. As a result, you are saying because of
that, they -- the transaction was negated for 809,000
shares?
A. Yes, it was.
526 Q. And as a result, JBI Nevada only had to
pay 200,000 shares?
A. Something like that.
527 Q. So at a later time JBI Nevada changed
its mind about the value?
A. No, the auditor changed their mind.
528 Q. The auditor ripped up the deal that you
initially made for an asset purchase agreement?
A. He didn't rip it up. He restated it.
529 Q. He restated it?
A. He said it was not properly done.
530 Q. The Agreement of Purchase and Sale was
not properly done?
John Bordynuik - 103
A. That's correct.
531 Q. Because the assets were overvalued?
A. They were not valued properly.
532 Q. What about the shares? Why then were --
if the assets were reduced by the valuation of the
assets was reduced by about a third, as you said, why
were the number of shares paid reduced by
three-quarters?
A. I don't recall why. I do recall that and
I can certainly show that the company issued JBI --
533 Q. -- 200,000 shares?
A. That's correct.
534 Q. To Delaware?
A. They still sit there to this very day.
535 Q. Rather than 809,000 shares, which they
were initially to have been paid?
A. That's correct.
536 Q. Now, at the time of the transaction, at
the same time that was a time when the stock had just
started to trade above a penny?
MS. KIS: What is the time of
transaction, counsel?
BY MR. HAWA:
537 Q. The time of the transaction --
A. That's not true.
John Bordynuik - 104
538 Q. Well, perhaps you can -- June, what was
the date of the transaction, June?
A. No. The --
539 Q. Go ahead.
A. The date that you enter into an
agreement isn't the date that the transaction completed.
The transaction completed in July, and that's when it
closed.
540 Q. It closed?
A. When it closes, that's when the
valuation is looked at, not before. So it is not done
at a penny a share. Anytime you do a transaction, it
closes on the day of. This was July 15th we were
trading over a buck. I think we were trading a buck 20
and buck and a half. That is how it was done. Our
securities lawyer did that.
541 Q. At the same time, just prior within that
month it had been trading for pennies?
A. No, it hadn't. It closed in July.
542 Q. On June 3rd it was 20-cents, isn't that
correct?
MS. KIS: Are you looking at a document
that you can direct him to?
THE WITNESS: The stock was all over the
place. It also was 2 bucks, I think, at the end of
John Bordynuik - 105
April. It was all over the place.
BY MR. HAWA:
543 Q. At the same time JBI Nevada went and
borrowed $200,000, not borrowed, went and traded 66,000
shares at $3 a share for $200,000 of Delaware's money,
isn't that correct?
A. JBI Delaware bought 66,000 shares of 310
Holdings to get to, to get money into 310 so that it
could operate so the shareholders that got the 310 stock
could actually do something. The company could actually
start growing and building, otherwise, they both would
be sitting on empty companies.
544 Q. So you overpaid for those shares, did
you not?
MS. KIS: Are you asking his opinion?
BY MR. HAWA:
545 Q. JBI Delaware overpaid? They paid $3 a
share at a time when the sock was trading at 49-cents?
MS. KIS: Counsel, you keep referencing
a chart. It seems to be in one of the records. Can you
tell me where it is so we can see the same numbers.
BY MR. HAWA:
546 Q. Do you recall when $200,000 was traded
for 66,000 shares?
A. No.
John Bordynuik - 106
547 Q. Does June 27th ring a bell?
A. Well, unless I see the document, I am
guessing.
548 Q. All right. I am --
MS. KIS: Counsel, if you are referring
to the numbers set out at paragraph 44 of Ms. Elsley's
affidavit.
MR. HAWA: Yes.
MS. KIS: I don't know where you have
gotten those numbers. There is no actual support for
those numbers. It's literally just a chart.
MR. HAWA: How about looking at the
actual chart.
MS. KIS: Sure. Just direct me to it.
MR. HAWA: At exhibit, it's at tab 0 of
the original motion record. So it's in volume 2.
MS. KIS: So, counsel, this is still a
set of numbers with prices. I don't know the source of
the information. But there is, undoubtedly, a whole set
of numbers set out here; dates, and then a whole column
of various cents and indecipherable numbers in the far
right column, but you can certainly direct us to any of
those.
MR. HAWA: Well, I take you to June.
MS. KIS: Okay.
John Bordynuik - 107
MR. HAWA: And take you to June, which
is about page -- page 17, 349.
MS. KIS: Okay.
MR. HAWA: There is a June but that's
not correct.
MS. KIS: This is 2011.
MR. HAWA: Sorry, 2009.
MS. KIS: I think it is 342.
MR. HAWA: It is.
549 Q. Now, do you agree that's the trading
history for JBI?
MS. KIS: We are refusing that question.
Based on these numbers, counsel, we have no idea where
you got them from. We have no idea. There is no legend
or any kind of indication of where these came from.
Based on what is in front of him here, I am not going to
let him answer that question.
-- REFUSAL
BY MR. HAWA:
550 Q. Was the stock trading at $3 when you,
when JBI Nevada traded 66,000 of its shares for
$200,000?
A. No.
551 Q. No?
A. No.
John Bordynuik - 108
552 Q. What was it trading at?
A. It had traded up to $2, around that
time. I don't know exactly. I don't know the date when
the agreement was done. I know that during the month of
June I think it peaked at around $2 or more.
553 Q. But it really wouldn't matter to the
shareholders, would it. If they all got their
proportion of share in JBI Nevada, it wouldn't really
matter if the transactions were arm's length or not,
would it?
MS. KIS: I don't understand, which
transactions?
THE WITNESS: I don't understand the
question.
BY MR. HAWA:
554 Q. You did a couple of transactions. You
did an asset purchase and you did, you did a share
purchase. You did a, JBI Delaware bought shares, 66,000
shares of JBI Nevada. And at the same time, in June of
2009, JBI Nevada bought assets of JBI Delaware, correct?
A. The asset purchase was very important.
That is why we ended up restating it. There are
specific accounting methods for acquiring assets. There
are specific prices and rules that you have to adhere
to. You just can't pick any number out of the sky. For
John Bordynuik - 109
the asset purchase when Withum Smith restated it, they
stated what the amount should be and all that.
555 Q. They reduced it by a third?
A. At least a third.
556 Q. Of the asset valuation?
A. Yes. However, on the share purchase.
557 Q. But at the same time you reduced the
number of shares, the purchase price by three-quarters
from 809,000 to 200,000?
MS. KIS: Counsel, you already asked
this. He already answered. Move on to the next
question.
BY MR. HAWA:
558 Q. That was at the same time as the -- so
in one case, that was at the same time that JBI Nevada
was taking money from JBI Delaware, correct?
A. The only way that JBI Nevada was funded
was through JBI Delaware.
559 Q. After that 200,000 was transferred, did
JBI Delaware have any money left?
A. Oh, no, actually, it didn't. No, I
don't think so.
560 Q. That was it?
A. That was it.
561 Q. Did JBI Delaware ever trade those
John Bordynuik - 110
shares?
A. No.
562 Q. Are they still in treasury?
MS. KIS: Of JBI.
BY MR. HAWA:
563 Q. Of JBI Delaware?
A. Those 200,000?
564 Q. And the 66,000?
MS. KIS: Counsel, hold on. You just
said JBI Delaware. Did JBI Delaware ever trade the
shares of JBI Nevada.
MR. HAWA: The ones that they hold as a
result of these two transactions?
MS. KIS: Of JBI Nevada.
BY MR. HAWA:
565 Q. Of JBI Nevada?
A. It has sat in restricted form in the
same cert. the day it was issued and has not changed.
566 Q. So there are at least 266,000 shares in
JBI?
A. There is somewhere around 200 and
change. None have ever been traded, whatever, left in
the original form. I don't know the exact number, but
it's somewhere in that area.
567 Q. So who approved the reduction of the
John Bordynuik - 111
purchase price of the assets from 809,000 shares to
200,000 shares?
MS. KIS: Do you mean who within JBI I
or JBI Delaware?
BY MR. HAWA:
568 Q. Within both?
A. Well, two things. One, 310 Holdings
needed capital to operate or else it was going under.
569 Q. Um hmm.
A. That was the first issue.
570 Q. Um hmm.
A. The second one was that the fact that
the restatement showed that the assets had to be
reduced. So we didn't -- it was not -- I had to accept
the audit. I was not about to sit there and fight with
them about it.
571 Q. And the audit also changed the number of
shares that you had to pay?
A. It changed the value.
572 Q. It changed the number. It decided --
the audit, who did the audit?
A. Withum Smith, the top 30 audit firm in
the U.S.
573 Q. They did an audit as a result of a
requirement of the SCC?
John Bordynuik - 112
A. Yes, they do. They felt that the
original audit done was done on the face value of the
assets and it was not acceptable. It had to go through
a full and thorough, some kind of -- there was
depreciation and all kinds of accounting GAAP rules we
were not aware of.
574 Q. So they decreased the value of the
assets and they increased the value of the shares that
were used to pay for the assets because the number of
shares was reduced to 200,000. Did they do that as
well?
MS. KIS: I don't understand the
question.
A. I don't understand the question.
575 Q. Well, the number of shares that was used
to purchase these asset was reduced from 809,000 down to
200,000?
A. Right.
576 Q. Now did they do that?
MS. KIS: Who is they, the auditors?
BY MR. HAWA:
577 Q. The auditors?
A. No.
578 Q. Who did that?
A. I did.
John Bordynuik - 113
579 Q. You made that decision?
A. Yes.
580 Q. On behalf of who?
A. Well, 310/JBI.
581 Q. And who was acting as an officer for JBI
Delaware? Were you not an officer for them as well?
A. I don't even know if JBI Delaware at
that point in time was even current.
582 Q. Did it have an officer?
A. It had filed a registration withdrawal.
I was an officer up until it was dormant. I don't know
what the proper term is used for that.
583 Q. Who signed the deals between JBI
Delaware and JBI Nevada?
A. I did back in 2009.
584 Q. So you signed twice, once for them?
A. Yes, that's correct.
585 Q. Is that not a conflict of interest?
MS. KIS: Counsel, is that not a legal
question?
MR. HAWA: It is a legal question.
586 Q. In May of 2009, in May of 2009, April of
2009, the stock was not trading for anything
significant?
MS. KIS: The stock of what, counsel?
John Bordynuik - 114
BY MR. HAWA:
587 Q. The stock of JBI Delaware, JBI Nevada, I
mean?
MS. KIS: 310 Holdings at the time.
THE WITNESS: 310 Holdings stock was not
what?
BY MR. HAWA:
588 Q. Was respectfully not trading in April,
March?
A. Yes, it was. It was trading in April
and May.
589 Q. For a negligible amount, is that not
correct?
A. No. April and May it was pretty active
after I filed my 8-K and what I was doing with it and
putting plastic to oil, it got reasonable trading I
would say for a new company.
590 Q. What about the stock price?
A. It whips out all over the place.
591 Q. But prior to April?
A. It was a shell company.
592 Q. It was a shell company?
A. Yes.
593 Q. So as soon as you put your plastic to
oil technology it started to --
John Bordynuik - 115
A. It went crazy. People saw the 8-K.
594 Q. People saw the 8-K?
A. Um hmm. There are many platforms that
are there to detect 8-Ks of shell companies going or
starting operations. It's very common. I used to do it
in 2000. I used to invest in just shells.
595 Q. You had sent some e-mails or you had
sent some e-mails to the shareholders of JBI Ontario to
come and pick up their shares and sign share purchase
agreements of 310 Holdings, had you not, in around June
of 2009?
A. That's correct.
596 Q. How much notice did you give the
shareholders?
A. They got as much notice as they wanted.
597 Q. Notice?
A. Meaning notice for?
598 Q. To come and sign their purchase
agreements?
A. They could come any time. Some came at
the end of 2009. It didn't matter when they came.
599 Q. When was the first time that you gave
them notice to come?
MS. KIS: What do you mean by notice
counsel.
John Bordynuik - 116
BY MR. HAWA:
600 Q. Notice for the shareholders to come and
receive their shares.
A. They could, I think that it was sometime
mid-June we had a couple specific days we set up at the
office. We had a lot of people there to help. There
was a bunch of people that wanted to get stock as
quickly as possible. After that, we wouldn't have the
resources, and they could pick up their stock any time.
601 Q. So they were both picking up stock and
signing a share purchase agreement, were they not?
A. That's correct.
602 Q. And a share purchase agreement was one
of these other shareholders --
A. That's correct. Actually, a couple
share purchase agreements. There were two I am aware
of.
603 Q. Two different companies that had
share --
A. No. That they had to sign. There were
two agreements. One they signed with us wherein they
were unwinding their JBI Delaware Holdings. And then
the other and winding the transaction. The other one
was with them wherein that original shareholder signed
and they signed and that went back to the shareholder.
John Bordynuik - 117
There were two sets.
MR. HAWA: Well, could you undertake to
provide me with a copy of one of these agreements
wherein they agreed to unwind their JBI Delaware shares?
MS. KIS: Well, counsel.
MR. HAWA: We don't have any such
production.
MS. KIS: I guess my question to you is
you have produced some. In the witness statements there
are some.
BY MR. HAWA:
604 Q. Those are the share purchase agreements
from the shareholders of JBI Nevada, right?
A. I would like to see one first.
605 Q. The share purchase agreements are in our
productions, examples of them.
MS. KIS: Do you mind if we go off of
the record while we look for it, counsel.
MR. HAWA: Exhibit L.
-- OFF THE RECORD DISCUSSION
--- BACK ON THE RECORD
BY MR. HAWA:
606 Q. It's the same agreement?
A. Yes.
607 Q. It's all within the same agreement?
John Bordynuik - 118
A. Yes.
608 Q. I see. It was not two agreements?
MS. KIS: Sorry, counsel, for the
clarity of the record, page 260 of volume 2 of
Miss Elsley's first affidavit in the main motion record
you asked for where there was a provision or whether
there was a separate agreement with respect to unwinding
of the shares. It's paragraph 12, it looks like of the,
at least in this case and this is a document that you
produced that is appended it looks like to the witness
Statement of Michael John Greene. And it's a share
purchase agreement between Westside Capital and 8424
Santa Monica, sorry, just Westside Capital is the
address and then Michael Greene. Like I said, provision
12. It reads,
"The shareholder agrees to unwind the
original investment in John Bordynuik Inc. Canada
because John Bordynuik Inc.'s assets are being sold to
310 Holdings Inc. to carry on the business of John
Bordynuik Inc. The purchaser acknowledges that --"
And it goes on.
MR. HAWA: It doesn't continue?
MS. KIS: I am not sure if that's
supposed to be an enumerated list that they acknowledge
the following or if that's just a typo.
John Bordynuik - 119
609 Q. All right. Let's look at another one of
those similar agreements, for example, Exhibit L. Share
purchase agreement between Beverly Hills Capital
Corporation and Sandra Elsley for 300,000.
MS. KIS: What page, counsel? They are
all Exhibit L.
MR. HAWA: Page 281.
MS. KIS: I am sorry.
MR. HAWA: It has the same kind of
provision. They all --
MS. KIS: Yeah. It looks like there is
that same provision in there, counsel.
BY MR. HAWA:
610 Q. What it's, I know you are not a lawyer,
but what does unwind, what does that provision mean?
What happens to those shares?
A. Well, it means they are gone.
611 Q. They are gone in what sense? They
ripped them up?
A. It's destroyed. They are gone. Unwind
generally means if a merger doesn't work, like in the
Delaware one we, it was dumped. To give you --
612 Q. So the intention was that if they got
their shares in JBI Nevada, they were to have nothing to
do with the shares. They were forfeiting their shares
John Bordynuik - 120
in JBI Delaware. Who was getting the JBI Delaware
shares?
A. No one. They are being destroyed. And
it doesn't say JBI Delaware. It's John Bordynuik Canada
Inc. They unwind their original investment. They
unwind it. The reason being is, and I think that you
are having some difficulties here, but JBI Delaware was
a company that owned JBI Canada.
613 Q. Yes.
A. And JBI Canada owned those assets.
614 Q. I understand that completely.
A. Great.
615 Q. So there was no asset, there was no
share purchase. There was no share trade. It was just
this sum agreement to rip up their shares?
A. There was a share purchase agreement
with all the original shareholders to buy stock in John
Bordynuik Inc. Canada. That is what the original Inc.
did that null and voided those agreements. They unwound
that transactions. There was no longer a need to have
JBI Delaware for that.
616 Q. There must be some shareholders in JBI
Delaware still left?
A. I don't know.
617 Q. After all, it still owns some shares of
John Bordynuik - 121
JBI Nevada?
A. They are sitting there in hyperspace.
They are still sitting there.
618 Q. They had a value of almost 1.5 million
at one point in hyperspace.
A. And they still sit there. They still
reside there this very day, those same share certs. with
restricted legends on them.
MR. HAWA: I don't know if it's a good
time to break. I want to go through the supplementary
affidavit.
-- OFF THE RECORD DISCUSSION
--- BACK ON THE RECORD AT 1:30 P.M.
BY MR. HAWA:
619 Q. Yes, Mr. Bordynuik, what determined the
300,000 shares, unrestricted shares which you provided
for Sandra? Why was that a magic number?
A. It appeared to be -- well, that number
came originally from our S1 filing. When we were going
through the public process, it appeared that our lawyers
felt that that was the amount of shares that they would
allow us to register at the time we were going through
in early 2009. In addition to that, in the early
shareholders, sorry, the original shareholders in 310
had also said that basically as a limit for anyone that
John Bordynuik - 122
had, let's say, a low or almost no cost basis for their
stock, that's the kind of deal they were going to do.
In other words, they didn't want
millions of shares going out to somebody that had
absolutely no cost basis and just be happy to dump it
out at a penny or two a share.
620 Q. What do you mean by cost basis?
A. What the stock costed in the end, what
they really paid for it.
621 Q. They paid a tenth of a penny for those
stocks?
A. No, I mean what the John Bordynuik Inc.
shareholders paid for it. They didn't pay a tenth of a
penny. It's in their filings what they originally paid
for their stock. I don't recall exactly what it was
but --
622 Q. Are you talking about the original
shareholders?
A. In 310, yes.
623 Q. So 300,000 was a number that was arrived
at as the maximum that that who would get?
A. Someone would get if they had almost a
no or low cost basis for their stock.
624 Q. All of the shareholders of JBI Delaware
were buying them at a low or no cost basis?
John Bordynuik - 123
A. No, they didn't. They had a cost basis
of, for example, of I think someone that paid $10,000
for 20,000 shares, that's a 50-cent cost basis. They
paid that in John Bordynuik Inc. Ontario. So it's
unlikely that they would sell all their stock at a penny
a share because they had a significant cost basis for
their shares. It's also how the regulators, I
understand, arrive at what they allow to be registered
or not.
625 Q. But there was no registration of those
stocks in 310 Holdings?
A. There absolutely was.
626 Q. There was a registration statement?
A. In 2006.
627 Q. They had been registered, those stocks?
A. Yeah.
628 Q. But not the ones that you got?
A. The ones that I got?
629 Q. Yes.
A. No, they couldn't be. They are
controlled stock. You can't register controlled stock.
630 Q. Are you planning to give back any shares
to the company?
A. No, no.
MS. KIS: To which company?
John Bordynuik - 124
BY MR. HAWA:
631 Q. To JBI Delaware? You have 3.4 million
shares are you planning --
A. JBI Delaware.
632 Q. Sorry, JBI Nevada.
A. No, I am not. I started with -- I did
learn it was 40,250,000. And then I had actually
returned a total of, it was between either executives or
return stock to the treasury of 35 million total.
MS. KIS: What do you mean between
executives?
THE WITNESS: Well, meaning 33 million
went to the treasury and the other two million was used
to either offset a PIPE, hire a CFO, something for JBI.
So in actual fact I was at 5.23 million. There was
another million that went back. So I was 4.23 million
as of May of 2012.
BY MR. HAWA:
633 Q. And since then you sold 800 of those?
A. That's correct.
634 Q. Those are the only ones that you've ever
sold in 2012?
A. Yes.
635 Q. You plan to give back no more shares?
You are holding on to the 3.4?
John Bordynuik - 125
MS. KIS: Do you mean return to
treasury?
BY MR. HAWA:
636 Q. Yes.
A. That's correct.
637 Q. Why did Pat Widdis receive 500 shares
unrestricted?
A. I don't know how many she received. I
would have to see some documentation. But, in any
event, if she received more than 300,000 it was because
her cost basis was fairly high. She did not have a cost
basis of let's say a penny a share.
638 Q. Did anybody else receive more than
300,000 shares, unrestricted shares?
A. I think Wendy Pinder did, Steve Doede's
wife. She put in cash over $150,000. So that was
more --
639 Q. Put in cash into JBI Ontario?
A. Yes, that's correct. However, Steve
Doede, her husband, took the 300,000 share deal that
Sandra did, and he originally had 1.2 million shares but
his cost basis was very, very low like hers.
640 Q. So he was not a PIPE?
A. That is correct.
641 Q. Steve Doede?
John Bordynuik - 126
A. But his wife was.
642 Q. His wife was. But that was a strategy
that you devised? It was not a requirement that that
strategy of --
A. It was.
643 Q. -- distinguishing between PIPE and
non-PIPE in order to provide them with restricted or
unrestricted shares?
A. No, this is something that I devised.
It's something that the shareholders had agreed to as
well. I mean, I don't know any company that would
agreed to hand out a bunch of stock to somebody with no
cost basis. They just won't allow it. And even if they
did, the regulators wouldn't. That is why they have
registration processes to ensure people that have low
cost basis don't go and flood the market and destroy the
capital for everyone else.
644 Q. Did you not advise Sandra that she could
get 300,000 per quarter, and that she was restricted to
selling 1%?
A. Never. That's impossible. Um, if she
took restricted stock, and if ever it met all the rules
and regulations to be sold there were even then, even if
you met everything to actually take affiliate control
stock and sell it. There were limitations imposed by
John Bordynuik - 127
the SCC of how much you could sell every quarter. They
have a formula for that. It's not 300,000. It's a
specific formula, but it is a very low amount and it is
based on trading volume per week, the amount of issue
notes in shares, 1% maximum of all of that of the stock
owned. There is a number of metrics that they use to
limit affiliates of selling stock.
645 Q. Did you advise her of that?
A. Yes.
646 Q. About the 300,000 per quarter limit?
A. I don't think that there was.
MS. KIS: Counsel, sorry, that was not
his evidence, right? He just explained to you that he
didn't think that it was 300,000 and that it was based
on a formula. Now, you reframed it for him as he
represented it as it was 300,000 per quarter limited.
THE WITNESS: I never stated it was
300,000. I don't even think that is under the rules.
BY MR. HAWA:
647 Q. You said earlier that all of the JBI
Delaware shareholders had agreed to forfeit their
shares?
MS. KIS: For what?
BY MR. HAWA:
648 Q. As a result of, as a result of their
John Bordynuik - 128
taking JBI Nevada's shares, is that correct?
A. They agreed to unwind the transaction.
649 Q. To unwind the transaction?
A. Yes.
650 Q. So who then would own those shares? Did
they go back to treasury?
MS. KIS: Counsel, you've asked this
question already.
THE WITNESS: You asked me that and they
have been cancelled.
BY MR. HAWA:
651 Q. Have they been cancelled formally, all
their shares?
A. I think so.
652 Q. Are there any outstanding shareholders
that you know of in JBI Delaware?
MS. KIS: You asked that question,
counsel.
BY MR. HAWA:
653 Q. Currently?
A. I don't know.
MR. HAWA: Subject to any answers to
questions taken under advisement, and subject to your
undertakings, I conclude the examination.
MS. KIS: No re-examination.
John Bordynuik - 129
-- UPON COMPLETION OF EXAMINATION AT 1:40 p.m.
Certified correct
________________________
Phyllis Doel, C.S.R., R.P.R.
Chartered Shorthand Reporter
Registered Professional Reporter
Commissioner of Oaths (expires March 30, 2015)
** This document must bear the original signature and
certification of the Reporter in Attendance at the
examination of the witness in the above matter. Absence
of this certification and signature is indication this
document has been reproduced without the permission of
Nimigan Mihailovich Reporting, and as such, is not an
original document and, therefore, in direct
contravention of Ontario Regulation 587/92, Courts of
Justice Act, January 1, 1990. **
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