28. Baldwin admits that Gately & Associates acted as JBI’s auditor between the filing of JBI’s Form 10-Q for the third quarter of 2009 and the filing of its Form 10-K for the fiscal year ended December 31, 2009, but otherwise deny the allegations contained in the first sentence in paragraph 28, including that any actions taken by JBI or Defendant Bordynuik caused JBI’s auditor to lack independence within the meaning of Regulation S-X, Rule 2-01. Baldwin admits that Defendant Bordynuik believed that a different individual who was a colleague of the principal of Gately & Associates performed audit procedures on behalf of that firm while the principal was himself unavailable to perform such procedures, but otherwise deny the allegations contained in the second sentence of this paragraph. Baldwin lacks knowledge or information sufficient to form a belief regarding the allegations in the third, fourth and last sentences of this paragraph and therefore denies the same. Baldwin admits that he had infrequent communications with the principal during February-March 2010, but he lacks knowledge or information sufficient to form a belief regarding whether Bordynuik had infrequent communications with the principal during February-March 2010 or whether Bordynuik specifically discussed the valuation of the media credits with the auditor from the Gately firm or the principal’s colleague, and therefore denies the same. Baldwin otherwise denies the allegations in the fifth sentence of this paragraph.
29. Baldwin states that the certifications attached to JBI’s Form 10-K filed on March 31, 2010, the management representation letters, and unqualified audit opinion referenced in the first, second and last sentences of paragraph 29 speak for themselves and deny any allegations inconsistent therewith. Baldwin otherwise denies the allegations in this paragraph.
30. Baldwin admits the allegations contained in the first two sentences of paragraph 30 of the Complaint. Baldwin further admits that he reviewed and was aware of the valuation of the media credits on JBI’s balance sheets, but otherwise denies the allegations contained in the second sentence of this paragraph. Baldwin admits that he had discussions regarding the valuation of the media credits with JBI’s business consultant, but otherwise denies the allegations contained in the fourth sentence of this paragraph. Baldwin denies the allegations contained in the fifth, sixth and last sentences of this paragraph.
31. Baldwin admits the allegations contained in the first sentence of paragraph 32 of the Complaint, except that Baldwin states that the quoted language in the first sentence was stated in jest. Baldwin states that the emails referenced in the second and third sentences of this paragraph speak for themselves and denies any allegations inconsistent therewith.
32. Baldwin admits the allegations contained in the first sentence of paragraph 32 of the Complaint. Baldwin admits that he knew that the media credits were the single largest assets on JBI’s balance sheet and that he did not review documents associated with them nor did he consult anyone other than Defendant Bordynuik regarding whether the media credits were real or usable, but states that Baldwin believed that such review or consultation was unnecessary. Baldwin otherwise denies the allegations contained in the second sentence of paragraph 32. Baldwin admits that he did not research GAAP relating to the media credits prior to the filing of the Form 10-K in March 2010, but otherwise denies the allegations contained in the third sentence. Baldwin admits that he did not consult with any outside auditor about the appropriateness of reporting the media credits on the balance sheet at $9.997 million, but otherwise denies the allegations contained in the fourth sentence. Baldwin denies the allegations contained in the last sentence of this paragraph.
33. Baldwin states that the term “significant” in the first sentence of paragraph 33 of the Complaint is vague and ambiguous and he therefore lacks knowledge or information sufficient to form a belief as to the allegations in the first sentence of this paragraph. Baldwin admits the second sentence of this paragraph. Baldwin denies the allegations in the fourth and fifth sentences of this paragraph.
34. Baldwin denies the allegations in paragraph 34.
35. Baldwin admits that he did not state at JBI’s Annual General Meeting that the media credits were erroneously booked and would have to be written down significantly and potentially in their entirety, but denies that he was under any obligation to do so. Baldwin admits that he did not state that he believed the media credits to be, at a minimum, overvalued by nearly $9 million, and at worst, completely worthless and needing to be written off entirely, and that he did not state that he believed the company most likely would need to restate its financial statements as a result of the overvaluation of the media credits, but denies that he had any obligation to do so. Baldwin otherwise denies the allegations contained in paragraph 35.
36. Baldwin admits that Defendant Bordynuik generally was present at JBI’s Annual
General Meeting. Baldwin otherwise denies the allegations contained in the first sentence of paragraph 36. Baldwin denies the allegations contained in the second sentence of this paragraph. Baldwin admits that at the time of JBI’s Annual General Meeting, Bordynuik was generally aware that one of the PIPES offerings had not yet closed. Baldwin denies that at the time of JBI’s Annual General Meeting, Baldwin was generally aware that one of the PIPES offerings had not yet closed. Baldwin states that at the time of the JBI’s Annual General Meeting, Baldwin was unaware that a PIPE offering had been commenced or was ongoing. Baldwin otherwise denies the allegations contained in the last sentence of this paragraph.
37. Baldwin states that the Form 8-K and the restatements referenced in paragraph 37 of the Complaint speak for themselves and deny any allegations inconsistent therewith.
Ronald Baldwin, Jr.'s ANSWER to 1 Complaint
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