Webalo First Day Declaration

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David S. Kupetz (CA Bar No. 125062) [email protected] Jason D. Balitzer (CA Bar No. 244537) [email protected] SulmeyerKupetz A Professional Corporation 333 South Hope Street, Thirty-Fifth Floor Los Angeles, California 90071-1406 Telephone: 213.626.2311 Facsimile: 213.629.4520 Bankruptcy Counsel for Webalo, Inc., Debtor and Debtor in Possession

UNITED STATES BANKRUPTCY COURT

CENTRAL DISTRICT OF CALIFORNIA

LOS ANGELES DIVISION

In re Webalo, Inc., a California corporation,

Debtor.

Employer ID #94-3352073

Case No. 2:14-bk-11467-WB Chapter 11 OMNIBUS DECLARATION OF PETER PRICE IN SUPPORT OF DEBTOR'S “FIRST-DAY” MOTIONS DATE: [To be Set] TIME: [To be Set] PLACE: Courtroom 1375

PLACE: U.S. Bankruptcy Court 255 East Temple Street

Los Angeles, CA 90012

Case 2:14-bk-11467-WB Doc 6 Filed 01/27/14 Entered 01/27/14 16:33:34 Desc Main Document of 27

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DECLARATION OF PETER PRICE

I, Peter Price, declare:

1. I have personal knowledge of the facts stated herein. I can testify that said

facts are true and correct.

2. I am the Chief Executive Officer and co-founder of Webalo, Inc. ("Webalo"

or the "Debtor").

3. Webalo is a California corporation. Webalo has its office in Los Angeles,

California.

4. Initially founded in 2000, Webalo is a re-launched (2012) early stage

technology company, with a product in the market and partners established. Webalo is just

entering the revenue generation stage.

5. Webalo's proprietary technology transforms data and enterprise applications

to make them compatible with mobile devices. This eliminates the need for custom programming,

and the deployment of applications is performed in comparatively less time. Webalo aims to

deliver enterprise mobile solutions in an easy, fast, and affordable manner.

6. Webalo was founded in 2000 by veterans in the IT sector with rich industry

experience. I have served as Webalo's Chief Executive Officer since 2001.

7. I have over thirty years of technology industry management and leadership

experience. Prior to co-founding Webalo, I served as founder and/or senior executive in the

financing, building and selling of four early-stage technology companies. My business operations

experience expands across major global software markets.

8. In 1984, I co-founded Expertech, a developer of expert system software

based in Europe. In 1990, I managed the acquisition of Expertech by Inference, a California-based

provider of self-service and knowledge management tools for customer service and help desk

industries. In July 1995, I was a member of the Management Committee that organized

Inference's successful initial public offering.

9. In 1996, I joined Limbex, a developer of the award-winning WebCompass

product (an end-user tool for acquiring and managing Internet information), and participated in its


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sale to Quarterdeck later that year. In 1997, I co-founded TriVida, a leading provider of a

networked personalization hosted service, and managed its acquisition by Be Free in 2000.

10. Webalo's management team has worked together in the enterprise software

market, in various companies, in all or part of the last four decades, and has been responsible for

building and deploying major technology-rich enterprise applications in corporations such as

American Airlines, American Express, AT&T, Boeing, Lockheed, Canon, Dell, Dun & Bradstreet,

Ford Motor Co., General Electric, Mitsubishi, NASA, Sun America, Swiss Bank, and many

others.

11. Webalo commenced a bankruptcy reorganization case by filing voluntary

chapter 11 petition on January 27, 2014 (the "Petition Date").

12. Webalo continues to manage and operate its business as a debtor in

possession. No creditors’ committee has yet been appointed in its chapter 11 case.

COMPANY HISTORY

13. Following its founding in 2000, Webalo and spent its first two years

exploring technology opportunities in the area of user interaction with enterprise data from multi-

channel devices. The company conceived, developed and patented (2011 - US Patent 8078731) an

uniquely innovative and potentially highly lucrative product/platform opportunity.

14. In the years that followed, post 9/11 and with subsequent recessions and

major industry transformations, the financing market for early-stage enterprise technology

companies was largely shut-down forcing Webalo to maintain a private financing model,

opportunistically supplemented with revenues from consulting services for companies such as

Symantec and the Federal Government.

15. In 2005, Webalo introduced its initial product to the BlackBerry

Smartphone market, aimed at mobilizing business intelligence.

16. Though early signs were encouragingly positive, the following years proved

to be unexpectedly challenging due to the successful introduction in 2007/2008 of next generation

mobile devices from vendors such as Apple and Android. This led almost immediately to the

enterprise market starting a transformational shift from BlackBerry to supporting Apple and then


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to Android and other devices. These major hardware, infrastructure transitions had the effect of

postponing the arrival of the enterprise mobile application software market - Webalo’s market.

17. During this period, Webalo foresaw these major industry changes and

adapted to this market shift by transforming its technology/product to support these new

generation smart phones and entering the resulting Cloud and Bring-Your-Own-Device era with a

major new product/platform launch at the end of 2012.

18. At the start of 2013, based on its new service for mobilizing enterprise

applications, Webalo launched its sales/distribution channel strategy; and throughout the year built

a network of corporate partners who are now ready to generate revenue for Webalo in 2014 and

beyond.

19. Webalo, financed exclusively by individual investors, rather than

institutional investors, raised approximately $18,600,000 of equity financing from inception

through 2011, and since then, an additional approximate $9,000,000 of debt financing.

20. In 2007/2008, a new group of private investors, who we call the “S2

Investors”, invested in Webalo. As a condition of their investment, this group insisted on being

given special rights to approve capital transactions which they subsequently used to systematically

and repeatedly challenge and oppose management, the company’s strategy and business plans as

well as the other shareholders and creditors who fully supported Webalo and its strategy. The

result was that, over the past seven years, Webalo spent a considerable amount of time and effort

accommodating this group, in order to offset their blocking rights. This came at the great expense

of time, resources and money and to the substantial detriment of business progress.

DEBT AND EQUITY STRUCTURE

21. Webalo has issued Secured Promissory Notes (the “Junior Secured Notes”)

and Senior Secured Promissory Notes (the “Senior Secured Notes”) pursuant to (i) a Secured Note

Purchase Agreement dated on or about March 13, 2013, by and among the Webalo and the holders

of the Junior Secured Notes; and (ii) a Senior Secured Note Purchase Agreement dated on or about

September 15, 2013, by and among Webalo and the holders of the Senior Secured Notes. The

Junior Secured Notes are held by approximately 44 holders and have a cumulative outstanding


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principal amount of approximately $1,679,150. The Senior Secured Notes are held by

approximately 28 holders and have a cumulative outstanding principal amount of approximately

$2,580,000.

22. From April 2012 through January 2013, Webalo raised approximately

$4,558,000 through the issuance of unsecured debt in the form of convertible promissory "bridge"

notes (the "Bridge Notes"). The Bridge Notes are held by approximately 48 holders and had a

maturity date of December 31, 2013. Pursuant to the language in the Bridge Note documents, the

Bridge Notes were to convert to equity if not paid or within 20 days following the December 31,

2013 maturity date, and after the company provided a conversion notice. Such notice was not

provided since it had been determined by that time that Webalo would file a Chapter 11

reorganization case. As of the Petition Date, Webalo has miscellaneous other unsecured debt in

the estimated approximate sum of $235,000.

23. Webalo raised approximately $18,600,000 in equity financing from

inception through 2011. The equity interests issued by Webalo take the form of preferred and

common stock and are held by approximately 135 holders. The preferred stock has been issued in

a number of series (Series 1, 1A, 2, 2B, 3, 4, and 4B). Approximately $123,000 was raised from

investors through the issuance of common stock.

24. Shortly prior to the Petition Date and in contemplation of its chapter 11

filing Webalo obtained approximately $400,000 in funds under the same terms as the Senior

Secured Notes. Additional funding is to be provided postpetition to allow Webalo to continue to

operate and pay administrative expenses connected with the chapter 11 case.

BUSINESS SUMMARY

25. Webalo is an infrastructural solution for automatically mobilizing enterprise

apps:

o To generate enterprise mobile applications, all an enterprise needs to

do is point Webalo at their data and Webalo does the rest.

o Webalo connects to any standards-based enterprise application such

as those from IBM, Microsoft, Oracle, SAP, Salesforce.com and

even in-house custom built applications.


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o Webalo automatically generates rich mobile UIs (user interface) for

any Android, Apple, BlackBerry or Windows Smartphone, tablet or

desktop device.

o Webalo is available either as a cloud-based SaaS (Software as a

Service) platform or as a behind-the-firewall virtual appliance.

26. Webalo's go-to-market strategy is 100% channel-based:

o Webalo integrates directly with, and partners with, EMM

(Enterprise Mobile Management) infrastructure vendors such as

AirWatch, Aruba, Citrix, Good Technology, MobileIron, Symantec

etc.

o GE’s Intelligent Platforms division is a strategic partner and will roll

out a Webalo based real-time operational intelligence app to its

30,000 global customers in Q2 2014

27. Since launching the platform in October 2012, 25 resellers and

approximately 800 companies have signed up for Webalo, with a very positive response to

Webalo's product:

o Volkswagen Financial Services: “The ease of development means

that we can be fully deployed with Webalo in much less time, and at

less cost, than it would take with other approaches.”

o Nixon Hire: “…flexibility was one of the advantages we saw in

Webalo. We’re able to select the exact data and functionality that

each mobile employee needs and give them mobile access in a

remarkably short time for an insignificant cost.”

o Bell Nursery: “...we rely on Webalo to equip hundreds of our

employees with the tools they need to optimize daily replenishment

in all of our store locations… A comprehensive mobility solution is

critical to the success of our business, and we are delighted to

partner with Webalo.”

o University Hospitals Birmingham: “It’s astounding that we can

deliver data and functions so fast and provide virtually instantaneous

benefits to both users and patients. Webalo is the golden nugget that

makes our mobility possible. It’s remarkable.”

28. Benefits to Webalo Customers and Partners:

o Ease of Deployment: Webalo provides low-cost, rapid, out-of-the-

box enterprise mobile app deployment. Customers can sign-up for


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free at webalo.com and within minutes deploy their enterprise

mobile app. The simple set-up, configuration, and deployment

process takes minutes to complete and generates device specific

native mobile interfaces without the IT department having to write

code or use cumbersome development tools. This, combined with

the integrated training and support environment, eliminates the need

for expensive consulting, training, and engineering demands that

bedevil other approaches. For Webalo and its channel partners, this

means dramatically lower cost of sales in developing customer

relationships from pilot to enterprise wide deployments.

o Mobile User Experience: Similar to native mobile consumer apps on

their devices, users benefit from a rich, visual experience which

provides them with their own personalized view of the enterprise

applications and data.

o Aggregate Multiple Enterprise Applications: Uniquely, Webalo can

access and combine data from multiple enterprise applications, such

as those from IBM, Microsoft, Oracle, SAP, Salesforce.com, and

even in-house custom built applications, into a single app. This

enables users to interact with only the parts of the various enterprise

applications, services, and data that they need through one single

app rather than having to access separate mobile versions of various

enterprise applications from multiple vendors and navigate through

unnecessary layers to do what they want to do.

o Business scalable: Webalo has been designed to meet the

requirements of companies that now have to mobilize everything.

The accessible, self-service Webalo platform enables small

businesses that will need tens of apps, mid-size companies that will

need hundreds of apps and large enterprises that will need thousands

of apps to deploy them all rapidly, simply, and at a very low-cost.

Once the Webalo client is deployed on a device, the company can

mobilize any number of enterprise applications, services or datasets

without any additional cost or disruption for the end user.

o Secure: Webalo “standardizes and commoditizes” enterprise

mobility, packaging enterprise-class solutions that automatically

meet mobility security challenges. Rather than providing tools for

building applications from scratch, where each line of code

represents a potential security vulnerability, a possible bug, and a

maintenance burden, Webalo provides controlled access to existing

enterprise applications and data, eliminating much of the human

factor and all of the security pitfalls associated with building mobile

applications from scratch.


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29. Webalo's primary competition includes mobile versions of packaged

enterprise applications and in-house custom mobile application development. Packaged apps,

including those from IBM, Microsoft, Oracle, SAP & others, are designed from a desktop

paradigm that in addition to being isolated do not deliver the simple, fast and responsive

experience that users, now conditioned by consumer mobile experiences, expect. Custom mobile

application development, and associated tools, is complex, time consuming and expensive and can

often only meet return-on-investment goals in hyper-scale (FedEx, Hertz etc.) deployments. Both

approaches rely on high-skill/high-cost mobile designers and programmers. Whether building

from scratch or customizing packaged apps to fit their environment, IT organizations face

significant challenges deploying effective, user-friendly enterprise mobile apps as the process

always requires architecture design, integration with existing enterprise applications and data, UI

design, coding, and implementation, security infrastructure integration, provisioning and

deployment. Furthermore, the process has to be repeated for each mobile OS and every time

changes are required for the app. This reality can be variously described as complex, time

consuming, expensive, etc. But the real challenge is that the model is simply not scalable. It does

not work for today’s all-mobile-all-the-time business environment. Webalo solves this challenge

by providing a scalable model for mobile app generation with dramatically lower cost and effort

than these traditional mobile application development approaches.

PRE-REVENUE FINANCIAL HISTORY

30. As stated above, Webalo has been operating since 2000. Webalo, however,

was re-launched in 2012 and is properly characterized as an early-stage technology company, with

a product in the market and partners established, that is just entering the revenue generation stage

in a meaningful way.

31. Webalo's fiscal year begins in January and ends in December. Historically,

Webalo started generating revenues in 2007. In 2011, Webalo generated $0.27 million in

revenues. In the same year, Webalo's operating expenses totaled $3.75 million. Consequently,

Webalo reported a loss of approximately $3.45 million during 2011. In 2012, Webalo generated

$216,052 in revenues. In that year, Webalo's operating expenses totaled $4,239,805 and costs of


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goods sold amounted to 725,042. Accordingly, Webalo reported an operating loss of

approximately $4,748,795 during 2012. For the 11 months ending November 30, 2013, Webalo

generated $149,860 in revenues. For that period, Webalo's operating expenses totaled $4,220,892

and costs of goods sold amounted to $661,629. Consequently, Webalo reported an operating loss

of approximately $4,732,661 for the first 11 months of 2013.

32. At this time, Webalo is poised to promptly move forward with a

restructuring plan. Further funding necessary for continued operations and to pay chapter 11

administrative expenses will be obtained postpetition and substantial funding will be provided in

connection with Webalo's chapter 11 plan. Webalo anticipates filing its chapter 11 plan within 60

days of the commencement of the case. The company's current projections, which are subject to

adjustment, are attached hereto as Exhibit 2 and are incorporated herein by this reference. As

reflected in the projections, Webalo and I presently anticipate further funding under the Senior

Secured Note Purchase Agreement in the sum of $1,000,000 by the end of February 2014 and an

additional $1,500,000 by the end of March 2014.

FACTORS PRECIPITATING CHAPTER 11 FILING

33. Early in 2013, Webalo intended to launch an institutional financing round

with the aim of closing it by the end of 2013. To finance Webalo over this period, the company

tried to negotiate an extension of its existing debt financing, but experienced intense opposition

from the S2 Investors despite the support of this strategy from the majority of creditors and

shareholders.

34. Several months of negotiations with the S2 Investors ensued delaying the

company’s progress once again, and this time the institutional financing process itself. At the

conclusion of this process the S2 Investors withdrew any remaining support of the company and

its finances, with the result that, though aggressively pursued, the institutional financing process

was never able to progress with prospective investors beyond the initial exploratory stage because

Webalo was forced to struggle forward with month-to-month financing, thereby never having the

resources required to finance the operating plan required to achieve the milestones expected by the

institutional investors if they were to fund the company.


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35. Despite these challenges, Webalo made excellent progress in establishing

its business partnerships in 2013, and supportive existing investors continued to finance the

company.

36. A revised plan was put in place in October 2013, to raise $3,500,000 to fund

the Webalo’s operations for the ensuing year without the inefficiency of month-to-month

financing. Supportive investors were willing to fund the company, but only with the possibility of

support from the S2 Investors. To that end, Webalo chose to carry out good faith negotiations

with the S2 Investors to ensure that they (the S2 Investors) would not use their rights to the

disadvantage of the investors who were being asked to fund the company at significant risk.

37. Several more months were spent trying to come to agreement with the S2

Investors, but in the end the S2 Investors, despite initially coming to an acceptable verbal

agreement, declined to conclude a written agreement.

38. As of the end of 2013, Webalo was in urgent need of financing and would

not be able to continue operations without obtaining funding.

39. I have been actively engaged in seeking financing for Webalo for the past

several months and determined that the only financing available to the company is from a group of

investors led by certain current investors (but anticipated to include some new investors). That

group was and is willing to fund Webalo through a reorganization or recapitalization, including

through a bankruptcy, but would not fund the company unless a structure was put in place that

simplifies the capitalization table and eliminates minority blocking rights, including specifically

the blocking rights currently held by the S2 Investors.

40. As indicated above, Webalo engaged in significant and prolonged

negotiations with the S2 Investors. In these negotiations, Webalo offered significant concessions

and incentives to facilitate a negotiated recapitalization. The S2 Investors articulated a number of

asks which, Webalo was led to believe, would result in a negotiated compromise and allow the

company to move forward with a mutually agreed-upon recapitalization and financing. Webalo

submitted a proposal which captured the negotiated agreement, but the S2 Investors rejected the

proposal and advised the company that, despite prior discussions, the S2 Investors would not agree


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to any recapitalization that limits their rights as they then currently stood. Following the S2

Investor’s rejection of the negotiated proposal, I had further discussions with the current investor

group prepared to provide Webalo with additional funding, but the current investor group

reconfirmed its unwillingness to fund the company without a reorganization of the company,

including recapitalization, restructuring of Webalo's debt and equity interests, and elimination of

minority blocking rights.

41. With Webalo unable to continue operations without additional financing,

and with no financing being available under the current circumstances, the only feasible options

available to the company were: (i) cease operations and liquidate the company’s assets; or (ii)

pursue a restructuring through bankruptcy.

42. Webalo's Board unanimously agreed that the best interests of the company’s

creditors and shareholders would not be served by a shutdown and liquidation of Webalo and that

a recapitalization and/or restructuring would be in the best interests of the creditors and

shareholders. Accordingly, having exhausted all other reasonable options, the Board approved a

Chapter 11 filing in order to pursue a restructuring through a bankruptcy reorganization case.

CHAPTER 11 CASE

43. The Senior Secured Note holders and the Junior Secured Note holders have

consented, through their duly appointed agents, to Webalo's use of cash collateral to continue to

operate its business in the ordinary course and to fund administrative expenses connected with

Webalo's chapter 11 case. A true and correct copy of such written consent obtained by Webalo is

attached hereto as Exhibit 1 and is incorporated herein by this reference.

44. Additionally, further funds will be provided postpetition adequate to allow

Webalo to continue its operations and pay administrative expenses.

45. Webalo anticipates filing a plan of reorganization providing for

restructuring of its debt and equity interests within 60 days of the commencement of Webalo's

chapter 11 case. Substantial additional funding will be provided in connection with the plan.


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FACTS IN SUPPORT OF FIRST DAY MOTIONS

Motion for Order Authorizing Payment and/or Honoring of Prepetition Employee Compensation Benefits, Reimbursements, Withholding Taxes, Accrued Vacation, and Related Employee Claims (the “Employee Claims Motions”)

46. As of the Petition Date, Webalo has 19 salaried employees, 1 hourly

employee, and 3 individuals who work remotely as contractors and submit monthly invoices to

Webalo. In the ordinary course, Webalo's employees are paid on a monthly basis (at the end of

each month). Webalo uses an outside payroll service, Paycom, to handle payroll. For the month

of January 2014, payroll was funded by Webalo to Paycom January 23, 2014, with the exception

that I was not paid from this payroll. As is the case each month, Paycom makes the payment to

Webalo's employees. A true and correct list of Webalo's employees' monthly compensation and

annual salary is attached to the Employee Claims Motion as Exhibit 1. For privacy reasons and to

protect Webalo's business, this chart does not identify the employees by name or specific position.

As set forth in Exhibit 2 to the Employee Claims Motion, Webalo also provides its employees

with health, disability, life, and workers compensation insurance, 401k plan, and paid time off.

47. Each of the employees for whom the Debtor requests the relief in the

Employee Claims Motions is currently employed with the company. Webalo will not pay pre-

petition wages or claims to employees who are no longer employed by the company, or to any

employees who have provided notice to the company that they will be leaving.

48. I believe that paying and/or honoring employee claims and benefits will

allow Webalo to retain necessary employees, maximize the value of the company’s business and

assets, and leave Webalo in a position where it can move forward with its business operations on a

viable basis. Webalo has access to adequate funds to continue its ongoing operations.

49. The amounts of Webalo's employees’ salaries for each pay period and

annually are accurately set forth in the chart attached to the Employee Claims Motions as

Exhibit 1. The Company is not seeking to pay out the vacation pay to the employees, but only

honor accrued vacation days in the ordinary course of its business. I submit that it is appropriate

to honor such claims, provided, however, that the vacation pay is not actually paid out.


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50. With respect to payroll, the Employee Claims Motion is brought in an

abundance of caution since it relates to a payroll period covering the month of January 2014,

although payroll was funded to Paycom prepetition on January 23, 2014. The amount of the

Webalo’s employees’ gross pay for each pay period and annual compensation are accurately set

forth in the chart attached to the Employees Claims Motion as Exhibit 1.

51. In large part, Webalo's ongoing operations and the opportunity for the

company to maximize the value of the estate is dependent upon a stable and productive work

force. In order to maintain employee stability, morale, and loyalty and to sustain the work effort

and ethic being demonstrated by its employees, I believe that it is imperative that payment to all

employees and honoring of all employee benefits remains current. Further, some of the company's

employees simply may not be able to afford to miss a pay period (especially since each pay period

is an entire month) or be deprived of benefits they receive in the ordinary course of their

employment.

52. The stability of the Webalo's employee pool is tenuous. The labor pool is

mobile. At the same time, it could be difficult for the company to find qualified replacement

employees with the unfavorable publicity of disrupted pay or benefits. Even if replacements could

be hired, it could take significant time before they could be fully trained and qualified for the jobs,

resulting in further disruption and harm to the company's business operations and the pending

reorganization process. Any interruption in Webalo’s business or downturn in productivity could

detrimentally impact the value of the estate and harm the interests of creditors of the company.

53. If prepetition compensation, reimbursement amounts and customary

benefits are not received and honored in the ordinary course, some of the employees may suffer

extreme personal hardship. Such a result would obviously damage employee morale. At this

time, any serious deterioration in employee morale would substantially and adversely impact the

company’s ability to move forward in a manner that maximizes the value of the estate. I submit

that the total amount to be paid to or for the benefit of the company's employees if the requested

relief is granted is significantly outweighed by the importance and necessity of the employees and

the magnitude of loss of business value the company would suffer if those amounts are not paid.


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54. Webalo's employees receive compensation for services rendered in amounts

that are competitive within the company's industry. Webalo's employees are compensated in

arrears once each month. As mentioned above, Webalo uses Paycom as a third-party payroll

processor.

55. Webalo offers its employees various benefits consistent with industry

standards, including medical and dental coverage, vision care, and paid vacations. See Exhibit 2

to the Employee Claims motion for greater detail. As with the payment of wages, it is important

that benefits continue to be provided on an uninterrupted basis. By the Employee Claims Motion,

Webalo requests that it be authorized to continue the employee benefit plans identified in Exhibit

2 to the Employee Claims Motion and referenced below.

56. The company has established and maintained its own benefit plans for its

employees. The general benefit plans to Webalo's employees (as described in Exhibit 2 to the

Employees Claims Motion) include:

Medical and Vision coverage;

Dental Insurance;

Short term and long term disability coverage;

Life insurance;

Worker's compensation insurance;

401k plan; and

Paid Time Off and company holidays.

57. Webalo customarily reimburses employees who incur business expenses in

the ordinary course of the company's business. The company’s employees submit reimbursement

requests monthly around the 20th

of following month. It is estimated that some of the company's

employees will not have timely submitted receipts and/or other documentation for a minimal

amount of reimbursement of business expenses as of the Petition Date. Further, some checks that

were issued prior to the Petition Date may not have been cashed before the bankruptcy was filed.

Webalo estimates that the total of both the unpaid expenses and outstanding checks for expenses

already paid will total less than $50,000. Webalo requests that the Court authorize the Company


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to pay any outstanding expense reimbursements as of the Petition Date, and direct the Company’s

bank (Wells Fargo Bank) to honor any outstanding checks.

Motion for Order (1) Deeming Utility Companies Adequately Assured of Future Performance, (2) Establishing Procedures for Requests for Additional Assurance, and (3) Restraining Utility Companies From Discontinuing Alternating or Refusing Service (the “Utilities Motion”).

58. In connection with the operation of its business, Webalo obtains internet,

Cloud, telephone and other similar services from a number of different utility suppliers (the

“Utility Providers”). The Utility Providers are identified to the best of Webalo's ability in the

chart attached to the Utilities Motion as Exhibit 1. This Exhibit 1 accurately details Webalo's

Utility Providers, the name, address and other contact information for the providers, the type of

service provided, and the amounts of the company's average one month charges for each utility.

The Utility Providers supply Webalo with services essential to the continuation of Webalo's

business. Any interruption in the utility services provided to Webalo would seriously disrupt

Webalo's operations and could jeopardize Webalo's opportunity to reorganize and maximize the

value of the estate. As set forth in the Utilities Motion, Webalo shall furnish adequate assurance

of payment to its Utility Providers.

Motion of NFRS, NFMX, and Simo Holdings for Order Limiting Extent of Notice Required for Administrative Matters and Authorizing Service by Email (the “Limiting Notice Motions”)

59. Webalo has approximately 48 holders of the Bridge Notes, 44 holders of the

Junior Secured Notes, 28 holders of the Senior Secured Notes, and 135 equity holders (while there

is material overlap between these groups, there are more than 175 different parties in Webalo's

mailing list). Further, I am advised that the company may be required to bring a number of

administrative matters before the Court in its chapter 11 case. Limiting the extent of notice

required for such matters could materially reduce the burden and expense that would be imposed

upon the estate if the Webalo is required to provide notice of all administrative matters in this case

to all of its creditors and various other parties. At the same time, a creditor, shareholder, or other

party in interest desiring to receive notice of administrative matters can ensure that notice will be

received by filing and serving a request for special notice or courtesy ECF notice. Moreover, in


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order to save the estate substantial expense in postage and copying costs, and to make receipt of

documents more convenient and expedient for various interested parties, Webalo also requests that

the Court authorize the company to serve notices, pleadings, and other documents filed in this case

by email on those parties who consent in advance to receiving service of such documents by

email.

60. Webalo seeks to reduce the burden and expense of providing notice of all

administrative matters in this case. Service of notices, pleadings, and other documents filed with

the Court by email on parties who consent, in advance, to receiving service of documents by email

will reduce postage and copying expenses in this case and will expedite service in a manner that

many parties will likely find preferable to the other more costly alternatives. Further, I understand

that the Court's approval of the Limiting Notice Motion will eliminate the necessity and expense

of the Company requesting limited notice separately in each administrative matter as it arises.

Motion for Extension of Time to File Bankruptcy Schedules, Statement of Affairs and Lists (the “Schedules Extension Motions”) 61. In the Schedules Extension Motion filed by Webalo, the company requests

an extension of time of thirty (30) days to file its bankruptcy schedules, statement of affairs, lists,

and related documents.

62. The reasons for this request, among other things, include the following:

(a) Upon commencement of this case, in order to continue its operations

and avoid irreparable harm to the estate, Webalo was required, among other things, to file various

“first day” motions, including (among others) motions (i) to obtain authorization to pay and honor

priority prepetition wage and benefit claims owed to its employees, and (ii) to provide adequate

assurance in accordance with Bankruptcy Code section 366 to utility providers. These matters

required the immediate attention of the company and its limited accounting personnel. The

company's accounting staff is limited to one person, Lora Mekikian (Vice President, Finance). Ms.

Mekikian handles accounting, finance, and human resources matters for Webalo. Since this is an

operating case (Webalo has an ongoing operating business), significant attention must continue to

be devoted to the company's business operations.


EXHIBIT 1


EXHIBIT 2


PROOF OF SERVICE OF DOCUMENT

I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is 333 South Hope

Street, Thirty-Fifth Floor, Los Angeles, California 90071-1406.

A true and correct copy of the foregoing document entitled (specify): OMNIBUS DECLARATION OF PETER PRICE IN

SUPPORT OF DEBTOR'S “FIRST-DAY” MOTIONS will be served or was served (a) on the judge in chambers in the form and

manner required by LBR 5005-2(d); and (b) in the manner stated below:

1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF): Pursuant to controlling General

Orders and LBR, the foregoing document will be served by the court via NEF and hyperlink to the document. On (date) January

27, 2014 I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and determined that the following

persons are on the Electronic Mail Notice List to receive NEF transmission at the email addresses stated below:

SEE ATTACHED SERVICE LIST

Service information continued on attached page.

2. SERVED BY UNITED STATES MAIL:

On (date) January 27, 2014 , I served the following persons and/or entities at the last known addresses in this bankruptcy case or

adversary proceeding by placing a true and correct copy thereof in a sealed envelope in the United States mail, first class, postage

prepaid, and addressed as follows. Listing the judge here constitutes a declaration that mailing to the judge will be completed no

later than 24 hours after the document is filed.

The Honorable Julia W. Brand

U.S. Bankruptcy Court

Roybal Federal Building

255 E. Temple Street, Suite 1382

Los Angeles, CA 90012-3332


3. SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR EMAIL (state

method for each person or entity served): Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on (date) January 27, 2014 , I served

the following persons and/or entities by personal delivery, overnight mail service, or (for those who consented in writing to such

service method), by facsimile transmission and/or email as follows. Listing the judge here constitutes a declaration that personal

delivery on, or overnight mail to, the judge will be completed no later than 24 hours after the document is filed.

The Honorable Julia W. Brand

U.S. Bankruptcy Court

Roybal Federal Building

255 E. Temple Street

Bin outside of Suite 1382

Los Angeles, CA 90012-3332


I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct.

January 27, 2014 Shirley Lee /s/Shirley Lee

Date Printed Name Signature


This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012 F 9013-3.1.PROOF.SERVICE

ADDITIONAL SERVICE INFORMATION (if needed):

Agents for Secured Creditors: Alex Jacobson [email protected] Gerard Kenny, Esq. [email protected] 20 Largest Unsecured Creditors The Lorne Weil 2006 Irrev. Trust [email protected] Noel William Robbins [email protected] Desert Pathology Med. Group Pension [email protected] Balch Hill Partners, LP [email protected] Robert J. & Susan E. Rosser [email protected] James R. Waisman M.D. [email protected] Park Family Trust [email protected] Stephen M. Ehrlichman Decl Trust [email protected] SLP Ventures II, LLC [email protected] Robert H. Wass [email protected] Antony J. Hitchen [email protected] Craig H. Millet [email protected] Kenny Family Trust [email protected] Inspiration Point Advisors LLC [email protected]


mailto:[email protected]
















This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012 F 9013-3.1.PROOF.SERVICE

Wayne & Sheryl Smith [email protected] Reeves Family Trust [email protected] MG Capital I, LLC [email protected] John Quarrey [email protected] Greendot Investments, LLC [email protected] Brooks H. Pierce [email protected] Utility Providers Amazon Web Services (Acct. No. 0970-0757-2752) [email protected] AT&T (Acct. No. 287247160671) [email protected] Cisco WebEx Attn: Tarek Bahnasy (Re: Acct. No. 107157) [email protected] Nextiva (Re: Acct. No. 1037755) [email protected] T Mobile (Re: Acct. No. 368879247) Post Office Box 51843 Los Angeles, CA 90051-6143 (Served via U.S. Mail) Time Warner Cable Business Class (Re: Acct. No. 8448 20 019 1653178) [email protected] Verizon California (Re: Acct. No. 01 1790 117730055004) Post Office Box 920041 Dallas, TX 75392-0041 (Served via U.S. Mail) Virtual PBX (Re: Acct. No. 2696254) [email protected]














Webalo First Day Declaration

Documents

Transcript of Webalo First Day Declaration