Case 16-10682-BLS Doc 400 Filed 10/11/16 Page 1 of 11 IN ...Case 16-10682-BLS Doc 400 Filed 10/11/16 Page 5 of 11. MWEISS\101668325\V-2 - 6 - only payments. The terms of the Saverin

$Page 1: Case 16-10682-BLS Doc 400 Filed 10/11/16 Page 1 of 11 IN ...Case 16-10682-BLS Doc 400 Filed 10/11/16 Page 5 of 11. MWEISS\101668325\V-2 - 6 - only payments. The terms of the Saverin$
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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re:

JMO WIND DOWN INC.,

Debtor.

Chapter 11

Case No. 16-10682 (BLS)

Re: Doc. 345, 350, 374 and 399

DECLARATION OF DANIEL MATTES

I, DANIEL MATTES, declare and state as follows:

1. I am the Authorized Representative of Samirana Investment Corp. ("Samirana")

and the Managing Director of Ampalu Investment GmbH ("Ampalu"). I also previously served as

the CEO of Jumio, Inc., the debtor in the above-captioned bankruptcy case ("Jumio" or the

"Debtor"). I have personal and first-hand knowledge of all the matters contained in this declaration

and, if called and sworn as a witness, I can and will competently testify to all of the matters

contained herein. I make this declaration in support of Ampalu Investment GmbH and Samirana

Investment Corp.'s Objection to Debtor's Amended Plan of Liquidation and Disclosure Statement

for the Amended Plan of Liquidation ("Objection").

2. I have been the Managing Director of Ampalu and the Authorized Representative

of Samirana for the period relevant to the transactions and events which are the subject matter of

this action, and I am personally familiar with the record keeping procedures used by Ampalu and

Samirana and with the records and files maintained by Ampalu and Samirana in the ordinary

course of their business operations.

3. Ampalu is an Austrian Company and holds 15,714,880 common shares of Jumio.

I am an Austrian citizen who owns and controls Ampalu and I also serve as its Managing Director.

Case 16-10682-BLS Doc 400 Filed 10/11/16 Page 1 of 11

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4. Samirana is an Belize Company and holds 360,000 common shares of Jumio. I

own and control Samirana and serve as its Authorized Representative.

5. In September 2010, I founded Jumio. Jumio was conceived as an online mobile

identity and credential authentication company, which uses verification products and software to

assist customers in reducing fraud, meeting regulatory requirements and providing faster service

to users. The company eventually became a market leader in its segment, growing to over nine

hundred employees and reporting record revenues and transactions of over $30 million.

6. Jumio was the sole owner of Jumio Software Development GmbH ("Jumio

Austria"). Jumio Austria provided all research and development activities for Jumio and was the

sole entity doing payment processing business. Jumio was the sales organization for Jumio's

product businesses Netswipe and Netverify.

7. In the beginning, Jumio's business model was to authenticate credit cards via the

camera of a mobile phone or computer, scan all the data, transfer all the information to a seller,

and authorize the payment with minimum manual input from the credit card's owner. Later on,

Jumio also started to verify credentials (such as passports, drivers licenses and government issued

identification) in real time related both to online and mobile transactions and to verify and facilitate

online payments. Jumio's mobile application enables a camera's phone to scan identification and

payment documents, digitizes the photo scan, and auto-fills payment, shipping and other pertinent

information fields for the consumer.

8. Jumio's revenue and business model is based on its software, and it charges clients

a fixed monthly rate within predefined transaction-volume ranges and allows for unlimited

transactions.


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9. In or around March 2011, Jumio completed a Series A financing with Eduardo

Saverin, the co-founder of Facebook Inc. ("Saverin"), and Liber Argentum (the "Series A

Financing"). At the time, Saverin insisted upon a direct investment in Jumio. Thus, the Series A

Financing was for the aggregate amount of $6.5 million, $5 million from Saverin and $1.5 million

from Liber Argentum.

10. In or around December 2011, Jumio completed a Series B financing with

Andreessen Horowitz, LLC ("AH LLC") and Andreessen Horowitz Fund, II, L.P. ("AH Fund LP")

(the "Series B Financing"). AH LLC and AH Fund LP are the financing arms of Marc Andreessen

("Andreessen"), the billionaire founder of Netscape and a venture capitalist. Mr. Andreessen's

holding companies and various of his partnerships and funds own and control large amounts of

Jumio stock.

11. Beginning a course of conduct that would continue throughout his role as a director

of Jumio, Saverin almost destroyed the Series B Financing because he was not reachable for weeks

at a time and would attempt not to accept standard industry terms. Only through massive efforts,

principally from me, did the Series B Financing finally close.

12. In or around the Spring of 2013, I signed a term sheet for a Series C financing with

Pinnacle Ventures ("Pinnacle") ("Series C Financing"). Again, Saverin worked hard to sabotage

the deal and was ultimately successful. The Series C Financing with Pinnacle never closed. In or

around August 2013, after sabotaging the Series C Financing with Pinnacle, Saverin himself

provided the Series C funding to gain more control over Jumio.

13. As of 2014, the Board of Directors ("Board") consisted of Thomas Kastenhofer

("Kastenhofer"); Chad Starkey ("Starkey"); Saverin; Scott Weiss, the general partner of AH LLC

and AH Fund LP ("Weiss"); Peng-Tsin Ong ("Ong"); and myself. Saverin, Weiss, and Ong were


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preferred directors (collectively, the "Preferred Directors") and had the power to block any

corporate actions. Kastenhofer, Starkey, I were common directors (collectively, the "Common

Directors").

14. In or around September 2014, Jumio received a final term sheet for a Series D

financing ("Series D Financing") from RCS Capital Corp. ("RCAP"), a then-prominent brokerage

firm. Had Jumio closed the Series D Financing, it would have raised $120 million. Instead, the

Preferred Directors voted to reject the deal.

15. In or around October 2014, I met with citizen.vc to discuss an alternative Series D

financing offer. Again, the Preferred Directors voted to reject the deal.

16. In or around October 2014, Jumio hired Accretive, an outside accounting firm, to

audit its financials, cash, and business contracts. Wendy Hsu ("Hsu") was the person sent by

Accretive to conduct the audit.

17. Accretive determined that the revenues of Jumio GmbH, an Austrian subsidiary of

Jumio, were recognized and reported consistently with International Financial Reporting

Standards ("IFRS"), a global accounting standard. Additionally, Accretive reported that after a

review of all of Jumio's customer contracts, it concluded that those contracts could all be

substantiated.

18. Accretive recommended, and the Board agreed, to change the accounting system

from IFRS accounting standards to US-GAAP and FASB rules regarding revenue recognition.

Jumio's major shareholders were informed of these necessary changes to the accounting standards.

Specifically, Kastenhofer, Starkey, and I met with two of the largest holders of Jumio's common

stock to explain the accounting changes.


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19. Thereafter, in or around November 2014, after determining that there had been no

wrongdoing, Hsu agreed to serve as Jumio's Interim CFO.

20. By the fourth quarter of 2014, Jumio required additional funds to get to cash flow

break even. There was, however, a significant inbound interest for financing.

21. In or around March 2015, Hsu and I presented three binding term sheets to the

Board and one non-binding term sheet. The Term Sheets ranged from $10 million to $30 million,

had better than industry standard terms, and came from tier-1 financial providers like "Triple

Point", "Fifth Street", and "Ares". Specifically, the Term Sheet from Fifth Street proposed a $10

million First Lien Term Loan Credit Facility with a term of 48 months and an interest rate of Libor

+ 10.25% (the "Fifth Street Term Sheet"). Additionally, the Term Sheet from Triple Point Capital

proposed a $15 million loan with an option for an additional $15 million loan with term options

ranging from 3 to 48 months at varying interest rates (the "Triple Point Term Sheet"). Further, the

Term Sheet from Ares proposed a $15 million loan facility with a term of 48 months and an interest

rate of Libor + 8.5% (the "Ares Term Sheet"). Finally, the Term Sheet from Pinnacle Ventures

proposed a loan commitment of up to $30 million over a term of 48 months at an interest rate of

Prime + 6% (the "Pinnacle Term Sheet", and collectively with the Fifth Street Term Sheet, the

Triple Point Term Sheet, and the Ares Term Sheet, the "Term Sheets"). Had Jumio entered into

any of the Term Sheets, it would have been financed to a point where it had break even cash flow.

22. The Preferred Directors rejected all of the proposed Term Sheets, sabotaging the

financing deals. Instead, the Preferred Directors voted to take insider financing from Saverin in

the form of a six-month convertible loan (the "Saverin Loan"). The loan's terms were unfavorable

compared to the Term Sheets, which contemplated a 48-month term with 18 months of interest


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only payments. The terms of the Saverin Loan ultimately forced Jumio into bankruptcy in March

2016 because of the short re-payment terms.

23. In March 2015, the Board formed a special committee (the "Special Committee")

made up of the Preferred Directors, Saverin, Weiss, and Ong (collectively, the "Special Committee

Members"). The Special Committee engaged special counsel to conduct an investigation.

24. The report of the Special Committee's counsel found no wrongdoing by me and that

all issues raised in the report had been addressed by me. In fact, Weiss told me that I had done

"nothing illegal". Nevertheless, the Preferred Directors used the report as a pretext to oust me

from Jumio.

25. On or about April 21, 2015, I met with Weiss and Andreessen. Weiss and

Andreessen threatened to act in a fashion that would harm Jumio by lessening its chances for

success unless I resigned.

26. In light of that threat, on April 30, 2015, I was forced to resign as CEO of Jumio

and my seat on the Board was forfeited, in order to save the future of the company. Stephen Stuut

("Stuut") replaced me as CEO. Stuut controls large amounts of Jumio common and preferred

stock. Under Stuut's leadership, the Board voted to reject the four financing proposals that I had

put together in the Term Sheets and instead voted to take insider financing in the form of the

Saverin Loan, which had onerous terms that ultimately drove Jumio into bankruptcy.

27. The Preferred Directors then began orchestrating a plan to consolidate their power

and control and eliminate other shareholders. For example, Saverin insisted on obtaining a security

interest in Jumio's assets so that he would have a position of control and power in Jumio's eventual

bankruptcy. As a secured creditor, he could dictate terms of post-petition financing, be in a

position to credit bid in a bankruptcy sale of Jumio's assets, fight any proposed action which


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affected his "collateral", and seek to enter into agreements which released the Preferred Directors,

including Saverin himself, from all liability for Jumio's past operations.

28. In August 2015, the Board amended Jumio's by-laws to restrict stock transfers,

making it impossible for shareholders to recoup their investments and walk away from Jumio.

Specifically, on August 27, 2015, the Board illegally issued Amended and Restated By-Laws of

Jumio, Inc. (the "Amended By-Laws"), which, among other things, restricted transfers of capital

stock unless the transfer was: (a) expressly preapproved by the Board at the Board's sole

discretion, and; (b) made in accordance with the Amended and Restated Right of First Refusal Co-

Sale Agreement, dated August 28, 2015.

29. Ampalu and Samirana, who together own over 16 million shares of common stock

in Jumio, were not parties to any agreement consenting to the stock restriction, nor were they

consulted or permitted to vote on the restriction. Further, at the same time the Board was

unlawfully amending the By-Laws, they were also discussing placing Jumio into bankruptcy.

Ampalu and Samirana, while owning 16,074,880 common shares, were completely ignored, and

were never asked or involved in the decision to file bankruptcy. Accordingly, the Board began

drafting security agreements which would give them the power to dictate and control the sale of

Jumio in bankruptcy.

30. On August 28, 2015, Saverin and Weiss purchased four convertible notes

(collectively, the "Saverin Notes"): (a) Note No. CPN -1 dated August 28, 2015 in the original

principal amount of $4,000,000 owed to Saverin; (b) Note No. CPN -2 dated August 28, 2015 in

the original principal amount of $1,509,780.82 owed to Saverin; (c) Note No. CPN -3 dated August

28, 2015 in the original principal amount of $2,005,041.10 owed to Saverin; and (d) Note No. CPN

-4 dated August 28, 2015 in the original principal amount of $1,509,780.82 owed to AH LLC (on


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March 18, 2016, three days before the Petition Date, this Note was transferred to Saverin). The

Saverin Notes are purportedly secured by virtually all of the Debtor's assets, making Saverin the

Debtor's only secured creditor.

31. Pursuant to a security agreement dated August 28, 2015, the Saverin Notes were

secured by liens on and security interests in substantially all of Jumio's assets, including its cash

(the "Saverin Security Agreement").

32. On September 2, 2015, the Board publicly announced that Jumio was required to

restate its unaudited financial statements for the years ending December 31, 2013 and December

31, 2014 (the "Restated Financials").

33. In October 2015, six months after I had resigned as CEO, Stuut finally began

attempting to secure financing for Jumio. On or about October 8, 2015, citizen.vc provided a

placement agreement to Stuut for the Series-D financing. The Board rejected the deal.

34. On or about October 14, 2015, Jumio received an acquisition offer from MITEK

Systems, Inc., a mobile capture and identity verification company that is traded on NASDAQ. The

Board rejected the offer.

35. On or about February 10, 2016, citizen.vc provided Stuut with another potential

Series-D term sheet. The Board rejected the offer.

36. On January 25, 2016, the Securities Exchange Commission ("SEC") began an

investigation of Jumio. Although Stuut has stated that he could not obtain financing because of

"certain government investigations," the Board was offered and rejected numerous financing deals

well before the SEC investigation began.


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37. In February 2016, Saverin formed Jumio Acquisition, LLC ("Jumio Acquisition")

to help the Board take Jumio into bankruptcy. In mid-March 2016, AH transferred its allegedly

secured debt to Saverin.

38. On March 21, 2016 (the "Petition Date"), Jumio filed its voluntary petition for relief

under Chapter 11 of the Bankruptcy Code, commencing the above-referenced bankruptcy case

("Bankruptcy Case") in the United States Bankruptcy Court for the District of Delaware. On the

Petition Date, Jumio also filed a motion for approval of a sale of substantially all of its assets to

Jumio Acquisition.

39. On May 6, 2016, the Bankruptcy Court approved the sale of Jumio's assets to Jumio

Buyer, Inc. ("New Jumio"), an entity owned by Centana Growth Partners, LP ("Centana Growth

Partners") for $850,000, less cure costs. Saverin's prepetition liens arising from the Saverin

Security Agreement attached to the sale proceeds. Upon information and belief, Stuut holds a 10-

15% ownership interest in New Jumio and, according to statements made in the press, Saverin is

still actively part of New Jumio. A true and correct copy of a September 6, 2016 article from the

Blog "Silicon Angle" referencing Saverin's continued participation in New Jumio is attached

hereto as Exhibit 1.

40. The sale of Jumio's assets to New Jumio for $850,000 is substantially less than

Jumio's prior reporting of annual revenue, and its listing of over $62,000,000 in assets on its

bankruptcy schedules. The sale price also stands in stark contrast to a 409a valuation performed

before the bankruptcy that valued Jumio in excess of $100 million.

41. Less than six months after acquiring Jumio's assets, New Jumio has already raised

$15,000,000 in new financing and issued numerous press releases regarding its "strong growth in

the market . . . [and] record results for Q2 2016, with a greater than 65 percent growth in recent


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revenue year-over-year, and a record 30 million transactions completed to-date." A true and

correct copy of Saverin's August 30, 2016 press release is attached hereto as Exhibit 2.

Additionally, a true and correct copy of an email dated September 17, 2016 from Joe Dempsey at

citizen.vc discussing a conference call in which Stuut described the financial condition of New

Jumio in glowing terms is attached hereto as Exhibit 3.

42. Following the filing of this Objection, Ampalu and Samirana, along with six other

investors who were equity security holders in the Debtor ( KTI Investment Foundation, Stephan

Skrobar, Markus Rumler, Thomas Willomitzer, Evers Invest AB, and Patrick Griffin (individually

and collectively with Ampalu and Samirana, the "Investors")), are filing a Motion for Relief from

Stay ("Motion for Relief from Stay") in the Bankruptcy Case requesting leave from the Court to

file a Complaint in the Court of Chancery of the State of Delaware to pursue derivative claims

against the Debtor's Preferred Directors on behalf of the Bankruptcy Estate. The Complaint alleges

the same breaches of fiduciary duty that serve as the factual basis for this Objection. Each of the

Investors have indicated that they oppose confirmation of the Debtor's Plan and Disclosure

Statement and agree with the positions taken by Ampalu and Samirana in their Objection.

[SIGNATURE ON FOLLOWING PAGE]



Case 16-10682-BLS Doc 400-1 Filed 10/11/16 Page 1 of 10










CERTIFICATE OF SERVICE

I, Thomas F. Driscoll III, hereby certify that on this 11th day of October, 2016, a copy of

the foregoing Declaration of Daniel Mattes was caused to be served on the attorneys listed below

via CM/ECF and the manner indicated below:

VIA HAND DELIVERY

Adam G. Landis, Esq.

Kerri K. Mumford, Esq.

Landis Rath & Cobb LLP,

919 Market Street,

Suite L800,

Wilmington, Delaware 19801

Laura Davis Jones, Esq.

Pachulski Stang Ziehl & Jones LLP

919 N. Market Street, 17th Floor,

Wilmington, DE 19801

David Buchbinder Esq.

Office of the United States Trustee

844 King Street

Suite 2207


Michael R. Nestor, Esq.

Sean M. Beach, Esq.

Young Conaway Stargatt & Taylor, LLP,

Rodney Square,

1000 North King Street,


VIA U.S. MAIL

Michael B. Lubic, Esq.

K&L Gates LLP

10100 Santa Monica Blvd,

8th Floor

Los Angeles, CA 90067

Michael L. Berstein, Esq.

Arnold & Porter LLP,

60L Massachusetts Avenue, NW,

Washington, DC 20001

Peter M. Gilhuly, Esq.

Ted A. Dillman, Esq.

Latham & Watkins LLP,

355 South Grand Avenue,

Los Angeles, CA 90071-1560

Sven T. Nylen, Esq.

K&L Gates LLP,

70 West Madison Street,

Suite 3100,

Chicago, IL 60602

/s/ Thomas F. Driscoll III

Thomas F. Driscoll III (#4703)


Documents

Case 16-10682-BLS Doc 400 Filed 10/11/16 Page 1 of 11 IN ...Case 16-10682-BLS Doc 400 Filed 10/11/16 Page 5 of 11. MWEISS\101668325\V-2 - 6 - only payments. The terms of the Saverin