solavei-14-14505-TWD-267

EX PARTE ORDER CONDITIONALLY APPROVING

DISCLOSURE STATEMENT AND SETTING EXPEDITED

PLAN CONFIRMATION SCHEDULE Page 1

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BUSH STROUT & KORNFELD LLP LAW OFFICES

601 Union St., Suite 5000 Seattle, Washington 98101-2373

Telephone (206) 292-2110 Facsimile (206) 292-2104

2043 20131 {c091802m6

UNITED STATES BANKRUPTCY COURT

WESTERN DISTRICT OF WASHINGTON

In re

SOLAVEI, LLC,

Debtor.

No. 14-14505

EX PARTE ORDER CONDITIONALLY

APPROVING DISCLOSURE

STATEMENT AND SETTING

EXPEDITED PLAN CONFIRMATION

SCHEDULE

THIS MATTER came before the Court upon the ex parte motion (Motion) of Solavei LLC,

debtor-in-possession herein, for an order (1) conditionally approving the adequacy of the Revised

Disclosure Statement (Disclosure Statement), while reserving rights to all parties to object to the

Disclosure Statement at the Plan confirmation hearing; and (2) setting an expedited schedule for final

approval of the Disclosure Statement and Plan confirmation. The Court has reviewed the files and

records herein, including the Disclosure Statement and the Amended Plan of Reorganization (Plan)

filed contemporaneously herewith at Docket Nos. 261 and 262, and finds that cause exists for the

requisite relief.

Case 14-14505-TWD Doc 267 Filed 03/13/15 Ent. 03/13/15 17:53:04 Pg. 1 of 40




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2043 20131 {c091802m6

Now, therefore, it is hereby

ORDERED that:

1. The Motion is granted;

2. The Disclosure Statement, in the form attached hereto as Exhibit A, is conditionally

approved as to its adequacy, while reserving rights to all parties to object as to the adequacy of the

Disclosure Statement at the Plan confirmation hearing, and Solavei may now solicit acceptance or

rejections of the Plan pursuant to 11 U.S.C. 1125;

3. Solavei is authorized to set a single hearing for final approval of the Disclosure

Statement and confirmation of the Plan on the Courts calendar on _____________, 2015, at _____.

4. Solavei shall cause to be placed in the mail to all creditors and other parties in interest

indicated on the official mailing matrix maintained by the Clerk of the Court a copy of the Planand the

Disclosure Statement, along with a ballot on which creditors may indicate acceptance or rejection of

the Plan.

5. The deadline for parties to cast voting ballots as to Solaveis proposed Plan shall be

_______________, 2015, at _______.

6. The deadline for parties to file objections as to the adequacy of the Disclosure

Statement and confirmation of the Plan shall be ______________, 2015, at _______.

7. Solavei shall file its Pre-Confirmation Report and the Ballot Summary by

________________ 2015, at ______.

/ / /End of Order/ / /

[SIGNATURES ON THE FOLLOWING PAGE]





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2043 20131 {c091802m6

Presented by:

BUSH STROUT & KORNFELD LLP

By /s/ Armand J. Kornfeld

Armand J. Kornfeld, WSBA #17214

Christine M. Tobin-Presser, WSBA #27628

Attorneys for Solavei, LLC

Approved as to Form by:

MILLER NASH GRAHAM & DUNN LP

By Mark D. Northrup

Mark D. Northrup, WSBA #16947

Attorneys for Opus Bank

HILLIS CLARK MARTIN & PETERSON P.S.

By /s/ Bradley R. Duncan

Bradley R. Duncan, WSBA #36436

Attorneys for T-Mobile USA Inc.

SCHWABE, WILLIAMSON & WYATT, P.C

By /s/ Lawrence R. Ream

Lawrence R. Ream, WSBA #18159

Attorneys for the Official Unsecured Creditors Committee


REVISED DISCLOSURE STATEMENT FOR DEBTOR'S

PLAN OF REORGANIZATION Page 1

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2043 20131 {c13ef06ed

HONORABLE TIMOTHY W. DORE

UNITED STATES BANKRUPTCY COURT

WESTERN DISTRICT OF WASHINGTON

In re

SOLAVEI, LLC,

Debtor.

No. 14-14505

REVISED DISCLOSURE STATEMENT

FOR DEBTOR'S PLAN OF

REORGANIZATION

IMPORTANT: THIS DISCLOSURE STATEMENT CONTAINS INFORMATION THAT

MAY BEAR UPON YOUR DECISION TO ACCEPT OR REJECT THE PLAN OF

REORGANIZATION (PLAN) OF SOLAVEI, LLC (DEBTOR). PLEASE READ THIS DOCUMENT WITH CARE. THIS DOCUMENT SUMMARIZES THE TERMS OF THE

PLAN. THE DEBTOR MAY CONTINUE TO NEGOTIATE PAYMENT TERMS WITH ITS

CREDITORS, AND THE SPECIFIC TREATMENT OF CLAIMS MAY CHANGE AS A

RESULT, BUT THE PAYMENT TERMS WHICH THE DEBTOR WILL ASK THE COURT

TO APPROVE WILL IN NO CASE BE MATERIALLY LESS FAVORABLE THAN THOSE

DESCRIBED HEREIN.

TO ALL PARTIES IN INTEREST:

On June 11, 2014 (Petition Date), the Debtor filed a voluntary petition under Chapter 11 of the Bankruptcy Code.

This Disclosure Statement contains information with respect to the Debtors proposed Plan. Pursuant to 1125 of the Bankruptcy Code, the Disclosure Statement is being distributed to you along

with a copy of the Plan to allow you to make an informed decision in exercising your right to accept

or reject the Plan. This Disclosure Statement has been conditionally approved by order of the Court

pursuant to 1125 of the Bankruptcy Code as containing information of a kind, and in sufficient

detail, as far as is reasonably practicable under the circumstances, that would enable a hypothetical

Case 14-14505-TWD Doc 261 Filed 03/13/15 Ent. 03/13/15 15:14:18 Pg. 1 of 24Case 14-14505-TWD Doc 267 Filed 03/13/15 Ent. 03/13/15 17:53:04 Pg. 4 of 40

EXHIBIT A



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2043 20131 {c13ef06ed

reasonable investor to make an informed judgment about the Plan. In the event of inconsistencies

between the Plan and the Disclosure Statement, however, the terms of the Plan shall control. The

Courts approval of this Disclosure Statement does not constitute an endorsement of the Plan by the Court.

The Debtor urges you to accept the proposed Plan and to promptly return your completed

ballot to enable your vote to be counted.

I. SUMMARY OF PLAN

Pursuant to the Plan, Aspider Solutions, Inc. (Aspider) will form a new entity (Newco) to acquire substantially all of the assets of the Debtor. Newco plans to continue the Debtors operations, uninterrupted, post-confirmation. In exchange for the Debtors assets, Newco will pay or transfer the following value to the Debtor for distribution to its creditors, and/or assume and pay the following

liabilities:

1. Newco will provide the Debtor cash at Closing (the Purchase Price Cash), which will fund the proposed cash distributions to creditors proposed in the Plan;

2. Newco will execute a combined $4.75 million in promissory notes in favor of Opus Bank

($750,000 note) and T-Mobile USA, Inc. (T-Mobile) ($4,000,000 note);

3. Newco will make available 40% of the ownership interests in Newco, with estimated value

of $1,771,136;

4. Newco will assume and pay the Debtors post-petition Ordinary Course Administrative Expense Claims (excluding the post-petition claim of T-Mobile discussed in the next

paragraph) which are comprised primarily of trade credit extended to the Debtor post-petition

by its trade creditors and vendors, as well as personnel expenses, taxes, and other similar

expenses, all in an amount estimated to be $1,000,000 - $1,400,000, depending on the actual

closing date; and

5. Newco will also assume and pay T-Mobiles Administrative Expense Claim accruing from January 1, 2015 through the Effective Date of the Plan, estimated to be $1,500,000 or more. T-

Mobile has agreed to waive its estimated $1,400,000 unpaid Administrative Expense Claim

that accrued prior to December 31, 2014.

The above-described transaction (the Aspider Transaction) is the product of significant efforts by the Debtor to locate a potential party interested in acquiring its going concern business and

continuing operations and represents the outcome that provides the greatest value to the Debtors creditors, including pre-petition and post-petition obligations. The Debtor had discussions with over

21 interested parties and provided meaningful due diligence information to 9 of those parties.

Ultimately, Aspider emerged as the most strategic party and the one willing to provide by far the

highest and best value to the estate.




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2043 20131 {c13ef06ed

T-Mobile provides the backbone that allows the Debtor to provide cellular and data services to

its customers. T-Mobile has consented to accept a significant discount of its prepetition secured

claims and post-petition administrative claims in order to support the Aspider Transaction. Without

T-Mobiles consent and cooperation, it would be impossible for the Debtor to continue its operations and no creditors, with the possible exception of very nominal value to Opus Bank, will receive any

value.

Likewise, Opus Bank, the Debtors senior secured lender has also agreed to accept a significant discount of its secured claim in order to support the Plan and the Aspider Transaction.

Under the Plan and assuming closing of the Aspider Transaction, distributions to Holders of

prepetition Allowed Claims will be made in the following manner:

Opus Bank Secured Claim $1,750,000 cash, plus a $750,000

unsecured note from Newco

T-Mobile Secured Claim $1,000,000 cash, plus a $4,000,000

note from Newco, secured by a

security interest in Newcos assets

Noteholder Claims 40% of the ownership interests in

Newco plus 20% of any Trade

Secret Lawsuit Proceeds, plus a

possible Cost Reimbursement

Benefit if Noteholders reimburse

Contingent Fee Counsels expenses

Priority Wage and Tax Claims Paid in full at Closing (Estimated to

be $331,767)

General Unsecured Claims $1,000,000 cash to be paid Pro Rata

to Allowed Holders of Class 6

Claims (the Class 6 Cash); plus 80% of any Trade Secret Claims

Proceeds (without any sharing in

any Cost Reimbursement Benefit

resulting from Noteholders

reimbursement of Contingent Fee

Counsels expenses); plus a note from Newco in the principal

amount of the lesser of (a) 5% of

the Rejected Contract Claims or (b)

$250,000 (the Class 6 Note).

Finally, the remaining cash paid to the estate as part of the Aspider Transaction will be used

1) to pay negotiated amounts to Cure Claims with respect to those of the Debtors executory contracts to be assumed and assigned to Newco at Closing, 2) to pay allowed Administrative Expense Claims

(excluding the T-Mobile Administrative Expense Claims, the treatment of which is described above)




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2043 20131 {c13ef06ed

not assumed by Newco, including fees of the Professionals employed by the Debtor and the

Committee, and 3) to create the Post-Confirmation Administrative Fund.

Absent the Aspider Transaction, the Debtor would be required to immediately cease

operations, leaving virtually no value for any of its creditors and leaving substantial Administrative

Expense Claims unpaid.

ARTICLE II.

DEFINITIONS

Terms used in this Disclosure Statement not specifically defined herein or in the Bankruptcy

Code shall be defined as set forth in the Plan that accompanies this Disclosure Statement. In

particular, capitalized terms shall have the meanings prescribed for such terms in Section II of the

Plan.

ARTICLE III.

BACKGROUND INFORMATION

A. Historical Background and Events Leading to Bankruptcy

Founded in late 2011, the Debtor sells mobile phone service to consumers using an innovative

online, mobile and social model the company refers to as Social Commerce. As of the Petition Date, the Debtors equity was held by the individuals and entities set forth in Exhibit A hereto, in the amounts set forth therein. Instead of using traditional advertising and a traditional sales force, the

Debtor relies on individual consumers, communicating with each other and other potential customers

using social networks such as Facebook and Twitter, to sell its products online. The Debtors approach allows consumers to receive goods and services they use every day at a discounted price,

and also rewards consumers with the opportunity to earn income by referring the Debtors products to others.

The Debtor launched its first product, nationwide mobile phone service, approximately 30

months ago, in September 2012. Prior to the Petition Date, the Debtor has signed up over 250,000

total members and operated at a current annual revenue rate of approximately $65 million. The

Debtor buys its mobile phone service on a wholesale basis from T-Mobile USA, Inc. and then sells it

to its customers starting at $29 per month for unlimited 4G LTE voice, text, and data service.

As of the Petition Date, the Debtor was headquartered in Bellevue, Washington, had 51

employees and contracted for an additional 160 dedicated call center representatives and offshore

development resources that provide member support and technology services respectively.

Because of its Social Commerce model and innovative technology, the Debtor was named a

winner of the 2014 Red Herring Top 100 Award, a prestigious award honoring the year's most

promising and innovative private technology companies. See

https://sg.finance.yahoo.com/news/solavei-named-winner-2014-red-231100902.html.




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2043 20131 {c13ef06ed

The Debtor created a technology platform to facilitate its Social Commerce model. All of the

Debtors customers, referred to by the company as members, have access to this technology platform, which includes proprietary tools allowing members to communicate with each other,

purchase and sell the Debtors products, keep track of potential referral prospects, and manage their referral commissions.

The Debtor also rewards its members by paying them each month for every mobile subscriber

they personally refer to the Debtor and for building significant networks of mobile subscribers. As of

the Petition Date, the Debtor paid a $5 referral commission each month for every subscriber a member

personally referred to the Debtor and this monthly commission continues for as long as the referred

subscriber remains a customer. Members that have built large networks of customers can receive

significant monthly commission payments ranging from $100 and more based on the size of their

network. Network size is based on the number of active mobile subscribers that is directly related to

the growth from those that they had referred to the Debtor. Members receive their commissions as a

discount to their mobile service bill, and earnings beyond the cost of their monthly bill are deposited

onto a Solavei branded Visa debit card or transmitted directly to their checking account. Referral fees

that do not take the form of billing discounts are paid to members monthly.

As of the Petition Date, approximately 35,000 of the Debtors members had built networks qualifying for commissions. Many members are families with less than $45,000 in annual income,

meaning that the cost of essential cell/data service and the ability to receive income through the

Debtors referral system are meaningful issues for these customer/members.

In spite of its rapid growth and ability to generate substantial revenues, the Debtor encountered

financial challenges. The Debtor initially scaled its business infrastructure to support a larger network

of members than was actually needed. In addition, vendor costs, in particular the cost of wholesale

mobile services purchased from T-Mobile, exceeded expectations due to higher than anticipated

customer usage. Over time, the company was able to restructure many costs and vendor obligations,

and in the summer of 2013, it reached agreement with its major service providers, including T-Mobile,

on cost revisions that were better aligned with projected revenues.

Due to the unique and innovative social referral distribution model, the Debtor struggled with

structuring the appropriate member commission model. The amount of commission payments owed

to members for referrals and network building activities exceeded initial expectations. The Debtor

had initially targeted and agreed to pay 50 percent of its gross profit to members in the form of

commissions. However, as members found ways to maximize their commissions in ways not

anticipated under the commission plan, the company was actually paying some 83 percent or more of

its gross profits to members. The Debtor substantially revised the commission plan in March 2013

and again in January 2014, to bring its overall payout closer to the sustainable 50 percent level.

The combination of these issues stressed the companys working capital and liquidity as it worked to recover from initial vendor costs and member commission structures that proved

unsustainably high. As a result of this stress on working capital and liquidity, the company found it

necessary to file its Chapter 11 bankruptcy with the intention of restructuring its existing liabilities

and growing its business.




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2043 20131 {c13ef06ed

B. Events Since Bankruptcy

1. Bankruptcy Court Filings.

The Debtor previously filed detailed schedules of its assets and liabilities and a statement of its

financial affairs. These documents may be reviewed at the Bankruptcy Court clerks office during normal business hours. In addition, the following material orders have been entered by the Court.

a. Authority to Use Cash Collateral. On July 16, 2014, the Court authorized the

Debtor to use, on an interim basis, the asserted cash collateral of Opus Bank, T-Mobile and the

Noteholders pursuant to a court-approved budget. On July 10, 2014, the Court entered an order

granting final approval of the Debtors use of cash collateral. On September 23, 2014, the Court entered an order extending the Debtors use of cash collateral through December 31, 2014. On December 31, 2014, the Court entered an order extending the Debtors use of cash collateral through February 28, 2015. On February 26, 2015, the Court entered an order extending the Debtors cash collateral usage through April 30, 2015.

b. Utilities; Cash Management. On July 16, 2014, the Court entered orders

approving the Debtors proposed adequate assurances of payment to utility providers, and authorizing the Debtor to continue to use prepetition bank accounts on a going-forward basis subject to the United

States Trustee requirements regarding collateralization.

c. Employment of Professionals. The Court approved employment of (1) Bush

Strout & Kornfeld, LLP as the Debtors bankruptcy counsel by order entered July 9, 2014 (Dkt. No. 74); (2) Melendez Torres Law PSC as the Debtors special counsel in Puerto Rico by order dated July 18, 2014 (Dkt. No. 89); (3) Schwabe Williamson & Wyatt as counsel for the Official Unsecured

Creditors Committee by final order dated August 14, 2014 (Dkt. No. 116); (4) KPMG LLP as the

Debtors accountants by order dated August 20, 2014 (Dkt. No. 128); (5) Piper Jaffray & Co. as the Debtors financial advisors by order dated September 26, 2014 (Dkt. No. 160); and (6) FTI Consulting, Inc. as financial advisors for the Official Unsecured Creditors Committee by order dated

October 7, 2014 (Dkt. No. 170); (7) Lee & Hayes PLLC as the Debtors intellectual property counsel by order dated December 23, 2014 (Dkt. No. 201); (8) Schiffer Odom Hicks & Johnson PLLC as the

Debtors litigation counsel by order dated February 4, 2015 (Dkt. No. 226); and (9) Schlemlein Goetz Fick & Scruggs, PLLC as additional counsel for the Official Unsecured Creditors Committee by order

dated February 10, 2015 (Dkt. No. 236).

d. Case Management Order. On July 16, 2014, the Court entered a Case

Management Order providing that notice of certain motions may be limited as provided in the order.

e. Claims Bar Date. By order entered June 18, 2014, the Court established

August 8, 2014, as the deadline for the filing of Proofs of Claim in this case.




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2043 20131 {c13ef06ed

f. Rejection of Office Lease. By order entered September 26, 2014, the Court

authorized the Debtor to reject its office lease as of July 31, 2014. Post-rejection, the Debtor has been

leasing office space on a month-to-month basis from Regus Management Group, LLC for

approximately $30,000 per month.

2. Events Leading to the Sale Transaction

Post-filing, the Debtor worked diligently to operationally restructure its business. The

operational restructure has included substantial expense reductions of approximately $380,000 per

month, achieved through modifications of various relationships with vendors, reduction in personnel

(from approximately 100 personnel on site to 36) and reduced lease costs (from approximate $71,000

per month to $30,000 per month), among others.

The Debtor also meaningfully revised its compensation plan for member/customers in order to

drive expansion of its customer base. The new compensation plan began October 1, 2014.

Unfortunately, serious technology issues outside of the Debtors control were encountered in implementing the new compensation plan, in large part due to an unprecedented total outage suffered

by the Debtors billing partner, which occurred on the day before the Debtors main promotional event in October. Customer retention and additions have finally stabilized.

Notwithstanding the new compensation plan and the reduction in costs achieved by the

Debtor, the Debtors cash flow has been insufficient to fund its budgeted post-petition obligations. Without the ability to fund its ongoing expenses, the Debtor would have been required to immediately

cease operations. Fortunately, T-Mobile, the Debtors largest vendor and supplier, has been willing to allow the Debtor to pay less than the full amount of its invoices, which has allowed the Debtor to

continue operations and remain current with all of its other post-petition obligations to its other

vendors, suppliers, taxing authorities, customer/members, and employees. Had it been necessary to

cease operations, because the Debtors assets consist primarily of its subscriber-members, who would have needed to immediately migrate to other networks to obtain cellular service, and of the technology

developed to enable social commerce distribution, there would have been virtually no value remaining

in the Debtors assets for the first-position lien holder, Opus Bank, or any other creditors.

3. The Benefits of the Proposed Aspider Transaction.

The Debtor offers mobile service to its members as a mobile virtual network operator

(MVNO), a service provider that does not own the mobile network infrastructure. The Debtor has developed its industry leading Social Commerce platform that leverages the power of social media to

facilitate the buying and selling of mobile service and directly rewards participating consumers.

Aspider is a leading global mobile virtual network enabler (MVNE) that provides the necessary mobile network infrastructure to MVNOs. Aspider currently serves as MVNE to over 70 MNO

(Mobile Network Operator)/MVNO customers and provides service to millions of subscribers. As a

full service organization with hundreds of employees and a solid 12-year track record of providing

comprehensive mobile enablement, Aspider is integrated with some of the largest mobile operators in

the world such as Vodafone, Orange, and Deutsche Telecom across Europe, Asia, Africa and Latin

America.




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2043 20131 {c13ef06ed

The Aspider Transaction will combine the strength of the Debtors Social Commerce platform with Aspiders mobile service enabling platform, resulting in significant benefit to Solaveis members. Solavei will be able to deliver enhanced mobile service to a far broader global member

base. Solavei will have the advantage of Aspiders significantly greater network utilization in terms of negotiating carrier pricing which will, in turn, allow Solavei to deliver more competitive offerings

and enhanced services for its members. Through the Aspider Transaction, Solavei will be able to

offer in-network pricing and capabilities to a global member base on country-to-country calling, which will be groundbreaking for Solavei and a competitive advantage against other MVNOs. Because Aspider can provide many of the services for which Solavei currently obtain through

contracts with third parties, the proposed transaction will allow Solavei to significantly streamline and

enhance its business. The mobile service platform provided by Aspider provides advanced

capabilities that will allow Solavei to rapidly deploy various mobile services to its members. For its

part, Aspider will integrate Solaveis social commerce platform into its existing technology platform, making it available to millions of subscribers and the MVNOs and MNOs providing them service. This platform will create a fully managed mobile service ecosystem including network wholesale,

retail infrastructure and social engagement.

Ryan Wuerch will remain CEO and Chairman, along with other executives from Solavei

continuing to lead its growth and expansion.

ARTICLE IV.

ASSETS AND LIABILITIES OF THE DEBTOR

A. Assets

1. Scheduled Assets.

As of the Petition Date, the Debtor held the following personal property:

Personal Property Type Value as of

Petition Date

Encumbrances/Restrictions

Cash in Bank Accounts $1,223,004 UCC-1 in favor of Opus

UCC-1s in favor of Noteholders

Security Deposit (Restricted) $200,057 Withheld and applied to unpaid

rents by Bellevue Place Offices,

LLC upon lease termination

100% Ownership Interest in Solavei

Puerto Rico, LLC*

$0.00 UCC-1 in favor of Opus


100% Ownership Interest in Dosh,

LLC*

$0.00 UCC-1 in favor of Opus


Receivable from Jeff Dahl (collected

on 2/23/15)

$44,543 UCC-1 in favor of Opus


Receivable Jim Zimmerman $30,000 UCC-1 in favor of Opus


Patents Unknown UCC-1 in favor of Opus




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2043 20131 {c13ef06ed

Personal Property Type Value as of

Petition Date

Encumbrances/Restrictions


Trademarks Unknown UCC-1 in favor of Opus


Customer List Unknown UCC-1 in favor of T-Mobile

UCC-1 in favor of Opus


SCCP Software Platform (Book

Value as of 4/30/14)

$3,530,798 UCC-1 in favor of Opus


Furniture and Fixtures (Book Value

as of 5/31/14)



Computer Equipment (Book Value as

of 5/31/14)



Video Equipment (Book Value as of

5/31/14)



Inventory (as of May 2014) $111,764 UCC-1 in favor of Opus


Prepaid Expenses $112,243

* Solavei Puerto Rico, LLC and Dosh, LLC have no assets and no operations.

2. Trade Secret Lawsuits.

During the case, the Debtor learned that some of the parties involved in the failed prepetition

merger discussions, as well as some of the Debtors former employee(s), may have unlawfully used trade secrets and other confidential information to build and promote competing businesses.

Pursuant to this Courts employment order (Docket No. 226), the Debtor engaged litigation counsel at the Texas law firm of Schiffer Odom Hicks & Johnson PLLC (Contingent Fee Counsel) to pursue claims against these individuals and entitles (the Trade Secret Claims) and has filed two lawsuits in which it is represented by counsel on a contingency fee basis: Solavei, LLC vs. SGE

Management LLC, et al, pending in the Dallas County 192nd District Court, Case No. DC-15-00782

(the Stream Lawsuit); and Solavei, LLC v. Robert McFadden, Social Mobile, pending in King County Superior Court, Case No. 15-2-00505-7 SEA (the McFadden Lawsuit), (together, the Trade Secret Lawsuits). Any net proceeds, after payment of fees and costs, generated by the Trade Secret Lawsuits (the Trade Secret Lawsuit Proceeds) will be preserved for and distributed to creditors pursuant to the terms of the Plan.

B. Liabilities

1. Secured Claims

a. Opus Bank. As of the Petition Date, pursuant to a July 1, 2013 Credit

Agreement, Note and Security Agreement entered into by the Debtor and Opus Bank, the Debtor was




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2043 20131 {c13ef06ed

indebted to Opus in the principal amount of $4,800,000, plus interest. Pursuant to the Security

Agreement and a UCC-1 financing statement filed with the state of Delaware on July 11, 2013 (File

No. 2013 2658962), Opus Bank holds a first position security interest in all of the Debtors personal property.

b. T-Mobile. T-Mobile U.S.A., Inc. (T-Mobile) holds a prepetition claim in the amount of approximately $21,615,653 arising from the prepetition relationship between the parties

pursuant to which the Debtor purchased mobile service from T-Mobile on a wholesale basis. The

prepetition claim consists of the Debtors unpaid deferred balance due to T-Mobile as of the Petition Date. A UCC-1 financing statement in favor of T-Mobile was filed on October 4, 2013 (DE file no.

2013 3905248) with respect to the following collateral:

[a]ll mobile service customer accounts, all contract rights relating to Debtors mobile service customer agreements, all Receivables (rights to payment from Debtors mobile service customers), all data, mobile service customer lists and books and records and

proceeds relating to the foregoing.

Post-petition, T-Mobile holds accrued unpaid claims for services provided to the Debtor. In

the post-petition period ending with December 31, 2014, this amount totaled approximately $1.4

million. Since January 1, 2015, T-Mobile has continued to accrue an Administrative Expense Claim

for unpaid services, with its agreement. Assuming the Plan is confirmed, T-Mobile will waive its

Administrative Expense Claim through December 31, 2014, and its remaining Administrative

Expense Claim will be paid according to the terms set forth in the Plan.

c. Noteholders. Numerous individuals and entities (collectively, the

Noteholders) loaned funds to the Debtor in connection with two tranches of financing identified as Bridge and Tranche B. The Debtors cumulative principal obligations on these tranches of financing are as follows:

Principal Approximate Balance with

interest and Fees as of 6/11/2014

Bridge 10,973,984.00 11,476,408

Tranche B 2,850,000 3,294,140

14,770,548

The Noteholders that loaned funds as part of the Bridge financing (the Bridge Noteholders) and the Noteholders that loaned funds as part of the Tranche B financing (the Tranche B Noteholders) are identified on Exhibit B hereto, along with the principal amounts loaned.

Security Agreements were executed in favor of all of the Noteholders with respect to the

Bridge and Tranche B financings, and two UCC-1 financing statements were filed in favor of the

Noteholders, one on September 24, 2013 (DE file no. 2013 3723526) and one on October 11, 2013

(DE file no. 2013 4010352). Pursuant to the UCC-1 filings, the Noteholders hold perfected security

interests in all of the Debtors assets.




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2043 20131 {c13ef06ed

2. Priority Tax Claims. The nature of the Debtors business in telecommunications operations involves operations in numerous tax reporting jurisdictions around the United States.

Many of these jurisdictions reflect nominal tax amounts incurred from one-time customers in

locations where mobile service was not adequate to sustain a customer base. All claims for taxing

authorities due on the Petition Date were scheduled as Disputed, meaning that in order to assert a claim, a taxing authority needed to file a timely Proof of Claim.

Taxing entities filed total of 62 Proofs of Claim in the case asserting priority tax claims in the

total amount of $306,012.52.

3. Wage Claims.

A number of the Debtors former employees hold Priority Wage Claims for amounts incurred within 180 days of the Petition Date. Under the Bankruptcy Code, these prepetition claims are

entitled to priority treatment up to the amount of $12,475.00 or less per employee (each, a Priority Wage Claim). According to the Debtors records, Priority Wage Claims total $25,755.00.

Additionally, the Debtors current employees who will be employed by Newco post-confirmation are have claims against the Debtor related to their employment with the Debtor (the

Continuing Employment Claims). The Continuing Employment Claims will be assumed and paid by Newco.

4. General Unsecured Claims ( including Ascentium Corporation).

The Debtors schedules reflect that, as of the Petition Date, there were $19,759,380.47 in general unsecured claims. Claimants filing proofs of claim have asserted $20,791,808.69 in general

unsecured claims. This amount does not include potential claims related to rejection of executory

contracts or claims for deficiency, if any, by Claimants holding Allowed Secured Claims.

On or about April 17, 2013, the Debtor executed a promissory note in favor of Ascentium

Corporation (Ascentium), an unsecured creditor, in the amount of $899,211.63. The Debtor never executed a security agreement or other document describing any collateral or containing a grant of a

security interest in favor of Ascentium. Over nine months later and without notifying the Debtor,

Ascentium, without authority, caused a UCC-1 financing statement to be filed in Delaware in which

Ascentium Corporation identified itself as the secured party and the Debtor as the debtor and

inaccurately and improperly indicated that Ascentium holds a security interest in all of the Debtors assets. The Debtor did not prepare, execute or authorize Ascentium to file the financing statement.

Ascentium Corporation filed a proof of claim in the Bankruptcy asserting a secured claim in the

amount of $1,001,360.32 (the Ascentium Proof of Claim). At the time it files its Plan or shortly thereafter, the Debtor has filed or will file an objection to the Ascentium Proof of Claim on the basis

that the Debtor never granted a security interest to Ascentium in anything and that Ascentium

improperly filed a UCC-1 financing statement. The Plan properly treats Ascentium as an unsecured

claim in Class 6.




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2043 20131 {c13ef06ed

ARTICLE V.

SUMMARY OF PROPOSED PLAN OF REORGANIZATION

A complete copy of the proposed Plan accompanies this Disclosure Statement. The discussion

of the Plan that follows constitutes a summary only. You are urged to read the Plan itself with care

before deciding to accept or reject the Plan.

A. Explanation of Impaired and Unimpaired Claims

The term Impaired as used herein refers to those creditors to whom this Disclosure Statement (and the related Ballots and other materials delivered together herewith) are being furnished

and who are entitled to accept or reject the Plan. Holders of claims in impaired classes are entitled to

vote to accept or reject the Plan.

The term Unimpaired refers to those creditors whose claims or interests remain unaltered by the reorganization effectuated by the Plan. Because of this favorable treatment, these creditors are

conclusively deemed to have accepted the Plan. Accordingly, under Section 1126(f) of the

Bankruptcy Code, it is not necessary to solicit acceptances from the holders of claims or interests in

such classes.

B. Classification of Claims and Interests

1. Unclassified Claims

a. Administrative Claims

As defined under the Plan, Administrative Expense Claims are Allowed Claims for costs or

expenses of the Chapter 11 Case that are allowed under sections 503(b) and 507(a)(1) of the

Bankruptcy Code. Unless such Holder agrees to different treatment, each Holder of an Allowed

Administrative Expense Claim against the Debtor shall receive payment of such claim from the Plan

Administrator, either upon, or as promptly as practicable after the Distribution Date provided,

however, that each Allowed Administrative Expense Claim which is an Ordinary Course

Administrative Expense Claims shall be deemed Allowed in the amount shown in the Debtors records unless such claim is a Disputed Claim, and shall be assumed by Newco and paid in the

ordinary course of business by Newco in accordance with the terms and conditions of the particular

agreement(s) governing such Ordinary Course Administrative Expense Claim.

b. T-Mobile Administrative Expense Claim

Notwithstanding anything in the foregoing to the contrary, by agreement with T-Mobile, the T-

Mobile Administrative Expense Claim, subject to liquidation as to the amount, shall be deemed

Allowed and paid in cash, in full, at Closing, provided, however, that if Closing occurs on or before

the Effective Date, the T-Mobile Administrative Expense Claim shall be deemed satisfied by payment

of an amount equal to the Debtors then-outstanding payment obligation to T-Mobile for services provided from January 1, 2015 through Closing, less $352,000.




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2043 20131 {c13ef06ed

c. Priority Tax Claims

As defined under the Plan, Priority Tax Claims are Allowed Claims of taxing agencies that are

entitled to priority in accordance with section 507(a)(8) of the Bankruptcy Code. Priority Tax Claims

include the principal portion of the applicable tax and interest accrued thereon through the Petition

Date but do not include any penalties. Priority Tax Claims against the Debtor shall be paid in full as

soon as practicable after allowance of such claims. Claims of taxing agencies incurred post-petition

shall be assumed and paid when due by Newco. Claims of taxing agencies for penalties against the

Debtor shall be Class 6 claims to the extent they are Allowed Claims and shall not be treated under

this paragraph.

2. Classified Claims and Interests

The Plan establishes six (6) Classes of Claims and one (1) Class of Interests with respect to the

Debtor. If the Plan is confirmed by the Court and becomes effective, the class into which each

Allowed Claim and Allowed Prepetition Interest fits will determine the manner in which such claim or

interest will be treated. The classes defined in the proposed Plan are summarized below.

Class 1: Allowed Secured Claim of Opus Bank

Class 2: Allowed Secured Claim of T-Mobile

Class 3: Allowed Secured Claim of Noteholders

Class 4: Allowed Priority Wage Claims

Class 5: Continuing Employment Claims

Class 6: Allowed General Unsecured Claims

Class 7: Allowed Prepetition Interests

C. Treatment of Classified Claims and Interests Under the Plan

The Treatment of Classified Claims and Interests Under the Plan, and the Means for Execution

of the Plan, are set forth in Sections V and VI, respectively, of the Plan and are summarized below.

Notwithstanding the summary provided below, the terms of the Plan shall control the classification

and treatment of claims and all other aspects of the Debtors rights and obligations as to matters governed by the Plan following the Effective Date. Parties are urged to read the Plan with care to

determine the treatment proposed for their Claim or Interest.

In summary, the Plan treats the various classes as follows:

1. Class 1: Opus Bank Secured Claim.

Class 1 is Impaired and consists of the Opus Bank Allowed Secured Claim (Class 1 Claim). Pursuant to the Plan, the Class 1 Claim shall be deemed an Allowed Secured Claim and shall be

treated and satisfied as follows:




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2043 20131 {c13ef06ed

a. Cash. The Holder of the Class 1 Claim shall be paid cash in the amount of one

million seven hundred and fifty thousand dollars ($1,750,000) on the Effective Date or as soon as

practicable thereafter.

b. Note. Newco shall execute a promissory note in favor of the Holder of the

Class 1 Claim in the amount of seven hundred and fifty thousand dollars ($750,000) (the Opus Note). Payments on the Opus Note shall commence in January 2016 and shall continue thereafter in 24 monthly installments. The Opus Note shall accrue interest at a rate of 8.25% per annum.

c. Waiver of Certain Proceeds. The Holder of the Class 1 Claim shall be

deemed to have waived any unsecured deficiency claim and any rights to receive Trade Secret

Lawsuit Proceeds, if any, and/or any portion of the Class 6 Cash, and/or the Class 6 Note.

2. Class 2: Allowed T-Mobile Secured Claim.

Class 2 is Impaired and consists of the T-Mobile Secured Claim (Class 2 Claim), which shall be deemed to be an Allowed Secured Claim. The Class 2 Claim shall be treated and satisfied as

follows:

a. Cash. The Holder of the Class 2 Claim shall be paid cash in the amount of one

million dollars ($1,000,000) on the Effective Date or as soon as practicable thereafter;

b. Note. Newco shall execute a promissory note in favor of the Holder of the

Class 2 Claim in the amount of four million dollars ($4,000,000) (the T-Mobile Note). Payments on the T-Mobile Note shall commence on the later of (a) April 30, 2015 and (b) Closing, and shall

continue thereafter in 21 monthly installments. The T-Mobile Note shall be secured by a first position

security interest in all of Newcos assets.

c. Waiver of Certain Proceeds. The Holder of the Class 2 Claim shall be

deemed to have waived any unsecured deficiency claim and any rights to receive Trade Secret

Lawsuit Proceeds, if any, and/or any portion of the Class 6 Cash, and/or the Class 6 Note.

3. Class 3: Allowed Noteholder Claims.

Class 3 is Impaired and consists of all Allowed Noteholder Claims (each Allowed

Noteholder Claim is a Class 3 Claim).

a. Allowed Secured Class 3 Claims. The Holders of the Class 3 Claims shall be

deemed to hold Allowed Secured Claims equal to the value of the Newco Equity Interests. Under the

Plan, the Newco Equity Interests are valued at one million, seven hundred and seventy one thousand,

one hundred and thirty six dollars ($1,771,136) (each individual Claim, calculated on a Pro Rata basis,

a Secured Class 3 Claim).




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2043 20131 {c13ef06ed

b. Satisfaction of Allowed Secured Class 3 Claims. On the Effective Date or as

soon as practicable thereafter, each Holder of a Class 3 Claim shall receive its Pro Rata share of forty

percent (40%) of the Newco Equity Interests in full satisfaction of its Secured Class 3 Claim.

c. Payment of Allowed Unsecured Class 3 Claim. The amount remaining

unpaid on each Class 3 Claim after payment of its Secured Class 3 Claim shall be an unsecured claim

(each, an Unsecured Class 3 Claim). Each Holder of an Unsecured Class 3 Claim shall be paid its Pro Rata Share of 20% of the Trade Secret Lawsuit Proceeds, if any, however, if, pursuant to the terms

of the Contingent Fee Agreement, the Holders of Unsecured Class 3 Claims reimburse Contingent Fee

Counsel for its expenses thereby insuring the lower applicable contingent fee, then the Holders of

Unsecured Class 3 Claims shall receive the marginal benefit due to such cost reimbursement (Cost Reimbursement Benefit). Attached as Exhibit B to the Plan is a chart that shows the percentage sharing of the Trade Secret Lawsuit Proceeds under the possible scenarios, taking into account

whether the Holders of Class 3 Unsecured Claims have or have not reimbursed Contingent Fee

Counsels costs. The Holder of an Allowed Unsecured Class 3 Claim shall not be entitled to receive any portion of the Class 6 Cash, the Class 6 Note, or any of Class 6s 80% share of the Trade Secret Lawsuit Proceeds.

4. Class 4: Priority Wage Claims

Class 4 is Unimpaired and consists of each Priority Wage Claim (each a Class 4 Claim). Each Holder of a Class 4 Claim will be paid in full on the Effective Date or as soon as practicable

thereafter after such Claim becomes an Allowed Claim.

5. Class 5: Continuing Employment Claims

Class 5 is Unimpaired and consists of each Continuing Employment Claim (each a Class 5 Claim). Newco shall assume the amounts due each Holder of a Class 5 Claim, and each Holder shall be paid its Class 5 Claim by Newco in the ordinary course of business of and between Newco and the

Holder of the Class 5 Claim.

6. Class 6: Allowed General Unsecured Claims

Class 6 is Impaired and consists of Allowed General Unsecured Claims (each a Class 6 Claim).

a. Class 6 Cash. On the Effective Date or as soon as practicable thereafter, each

Holder of a Class 6 Claim shall be paid its Pro Rata share of the Class 6 Cash ($1,000,000).

b. Class 6 Note. Newco shall execute a promissory note in the principal amount

of the lesser of (a) 5% of the Allowed Rejected Contract Claims or (2) two hundred and fifty thousand

dollars ($250,000) (the Class 6 Note). Payments on the Class 6 Note shall commence in January 2016 and shall be paid over the next twenty four (24) months. Interest shall accrue from January 2016

forward at the rate of four percent (4%) per annum.




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2043 20131 {c13ef06ed

c. Trade Secret Lawsuit Proceeds. Each Holder of a Class 6 Claim shall receive

its Pro Rata share of eighty percent (80%) of the Trade Secret Lawsuit Proceeds, if any. The Holder

of Class 6 Claims shall not share in any Cost Reimbursement Benefit resulting from reimbursement of

Contingent Fee Counsels costs by the Holders of Class 3 Unsecured Claims. Attached as Exhibit B to the Plan is a chart that shows the percentage sharing of the Trade Secret Lawsuit Proceeds under the

possible scenarios, taking into account whether the Holders of Class 3 Unsecured Claims have or have

not reimbursed Contingent Fee Counsels costs.

7. Class 7: Allowed Interests.

Class 7 is Impaired and consists of the Allowed Interests. All Interests shall be deemed

cancelled as of the Effective Date.

ARTICLE VI.

MEANS FOR IMPLEMENTATION; DISTRIBUTIONS;

RETENTION OF CLAIMS

1. Aspider Transaction. On the Effective Date, the Aspider Transaction, on the terms

and conditions set forth in the Aspider Agreement, a true copy of which is attached as Exhibit A to the

Plan, shall be consummated. Pursuant to the Plan, the Aspider Agreement and its terms, including the

terms of any additional documents related to the Aspider Agreement, shall be fully incorporated into

the Plan by reference such that all of the terms of the Aspider Agreement shall be considered part of

the Plan. Aspider will pay to the Debtor the Purchase Price in exchange for the Acquired Assets. The

Purchase Price, exclusive of the Opus Note, the T-Mobile Note, the Class 6 Note, and the Newco

Equity Interest, which will be transferred at Closing, will be distributed by the Plan Administrator in

accordance with the provisions of Section VII of the Plan.

2. Corporate Governance of Newco. Upon its formation, Newco will be a separate

legal entity from the Debtor, the Reorganized Debtor, and the Estate. It shall be owned by the

Noteholders (through their receipt of 40% of the Newco Equity Interests) and by Aspider and/or other

investors who fund the cash to consummate the Aspider Transaction (60% of the Newco Equity

Interests). The Aspider Agreement provides for a management incentive program to be instituted by

the Newco Board, after formation of Newco and the Closing/Effective Date. Currently, there is no

written or oral agreement as to the terms of this management incentive program, though the program

will incentivize management with respect to forward looking performance and success and will not

compensate any person due to that persons existing role with the Debtor. The Newco Board will be comprised of directors and governed as set forth in the Aspider Agreement. With respect to current

members of the Debtors senior management team, it is assumed that the following individuals will be employed by Newco in the same or similar roles as their current roles at similar compensation levels:

Ryan K. Wuerch, CEO

Nathan A. Gooden, CFO

Jamie Kuhnhausen, Head of Human Resources

Kris Lentz, Head of Product

Dennis Korevitski, Head of Technology & Operations




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2043 20131 {c13ef06ed

Ed Mock, Head of Strategic Innovations Rudy Bourcelot, Head of Marketing

3. Plan Administrator. The Committee shall designate the Plan Administrator prior to

entry of the Confirmation Order, subject to the Debtors consent which shall not be unreasonably, withheld. The identity of the Plan Administrator and the terms of compensation will be set forth in

the Confirmation Order. The Plan Administrator, on behalf of the Debtor, shall have responsibility

for administering Claims, including making objections where appropriate and obtaining necessary

claims orders; paying taxes; distributing payments required to be made under the Plan; ensuring the

completion of any necessary tax returns; filing any necessary post-confirmation reports; making

decisions about the settlement and or continued pursuit of the Trade Secret Lawsuits; obtaining a final

decree and performing such other tasks as may be necessary to fully administer the foregoing. To the

extent necessary, the Plan Administrator shall be authorized to continue to employ and utilize the

services of the Debtors Professionals or such other professionals as the Plan Administrator may deem necessary which expenses shall be paid from the Post-Confirmation Administrative Fund. The Plan

Administrator shall also pay any post-confirmation United States Trustee fees (incurred in any quarter

after the Effective Date occurs). The Plan Administrator shall have the sole authority to pay the

expenses associated with the foregoing without the need for further Court approval.

4. Effectuating Documents/Further Transactions. The Debtor and its officers and

designees are authorized to execute, deliver, file, or record such contracts, instruments, releases,

indentures, and other agreements or documents, and take such actions as may be necessary or

appropriate to effectuate and further evidence the terms and conditions of the Plan or to otherwise

comply with applicable law.

5. Exemption from Transfer Taxes and Certain Recording Fees. Pursuant to

Bankruptcy Code 1146(a), any transfers from the Debtor to the Reorganized Debtor or to any other

person or entity pursuant to the Plan, or any agreement regarding the transfer of title to or ownership

of any of the Debtors personal property or issuance of membership interests will not be subject to any stamp tax or similar tax.

6. Continued Estate Existence/Further Authorization. The Debtor and/or the

Reorganized Debtor, as well as the Plan Administrator, shall be entitled to seek such orders,

judgments, injunctions and rulings as they deem necessary to carry out the intentions and purposes,

and to give full effect to the provisions, of the Plan. The Estate will continue to exist after the

Effective Date.

7. Creditors Committee. On the Effective Date, the Creditors Committee shall dissolve automatically, whereupon its members, professionals, and agents shall be released from any

further duties and responsibilities in the Bankruptcy Case and under the Bankruptcy Code, except for

the limited purposes of filing applications for compensation in accordance with the Plan.




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2043 20131 {c13ef06ed

B. Retention of Claims and Causes of Action/Waiver of Avoidance Actions

Unless otherwise waived under the Plan, all rights, claims and causes of action, whether

equitable or legal, and all defenses, counterclaims and setoffs, whether equitable or legal, of the

Debtor or the Reorganized Debtor against all persons are reserved for the Reorganized Debtor,

including but not limited to the Trade Secret Claims. Notwithstanding the foregoing, the Debtor and

the Estate shall be deemed to have waived and released all Avoidance Actions against all parties as of

the Effective Date.

The Debtor has provided to the Committee its analysis of potential Avoidance Actions. In

large part, these would be based on payments to non-insider creditors, primarily the Debtors vendors and suppliers, within 90 days of the Petition Date. Such payments may be recovered as preferences, if

late, and if no defenses existed. The total amount of late payments to non-insiders within 90 days

prior to the Petition Date totaled approximately $2,630,000. Many of these payments may be subject

to defenses, including unpaid new value outstanding on the Petition Date. In addition, Aspider

disfavors preference actions against the Debtors former vendors and suppliers, as this may negatively impact Aspiders ability to maintain going-forward relationships with these key vendors. With respect to payments to insiders during the year before the Petition Date, the Debtors analysis, provided to the Committee, shows all such payments were 1) made timely according to the terms of

the relevant instrument(s); or were 2) for salary or expense reimbursements.

Based on the above, the Plan provides for waiver of all Avoidance Claims.

C. Distributions Under the Plan

1. Sources of Funds for Distribution. The distributions provided for in the Plan shall be

made from: a) the Purchase Price and b) the Trade Secret Lawsuit Proceeds, if any.

2. Disputed Claims. Notwithstanding any provision of the Plan specifying the time for

payment of distributions to holders of Claims, no payment or distribution shall be made to the Holder

of any Disputed Claim until the time such Claim has been determined to be an Allowed Claim.

Notwithstanding the existence of a Disputed Claim in a Class to which a distribution under the Plan is

due, such distribution to other creditors shall not be affected by any delay in the resolution of the

Disputed Claim. Upon the allowance of any Disputed Claim, the Holder shall be paid the amount that

such Holder would have received had its Claim been an Allowed Claim on the Effective Date.

3. Distributions by the Plan Administrator. The Plan Administrator shall make all

distributions required to be distributed under the Plan.

4. De Minimus Distributions. The Plan Administrator shall not have an obligation to

make a distribution if the amount to be distributed to the specific Holder of the Allowed Claim is or

has a value of less than fifty dollars ($50.00).

5. Interest on Claims. Unless otherwise specifically provided for or contemplated in the

Plan, the Confirmation Order, or required by applicable bankruptcy law, postpetition interest shall not




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2043 20131 {c13ef06ed

accrue or be paid on any Claims and no Holder of a Claim shall be entitled to interest accruing on or

after the Petition Date on any Claim.

ARTICLE VII.

CLAIMS OBJECTIONS AND TREATMENT OF DISPUTED CLAIMS

A. Administration of Claims

Except as otherwise provided for in the Plan, each Claim shall be Allowed or disallowed, as

the case may be, in such amount as the Court shall determine, whether prior to or following

Confirmation, and whether pursuant to this Plan or otherwise, upon such notice as the Bankruptcy

Court or Bankruptcy Rules shall permit except that, after the bankruptcy case is closed, the Plan

Administrator may settle or compromise any controversies regarding Claims without notice or further

order of the Court.

B. Affirmative Claims, Defenses and Counterclaims Assigned to the Reorganized Debtor

On the Effective Date, the Debtor shall be deemed to have assigned to the Reorganized Debtor

and its continuing bankruptcy estate, and the Reorganized Debtor and its continuing bankruptcy estate

shall be deemed to have acquired and become the successor to, all defenses, counterclaims and setoffs,

whether equitable or legal, of the Debtor to Claims held or asserted to be held against the Debtor, and

all claims of the Debtor for relief against any other party. Any objection to Claims must be filed and

served in accordance with Bankruptcy Rule 3007; provided, however, that the foregoing limitations

do not apply to any claims filed subsequent to Confirmation.

ARTICLE VIII.

EXECUTORY CONTRACTS AND UNEXPIRED LEASES

Attached to the Plan as Exhibit C is a list of all of the executory contracts and/or unexpired

leases to which the Debtor is a party, along with the Debtors calculation of the pre-petition amounts owed with respect to each such executory contract or unexpired lease. At least seven (7) days prior to

the deadline for filing objections to the Plan, Debtor shall file a list (the Designated Contracts List) setting forth each executory contract and/or unexpired lease that the Debtor proposes to assume and

assign to Newco under the Plan (each, a Designated Contract) and shall serve the Designated Contracts List on the non-debtor parties to the relevant Designated Contracts. The Plan constitutes a

motion to assume the Designated Contracts set forth on the Designated Contracts List. As to each

Designated Contract, the Debtor proposes that the amount of the Cure Claim shall be either the

amount set forth in Exhibit C or such lower amount as may be included on the Designated Contracts

List. Entry of the Confirmation Order by the Bankruptcy Court shall constitute approval, as of the

Effective Date, of the Debtors assumption of each Designated Contract and its assignment of each Designated Contract to Newco (each, an Assumed Contract). The Confirmation Order shall further effectuate the rejection of the contracts and leases set forth on Exhibit C that are not Designated

Contracts (each, a Rejected Contract). With respect to T-Mobiles existing Wholesale Supply Agreement (WSA) in place with the Debtor, pursuant to the terms of the Aspider Transaction and assuming such transaction Closes, and subject to the terms of the Plan Support Agreement between T-




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2043 20131 {c13ef06ed

Mobile and Aspider, T-Mobiles WSA will be assigned to Newco in exchange for the payments and T-Mobile Note contemplated in the Plan, and T-Mobile will not hold a Rejection Claim.

All claims arising from the rejection of a Rejected Contract pursuant to the Plan (each, a

Rejection Claim), must be filed with the clerk of the Bankruptcy Court and served upon the Plan Administrator and the Debtors counsel within thirty (30) days after the date of entry of the Confirmation Order. Allowed Rejection Claims constitute Class 6 Claims under the Plan.

ARTICLE IX.

LIQUIDATION ANALYSIS

The Bankruptcy Code requires that a creditor with a right to vote either accept the Plan, or that

such creditor receive under the Plan at least as much as it would receive if the debtors assets were liquidated in and the proceeds distributed under a Chapter 7 liquidation. This is generally known as

the best interests test. To apply the test, a debtors assets are valued at the dollar amount that would be generated from their distressed liquidation in the context of a Chapter 7 case by a trustee appointed

by the Bankruptcy Court. The estimated values take into account the costs and expenses of the

liquidation, and such additional administrative and priority claims that may result from the

termination of the debtors business and the use of Chapter 7 for the purpose of liquidation. Net liquidation proceeds would be paid to general unsecured creditors only to the extent funds are

available after secured creditors have been paid the full value of their collateral and priority creditors

receive full payment on their claims. In the event of conversion to a case under Chapter 7 of the

Code, in order to complete the distribution to creditors, the estate would incur a Chapter 7 trustees fee paid in the percentages indicated by 11 U.S.C. 326.

In the event of a Chapter 7 liquidation, the Debtors business would immediately cease and, its customers would immediately migrate to a new carrier in order to continue uninterrupted service.

Because the Debtors customers are essentially invisible to T-Mobile, the provider of the backbone to the Debtor, T-Mobile would be unable to migrate the Debtors customers to its platform. The value of the Debtors customer base would be lost. The Debtors remaining assets would likely have little or no value, as the remaining assets are primarily software and intellectual property designed by the

Debtor to support its customer base. The only potential assets available in a Chapter 7 liquidation

would likely be any Trade Secret Lawsuit Proceeds and Avoidance Claims, all of which are

unencumbered assets, meaning that no existing creditor holds a lien or first right to these assets.

The Plan proposes to distribute twenty percent (20%) of the Trade Secret Lawsuit Proceeds to

Class 3 Claims, after reduction for the value of the 40% Newco Equity Interests distributed to those

Claims, and eighty percent (80%) of the Trade Secret Lawsuit Proceeds to Class 6 Claims. In a

liquidation, all creditors, not just Class 6 and Class 3 would be entitled to share in the Trade Secret

Lawsuit Proceeds, if any. This would substantially dilute the percentage of the Trade Secret Lawsuit

Proceeds that would go to Class 3 Claims or Class 6 Claims. The following shows the pool of

creditors that will share in the Trade Secret Lawsuit Proceeds in a liquidation (all creditors):




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In a Liquidation: Total Pool to Share = $61,977,000

Class 1 (Opus) $4,800,000 (7.7% of Pool)

Class 2 (T-Mobile) $21,616,000 (34.9% of Pool)

Class 3 (Noteholders) $14,770,000 (23.8% of Pool)

Class 6 (General Unsecured) $20,791,000 (33.6% of Pool)

Total Claims to Share $61,977,000

If the Debtor abruptly closed its business operations and converted its case to a Chapter 7,

there would be significant unpaid Administrative Expense Claims without any funds to pay them,

estimated as follows:

T-Mobile (unpaid post-petition credit) $3,000,000

Trade Credit, Taxes and Other Ordinary

Course Administrative Expenses

$1,400,000

Professional Fees $100,000 to $200,000

Opus Adequate Protection Claims Per

Cash Collateral Orders

Unknown

Total Estimated Ch 11 Admin Claims $3,500,000 +

In a Chapter 7 scenario, before any funds would be distributed on account of prepetition

claims, these Administrative Expense Claims would need to be paid, along with the Chapter 7

trustees expenses. This would include any Trade Secret Lawsuit Proceeds and any recoveries from Avoidance Claims. As discussed herein, the Debtors analysis is that there is not a likelihood of substantial recovery from Avoidance Claims. At best, the proceeds generated by a Chapter 7 trustee

from avoidance claims would be only a small reduction in the approximately $3,500,000 in Chapter

11 Administrative Claims detailed above. This essentially means that the only potential recovery for

creditors in a Chapter 7 would be from the Trade Secret Lawsuit Proceeds, if any. Even ignoring the

Chapter 11 Administrative Expense Claims, the proposed Plan treats all creditors far better than they

would be treated in a liquidation.

Following is a comparison of the proposed Plan treatment of various Classes and the outcome

in a liquidation, again, ignoring the $3,500,000 of Chapter 11 Administrative Expense Claims that

would likely further dilute the recoveries in a liquidation:

Class/Creditor(s) Under Plan Terms In a Liquidation

Class 1 (Opus) $2.5million cash/note 7.6% of Trade Secret Lawsuit Proceeds

Class 2 (T-Mobile) $5million cash/note 36.3% of Trade Secret Lawsuit Proceeds

Class 3 (Nholders) 40% Newco equity and 23.3% of Trade Secret Lawsuit Proceeds

20% of Trade Secret Lawsuit

Proceeds

Class 6 (Unsecureds) $1,000,000 cash and 32.8% of Trade Secret Lawsuit Proceeds




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80% of Trade Secret Lawsuit

Proceeds

Based on this analysis, the proposed Plan treats all Classes of creditors far better than they

would be treated in a liquidation. Therefore, the best interest of creditors test is satisfied.

ARTICLE X.

TAX CONSEQUENCES

A. Tax Consequences for Debtor

The Debtor is a Delaware limited liability company taxed as a partnership for federal income

tax purposes. As such, any federal income tax liability is incurred and paid, if due, by its members.

While the Plan anticipates significant cancellation of indebtedness (COD), it is not anticipated that this COD will create any federal income tax liability for the Debtor or its Estate. The Debtor is unable

to offer an opinion as to whether partnership minimum gain will be triggered under Treas. Reg.

1.704-1(b)(2) and (d), whether partnership minimum gain chargeback would be triggered under Treas.

Reg. 1.704-2, or any other effect under Subchapter K of the IRC.

The Plan may or may not create tax consequences to the Equity Holders in connection with the

inclusion in their allocable shares of partnership income, gain, loss, deduction, credit and other items

in their taxable income. The Debtor offers no opinion on these matters.

EACH AND EVERY EQUITY HOLDER IS STRONGLY URGED TO CONSULT A

PROFESSIONAL TAX ADVISOR REGARDING THE FEDERAL, STATE AND LOCAL TAX

CONSEQUENCES OF THE TRANSACTIONS DESCRIBED HEREIN AND IN THE PLAN.

B. Tax Consequences to Creditors

The Debtor expects that creditors will report any payments received under the Plan and any

amounts disbursed in accordance with their normal method of accounting. The Debtor is unable to

provide any opinion to creditors with respect to any tax consequences as a result of the Plan being

confirmed on the terms set forth herein. CREDITORS ARE STRONGLY URGED TO CONSULT A

PROFESSIONAL TAX ADVISOR REGARDING ANY TAX CONSEQUENCES OF THE

TRANSACTIONS DESCRIBED HEREIN AND CONTEMPLATED BY THE PLAN.

XI.

CONFIRMATION OF THE PLAN

A. Voting Procedures

A ballot to be used for voting your acceptance or rejection of the Plan of Reorganization is

being mailed to you together with this Disclosure Statement and Plan. Holders of claims should read

the instructions carefully, complete, date and sign the ballot, and transmit it in the envelope enclosed.

IN ORDER TO BE COUNTED, YOUR BALLOT MUST BE RECEIVED AT THE INDICATED

ADDRESS NOT LATER THAN ______________________, 2015. FAILURE TO VOTE OR A




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VOTE TO REJECT THE PLAN WILL NOT AFFECT THE TREATMENT TO BE ACCORDED A

CLAIM OR INTEREST IF THE PLAN NEVERTHELESS IS CONFIRMED.

If more than one-half in number of claimants voting and at least two-thirds in amount of the

Allowed Claims of such claimants in each Class of Claims vote to accept the Plan, such Classes will

be deemed to have accepted the Plan. If at least two-thirds in amount of the shares voted in a Class of

Interests are voted to accept the Plan, such Class will be deemed to have accepted the Plan. For

purposes of determining whether a Class of Claims or Interests has accepted or rejected the Plan, only

the votes of those who have timely returned their ballots will be considered.

B. Hearing on Confirmation

The hearing on confirmation of the Plan has been set for ____________________, 2015

before the Honorable Timothy W. Dore, United States Bankruptcy Judge, Courtroom 8106, 700

Stewart St., Seattle, WA,