UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

Form 8-K

 

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of report (date of earliest event reported):

October 28, 2015

 

 

 

Jamba, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-32552   20-2122262

(State or other jurisdiction

of incorporation)

 

(Commission

File No.)

 

(I.R.S. Employer

Identification No.)

 

6475 Christie Avenue, Suite 150, Emeryville, California 94608

(Address of principal executive offices)

 

Registrant's telephone number, including area code:

(510) 596-0100

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

 

On October 28, 2015, Jamba Juice Company, a California corporation and wholly-owned subsidiary of Jamba, Inc. (the “Company”), completed the refranchising of a group of Company-owned stores the San Francisco Bay Area as part of the Company’s refranchising initiative. In connection with the refranchising transaction, Jamba Juice Company transferred to Valley Juice, LLC all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, other tangible personal property and all goodwill associated with the stores for a purchase price of $3,300,000 plus payment for cash on hand and marketable inventory at each of the stores. In connection with entering into the transaction, Valley Juice, LLC agreed to enter into the Company’s standard franchise agreement with a ten-year term and the Company’s standard development agreement under which it agreed to open eight additional stores in the San Francisco Bay Area.

 

The accompanying unaudited pro forma condensed consolidated financial statements give effect to the disposition of the assets in the above referenced refranchising transaction and all prior disposals under the Company’s refranchising initiative.

 

Item 9.01. Financial Statements and Exhibits

 

(b)Pro Forma Financial Information

 

The unaudited pro forma condensed consolidated financial statements of the Company, which reflect the disposition described in Item 2.01 and all prior disposals under the Company’s refranchising initiative are furnished as Exhibit 99.1 to this Current Report on Form 8-K and are incorporated by reference herein.

 

(d)Exhibits

 

99.1Unaudited pro forma condensed consolidated financial statements of the Company.

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  JAMBA, INC.
   
Date: November  3, 2015 By:

/s/ Karen L. Luey

   

Karen L. Luey

Chief Financial Officer, Chief Administrative Officer, Executive Vice President and Secretary

 

 



 

Exhibit 99.1

 

JAMBA INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share amounts)

 

       PRO FORMA ADJUSTMENTS    
   Reported   April Disposal   April Disposal   May   June Disposal   June Disposal   July Disposal   July Disposal   September   October   Other   Total      Pro Forma 
   December 30, 2014   1   2   Disposal   1   2   1   2   Disposal   Disposal   Disposals   Adjustments      December 30, 2014 
ASSETS                                                                    
Current assets:                                                                    
     Cash and cash equivalents  $17,750   $1,499   $2,760   $2,300   $1,840   $370   $5,834   $20,620   $4,118   $2,321   $2,406   $44,068   (a)  $61,819 
     Receivables, net of allowances  of $280 and $291   16,977    -    -    -    -    -    -    -    -         -    -       16,977 
     Inventories   2,300    (83)   (48)   (56)   (67)   (42)   (156)   (444)   (78)   (112)   (32)   (1,118)  (c)   1,182 
     Prepaid and refundable income taxes   474    -    -    -    -    -    -    -    -    -    -    -       474 
     Prepaid rent   504    -    -    -    -    -    -    -    -    -    -    -       504 
     Assets held for sale   26,626    (2,427)   -    (1,311)   -         -    (8,424)   (1,584)   (2,086)   (191)   (16,023)  (d)   10,603 
     Prepaid expenses and other current assets   8,105    -    (95)   -    -    1,260    -    -    -    -    -    1,165   (b) (c)   9,270 
Total current assets   72,736    (1,011)   2,617    933    1,773    1,588    5,678    11,752    2,456    123    2,184    28,093       100,828 
                                                                     
Property, fixtures and equipment, net   15,236    -    (829)   -    (964)   (755)   (3,683)   -    -         (325)   (6,556)  (d)   8,680 
Goodwill   982    (7)   (11)   (9)   (8)   (6)   (23)   -    (15)   -    -    (79)  (d)   903 
Trademarks and other intangible assets, net   1,294    -    -    -    -    -    -    -    -    -    -    -       1,294 
Other long-term assets   2,241    -    -    -    -    -    -    2,000    -    -    -    2,000   (e)   4,241 
                                                 -                   
                Total assets  $92,489   $(1,018)  $1,777   $924   $801   $827   $1,972   $13,752   $2,441   $123   $1,859   $23,457      $115,946 
                                                                     
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                    
Current liabilities:                                                                    
     Accounts payable  $3,926   $-   $-   $-   $-   $-   $-   $-   $-   $-   $-   $-      $3,926 
     Accrued compensation and benefits   6,325    -    -    -    -    -    -    -    -    -    -    -       6,325 
     Workers' compensation and health insurance reserves   1,311    -    -    -    -    -    -    -    -    -    -    -       1,311 
     Accrued jambacard liability   38,184    -    -    -    -    -    -    -    -    -    -    -       38,184 
     Other current liabilities   16,454    -    -    -    -    -    -    -    -    -    -    -       16,454 
Total current liabilities   66,200    -    -    -    -    -    -    -    -    -    -    -       66,200 
                                                                     
Deferred revenue and other long-term liabilities   9,544    210    -    295    -    -    -    694    -    80    -    1,279   (f)   10,823 
Total liabilities   75,744    210    -    295    -    -    -    694    -    80    -    1,279       77,023 
                                                                     
Stockholders' equity:                                                                    
Common stock  $17   $-   $-   $-   $-   $-   $-   $-   $-   $-   $-   $-      $17 
     Additional paid-in-capital   396,629    -    -    -    -    -    -    -    -    -    -    -       396,629 
     Treasury Shares at cost   (11,991)   -    -    -    -    -    -    -    -    -    -    -       (11,991)
     Accumulated deficit   (368,041)   (1,228)   1,908    629    801    827    1,972    13,058    2,441    43    1,859    22,310   (g)   (345,731)
Total equity attributable to Jamba, Inc.   16,614    (1,228)   1,908    629    801    827    1,972    13,058    2,441    43    1,859    22,310       38,924 
     Noncontrolling interest   131    -    (131)   -                                  -    (131)  (h)   - 
Total stockholders' equity   16,745    (1,228)   1,777    629    801    827    1,972    13,058    2,441    43    1,859    22,179       38,924 
                                                                     
            Total liabilities and stockholders' equity  $92,489   $(1,018)  $1,777   $924   $801   $827   $1,972   $13,752   $2,441   $123   $1,859   $23,458      $115,947 

 

 

 

 

 

JAMBA, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)

 

   Reported Year ended December 30, 2014   April Disposal 1   April Disposal 2   May Disposal   June Disposal 1   June Disposal 2   July Disposal 1   July Disposal 2   September Disposal   October Disposal   Other Disposals   Total Adjustments     Pro Forma Year ended December 30, 2014 
Revenue:                                                                   
Company stores  $198,737   $(9,563)  $(6,551)  $(7,219)  $(6,543)  $(6,039)  $(19,595)  $(54,747)  $(10,210)  $(12,276)  $(3,996)  $(136,740)  A  $61,997 
Franchise and other revenue   19,311    526    360    397    360    332    1,078    3,011    562    675    220    7,521   B   26,832 
Total revenue   218,048    (9,037)   (6,191)   (6,822)   (6,183)   (5,707)   (18,517)   (51,736)   (9,648)   (11,601)   (3,776)   (129,219)     88,829 
Costs and operating expenses (income):                                                                   
Cost of sales   52,236    (2,418)   (1,634)   (1,851)   (1,677)   (1,601)   (5,168)   (13,754)   (2,630)   (3,114)   (1,031)   (34,879)  C   17,357 
Labor   61,749    (3,164)   (1,808)   (2,198)   (2,002)   (1,871)   (5,767)   (16,735)   (2,985)   (3,853)   (1,157)   (41,539)  C   20,210 
Occupancy   27,630    (1,192)   (813)   (843)   (824)   (807)   (2,838)   (5,978)   (1,250)   (1,697)   (370)   (16,612)  C   11,018 
Store operating   33,089    (1,473)   (846)   (1,106)   (1,024)   (880)   (2,846)   (7,954)   (1,559)   (1,845)   (553)   (20,085)  C   13,004 
Depreciation and amortization   10,084    (501)   (149)   (323)   (279)   (201)   (818)   (1,622)   (375)   (601)   (91)   (4,959)  C   5,125 
General and administrative   37,278    -    -    -    -    -    -    -              -    -      37,278 
Other operating, net   (718)   -    -    -    -    -    -    -    -         -    -      (718)
Total costs and operating expenses   221,348    (8,748)   (5,250)   (6,321)   (5,807)   (5,360)   (17,438)   (46,042)   (8,798)   (11,109)   (3,202)   (118,074)     103,274 
 (Loss) income from operations   (3,300)   (289)   (941)   (502)   (376)   (347)   (1,080)   (5,694)   (850)   (492)   (574)   (11,145)     (14,445)
Other income (expense):                                                                   
Interest income   74    -    -    -    -    -    -    -    -         -    -      74 
Interest expense   (195)   -    -    -    -    -    -    -    -         -    -      (195)
Total other expense, net   (121)   -    -    -    -    -    -    -    -    -    -    -      (121)
(Loss) income before income taxes   (3,421)   (289)   (941)   (502)   (376)   (347)   (1,080)   (5,694)   (850)   (492)   (574)   (11,145)     (14,566)
Income tax expense   (168)   -    -    -    -    -    -    -    -         -    -      (168)
 Net (loss) income  $(3,589)  $(289)  $(941)  $(502)  $(376)  $(347)  $(1,080)  $(5,694)  $(850)  $(492)  $(574)  $(11,145)    $(14,734)
Preferred stock dividends and deemed dividends   -    -         -    -    -    -    -    -         -    -      - 
Less: Net income attributable to noncontrolling interest   43    -    (43)   -    -    -    -    -    -         -    (43) D   - 
Net (loss) income attributable to common stockholders  $(3,632)  $(289)  $(898)  $(502)  $(376)  $(347)  $(1,080)  $(5,694)  $(850)  $(492)  $(574)  $(11,102)    $(14,734)

 

 

 

 

 

Jamba, Inc.

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

December 30, 2014

 

1.Description of Refranchising Transactions

 

Beginning in January, 2015, Jamba Juice Company, a California corporation and wholly-owned subsidiary of Jamba, Inc. (the “Company”) began refranchising Company-owned stores located in the San Francisco Bay Area and Southern California as part of the Company’s refranchising initiative in multiple transactions.

 

April Disposal 1

 

In connection with the first refranchising transaction, the Company transferred to M5 Partners, Inc. all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, vehicles, other tangible personal property and all goodwill associated with stores for a purchase price of $1,850,000 plus payment for all marketable inventory and cash on hand at each of the stores. M5 Partners, Inc. agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

April Disposal 2

 

In another refranchising transaction completed on April 28, 2015, the Company sold its 88% membership interest in Jamba Juice Southern California LLC (“JJSC”) to Strategic Marketing Sciences, Inc., its minority partner in the joint venture. JJSC was formed to operate a group of stores in Southern California. The purchase price for the membership interest was $3,000,000 plus payment for all marketable inventory and cash on hand at each of the stores. Strategic Marketing Sciences, Inc. agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

May Disposal

 

On May 19, 2015, the Company completed the refranchising of a group of Company-owned stores located in the San Francisco Bay Area. In connection with the refranchising transaction, the Company transferred to Blended Star NorCal, Inc. all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, vehicles, other tangible personal property and all goodwill associated with stores for a purchase price of $2,500,000 plus payment for all marketable inventory and cash on hand at each of the stores. Blended Star NorCal, Inc. agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

June Disposal 1

 

On June 9, 2015, the Company completed the refranchising of a group of Company-owned stores located in Southern California as part of its refranchising initiative. In connection with the refranchising transaction, the Company transferred to J’s Juice Masters, Inc. all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, other tangible personal property, all marketable inventory and all goodwill associated with the stores for a purchase price of $2,100,000 plus payment for cash on hand at each of the stores. J’s Juice Masters, Inc. agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

 1 

 

 

June Disposal 2

 

On June 30, 2015, the Company completed the refranchising of a group of Company-owned stores located in Southern California as part of its refranchising initiative. In connection with the refranchising transaction, the Company transferred to CMCS 2 Juice, LP and CMCS 3 Juice, LP all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, other tangible personal property, all marketable inventory and all goodwill associated with the stores for a purchase price of $1,800,000 plus payment for cash on hand at each of the stores. Payment of the purchase price was comprised of $540,000 in cash and two promissory notes of $542,079 and $717,921, both with an interest rate of the rate of the four and one-quarter percent (4.25%) per annum and maturity dates of July 30, 2015. CMCS 2 Juice, LP and CMCS 3 Juice, LP agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

July Disposal 1

 

On July 7, 2015, the Company completed the refranchising of a group of Company-owned stores located in Southern California as part of its refranchising initiative. In connection with the refranchising transaction, the Company transferred to one owner operating five separate entities - Brea Juice Company, LLC, Fresh Juice Development, LLC, Grab N Go Juice, LLC, Juice To Go, LLC and LA Juice Company, LLC - all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, other tangible personal property, all marketable inventory and all goodwill associated with the stores for a purchase price of $6,600,030 plus payment of $30,000 for cash on hand at each of the stores. Brea Juice Company, LLC, Fresh Juice Development, LLC, Grab N Go Juice, LLC, Juice To Go, LLC and LA Juice Company, LLC, agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

July Disposal 2

 

On July 28, 2015, the Company completed the refranchising of a group of Company-owned stores located in Northern and Southern California as part of its refranchising initiative. In connection with the refranchising transaction, the Company transferred to Vitaligent, LLC all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, other tangible personal property, cash on hand at each of the stores, all marketable inventory and all goodwill associated with the stores for a purchase price of $25,000,000. Payment of the purchase price was comprised of $23,000,000 in cash and a promissory note of $2,000,000 with a combined interest rate of five and a half percent (5.5%) per annum, comprised of basic interest at three percent (3%) and a payment-in-kind interest. The payment-in-kind interest compounds quarterly beginning October 28, 2015. The note matures February 1, 2021. In addition to a $50,000 escrow account at closing for store repairs/upgrades, there is a reduction in gain for contingent payables of $694,000 for designated repairs and fixed asset additions. Vitaligent, LP agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

September Disposal

 

On September 23, 2015, the Company completed the refranchising of a group of Company-owned stores located in Southern California as part of its refranchising initiative. In connection with the refranchising transaction, the Company transferred to RPM Jamba #5, Inc. all machinery equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, other tangible personal property, and all goodwill associated with the stores for a purchase price of $4,500,000 plus payment of $94,000 for all marketable inventory and cash on hand at each of the stores. RPM Jamba #5, Inc. agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

 2 

 

 

October Disposal

 

On October 28, 2015, the Company completed the refranchising of a group of Company-owned stores the San Francisco Bay Area as part of the Company’s refranchising initiative. In connection with the refranchising transaction, the Company transferred to Valley Juice, LLC all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, other tangible personal property and all goodwill associated with the stores for a purchase price of $3,300,000 plus payment for cash on hand and marketable inventory at each of the stores. In connection with entering into the transaction, Valley Juice, LLC agreed to enter into the Company’s standard franchise agreement with a ten-year term and the Company’s standard development agreement under which it agreed to open eight additional stores over five years in the San Francisco Bay Area.

 

 

Other Disposals

 

In addition to the transactions mentioned above, the Company entered into multiple individually insignificant agreements and refranchised a small group of stores located in Southern California and in the San Francisco Bay Area during the 13 week periods ended March 31, 2015 and June 30, 2015. In connection with the refranchising transactions, the Company received aggregate proceeds of $2,412,000 and the purchasers entered into the Company’s standard franchise agreements with ten-year terms in connection with entering into the transactions.

 

2.Basis of Presentation

 

The effect of the refranchising transactions on a cumulative basis is reflected in the unaudited pro forma condensed consolidated financial statements.

 

The unaudited pro forma condensed consolidated financial statements were prepared in accordance with U.S. GAAP and pursuant to U.S. Securities and Exchange Commission Regulation S-X Article 11, and present the pro forma financial position and results of operations of the Company based upon the historical information after giving effect to the disposal and adjustments described in the notes to the unaudited pro forma condensed consolidated financial statements. The unaudited pro forma condensed consolidated balance sheet is presented as if the refranchising had occurred on December 30, 2014, and the unaudited pro forma condensed consolidated statement of operations for the fiscal year ended December 30, 2014 is presented as if the disposal had occurred on January 1, 2014.

 

The unaudited pro forma condensed consolidated financial information is presented for informational purposes only and is not indicative of the Company’s financial results or financial position as if the transactions reflected herein had occurred, or been in effect during the pro forma periods. This unaudited pro forma condensed consolidated financial information should not be viewed as indicative of the Company’s expected financial results for future periods.

 

3.Adjustments to Unaudited Pro Forma Condensed Consolidated Balance Sheet

 

Adjustments in the columns titled “Pro Forma Adjustments” represent the following:

 

 3 

 

 

(a) - Represents the pro forma adjustments for the proceeds received offset by store-related cash balances at the end of the fiscal year (in thousands).

 

   Amount 
Proceeds received  $50,164 
Cost to sell   (5,869)
Store-related cash at hand   (227)
   $44,068 

 

(b) - Represents the pro forma adjustments for the one month promissory notes given as consideration included in the purchase price (in thousands):

 

   Amount 
     
CMCS 2 Juice, LP  $542 
CMCS 3 Juice, LP   718 
   $1,260 

 

(c) - Represents the pro forma adjustments for the inventory and other current assets that will no longer be on the Company’s balance sheet as a result of the disposal of the stores to franchise partners.

 

(d) - Represents the pro forma adjustments for the estimated net book value of the store assets purchased by the franchise partners from the Company.

 

(e) - Represents the pro forma adjustments for long-term promissory note given as consideration included in the purchase price (in thousands):

 

   Amount 
      
Vitaligent, LLC  $2,000 

 

(f) - Represents the pro forma adjustments for the effect of amounts refundable to purchasers contingent upon landlords not extending the lease terms for certain store locations or amounts related to development fees for future stores.

 

(g) - Represents the pro forma adjustments for the impact of the refranchising transaction on the Company’s accumulated deficit (in thousands):

 

   Amount 
Proceeds received  $50,164 
Promissory Notes   3,260 
Less: Cost to sell   (5,869)
Assets held for sale   (16,023)
Property, fixtures and equipment, net   (6,556)
Goodwill and current assets   (1, 519)
Amounts contingently refundable   (1,199)
 Deferred revenue    (80)
Noncontrolling interest   131 
   $22,309 

 

 4 

 

 

      (h) - Represents the pro forma adjustment to eliminate the 12% noncontrolling interest in JJSC, since the purchaser is acquiring the remaining interest on the JJSC stores.

 

 5 

 

 

4.Adjustments to Unaudited Pro Forma Condensed Consolidated Statement of Operations

 

A - Reflects the pro forma adjustments for the revenue during the fiscal year ended December 30, 2014 from the stores sold to franchise partners.

 

B - Reflects the pro forma adjustments for estimated royalty income that would have been earned had the stores been owned by franchisees for the 2014 fiscal year.

 

C - Reflects the pro forma adjustments for the expenses related to the stores sold to franchise partners.

 

D - Reflects the pro forma adjustments to eliminate the 12% noncontrolling interest in JJSC, since the owner of the noncontrolling interest is acquiring the remaining interest on the JJSC stores.

 

 6 

 

 

JAMBA INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share amounts)

 

   Reported   July Disposal   July Disposal   September   October   Total   Pro Forma 
   June 30, 2015   1   2   Disposal   Disposal   Adjustments   June 30, 2015 
ASSETS                                   
Current assets:                                   
     Cash and cash equivalents  $13,918   $5,834   $20,620   $4,118   $2,321   $32,893(a)  $46,811 
     Receivables, net of allowances  of $366 and $291   18,928    -    -    -         -    18,928 
     Inventories   2,177    (156)   (444)   (78)   (112)   (790)(b)   1,387 
     Prepaid and refundable income taxes   217    -    -    -    -    -    217 
     Prepaid rent   2,501    -    -    -    -    -    2,501 
     Assets held for sale   20,456    -    (8,424)   (1,584)   (2,086)   (12,094)(c)   8,362 
     Prepaid expenses and other current assets   6,293    -    -    -    -    -    6,293 
Total current assets   64,490    5,678    11,752    2,456    123    20,010    84,500 
                                    
Property, fixtures and equipment, net   13,512    (3,683)   -    -    -    (3,683)(c)   9,829 
Goodwill   897    (23)   -    (15)   -    (39)(c)   858 
Trademarks and other intangible assets, net   1,154    -    -    -    -    -    1,154 
Other long-term assets   1,899    -    2,000    -    -    2,000(d)   3,899 
                                    
                Total assets  $81,952   $1,972   $13,752   $2,441   $123   $18,288   $100,240 
                                    
                                    
LIABILITIES AND STOCKHOLDERS' EQUITY                                   
Current liabilities:                                   
     Accounts payable  $1,471   $-   $-   $-   $-   $-   $1,471 
     Accrued compensation and benefits   4,985    -    -    -    -    -    4,985 
     Workers' compensation and health insurance reserves   1,754    -    -    -    -    -    1,754 
     Accrued jambacard liability   31,431    -    -    -    -    -    31,431 
     Other current liabilities   18,604    -    -    -    -    -    18,604 
Total current liabilities   58,245    -    -    -    -    -    58,245 
                                    
Deferred revenue and other long-term liabilities   9,021    -    694    -    80    774(e)   9,795 
Total liabilities   67,266    -    694    -    80    774    68,040 
                                    
Stockholders' equity:                                   
Common stock  $18   $-   $-   $-   $-   $-   $18 
     Additional paid-in-capital   399,945    -    -    -    -    -    399,945 
     Treasury Shares at cost   (21,814)   -    -    -    -    -    (21,814)
     Accumulated deficit   (363,463)   1,972    13,058    2,441    43    17,514(f)   (345,949)
Total equity attributable to Jamba, Inc.   14,686    1,972    13,058    2,441    43    17,514    32,200 
                                    
Total stockholders' equity   14,686    1,972    13,058    2,441    43    17,514    32,200 
                                    
            Total liabilities and stockholders' equity  $81,952   $1,972#  $13,752   $2,441   $123   $18,288   $100,240 

 

 

 7 

 

 

JAMBA, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)

 

   Reported 26 week period ended June 30, 2015   April Disposal 1   April Disposal 2   May Disposal   June Disposal 1   June Disposal 2   July Disposal 1   July Disposal 2   September Disposal   October  Disposal   Other Disposals   Total Adjustments     Pro Forma 26 week period ended June 30, 2015 
Revenue:                                                                   
Company stores  $96,088   $(3,131)  $(2,161)  $(2,736)  $(2,937)  $(3,119)  $(10,100)  $(29,859)  $(5,235)  $(6,593)  $(978)  $(66,848) A  $29,240 
Franchise and other revenue   10,542    172    119    150    162    172    556    1,642    288    363    54    3,677  B   14,219 
Total revenue   106,630    (2,958)   (2,042)   (2,585)   (2,776)   (2,947)   (9,545)   (28,217)   (4,947)   (6,230)   (925)   (63,172)     43,458 
Costs and operating expenses (income):                                                                   
Cost of sales   23,881    (778)   (549)   (653)   (724)   (796)   (2,549)   (7,146)   (1,304)   (1,614)   (242)   (16,355) C   7,526 
Labor   30,964    (1,119)   (637)   (892)   (940)   (1,015)   (3,107)   (8,999)   (1,595)   (2,173)   (337)   (20,815) C   10,149 
Occupancy   12,966    (336)   (210)   (318)   (373)   (435)   (1,476)   (3,144)   (647)   (884)   (100)   (7,922) C   5,044 
Store operating   16,093    (552)   (308)   (401)   (447)   (464)   (1,429)   (4,204)   (769)   (1,013)   (149)   (9,736) C   6,357 
Depreciation and amortization   3,217    (122)   (32)   (70)   (99)   (60)   (366)   0    (206)   (279)   (84)   (1,318) C   1,899 
General and administrative   17,390    -    -    -    -    -    -    -    -         -    -      17,390 
Gain on disposal of assets   (5,258)   (1,334)   2,519    618    826    766    -    -    -         1,975    5,370  D   112 
Other operating, net   2,584    -    -    -    -    -    -    -    -         -    -      2,584 
Total costs and operating expenses   101,837    (4,241)   783    (1,716)   (1,757)   (2,004)   (8,928)   (23,492)   (4,522)   (5,962)   1,064    (50,775)     51,062 
Income (loss) from operations   4,793    1,283    (2,825)   (869)   (1,018)   (943)   (617)   (4,725)   (425)   (268)   (1,988)   (12,396)     (7,603)
Other income (expense):                                                                   
Interest income   29    -    -    -    -    -    -    -    -    -    -    -      29 
Interest expense   (109)   -    -    -    -    -    -    -    -    -    -    -      (109)
Total other expense, net   (80)   -    -    -    -    -    -    -    -    -    -    -      (80)
Income (loss) before income taxes   4,713    1,283    (2,825)   (869)   (1,018)   (943)   (617)   (4,725)   (425)   (268)   (1,988)   (12,396)     (7,683)
Income tax expense   (83)   0    0    0    0    0    -    -    -    -    -    -      (83)
Net income (loss)  $4,630   $1,283   $(2,825)  $(869)  $(1,018)  $(943)   (617)   (4,725)   (425)   (268)   (1,988)   (12,396)    $(7,766)
Less: Net income attributable to noncontrolling interest   52    -    (52)   -    -    -    -    -    -    -    -    (52) E   0 
Net income (loss) attributable to Jamba, Inc.  $4,578   $1,283   $(2,773)  $(869)  $(1,018)  $(943)  $(617)  $(4,725)  $(425)  $(268)  $(1,988)  $(12,344)    $(7,766)

  

 8 

 

 

Jamba, Inc.

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

June 30, 2015

 

1.Description of Refranchising Transactions

 

Beginning in January, 2015, Jamba Juice Company, a California corporation and wholly-owned subsidiary of Jamba, Inc. (the “Company”) began refranchising Company-owned stores located in the San Francisco Bay Area and Southern California as part of the Company’s refranchising initiative in multiple transactions.

 

April Disposal 1

 

In connection with the first refranchising transaction, the Company transferred to M5 Partners, Inc. all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, vehicles, other tangible personal property and all goodwill associated with stores for a purchase price of $1,850,000 plus payment for all marketable inventory and cash on hand at each of the stores. M5 Partners, Inc. agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

April Disposal 2

 

In another refranchising transaction completed on April 28, 2015, the Company sold its 88% membership interest in Jamba Juice Southern California LLC (“JJSC”) to Strategic Marketing Sciences, Inc., its minority partner in the joint venture. JJSC was formed to operate a group of stores in Southern California. The purchase price for the membership interest was $3,000,000 plus payment for all marketable inventory and cash on hand at each of the stores. Strategic Marketing Sciences, Inc. agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

May Disposal

 

On May 19, 2015, the Company completed the refranchising of a group of Company-owned stores located in the San Francisco Bay Area. In connection with the refranchising transaction, the Company transferred to Blended Star NorCal, Inc. all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, vehicles, other tangible personal property and all goodwill associated with stores for a purchase price of $2,500,000 plus payment for all marketable inventory and cash on hand at each of the stores. Blended Star NorCal, Inc. agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

June Disposal 1

 

On June 9, 2015, the Company completed the refranchising of a group of Company-owned stores located in Southern California as part of its refranchising initiative. In connection with the refranchising transaction, the Company transferred to J’s Juice Masters, Inc. all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, other tangible personal property, all marketable inventory and all goodwill associated with the stores for a purchase price of $2,100,000 plus payment for cash on hand at each of the stores. J’s Juice Masters, Inc. agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

 9 

 

 

June Disposal 2

 

On June 30, 2015, the Company completed the refranchising of a group of Company-owned stores located in Southern California as part of its refranchising initiative. In connection with the refranchising transaction, the Company transferred to CMCS 2 Juice, LP and CMCS 3 Juice, LP all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, other tangible personal property, all marketable inventory and all goodwill associated with the stores for a purchase price of $1,800,000 plus payment for cash on hand at each of the stores. Payment of the purchase price was comprised of $540,000 in cash and two promissory notes of $542,079 and $717,921, both with an interest rate of four and one-quarter percent (4.25%) per annum and maturity dates of July 30, 2015. CMCS 2 Juice, LP and CMCS 3 Juice, LP agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

July Disposal 1

 

On July 7, 2015, the Company completed the refranchising of a group of Company-owned stores located in Southern California as part of its refranchising initiative. In connection with the refranchising transaction, the Company transferred to one owner operating five separate entities - Brea Juice Company, LLC, Fresh Juice Development, LLC, Grab N Go Juice, LLC, Juice To Go, LLC and LA Juice Company, LLC - all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, other tangible personal property, all marketable inventory and all goodwill associated with the stores for a purchase price of $6,600,030 plus payment of $30,000 for cash on hand at each of the stores. Brea Juice Company, LLC, Fresh Juice Development, LLC, Grab N Go Juice, LLC, Juice To Go, LLC and LA Juice Company, LLC, agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

July Disposal 2

 

On July 28, 2015, the Company completed the refranchising of a group of Company-owned stores located in Northern and Southern California as part of its refranchising initiative. In connection with the refranchising transaction, the Company transferred to Vitaligent, LLC all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, other tangible personal property, cash on hand at each of the stores, all marketable inventory and all goodwill associated with the stores for a purchase price of $25,000,000. Payment of the purchase price was comprised of $23,000,000 in cash and a promissory note of $2,000,000 with a combined interest rate of five and a half percent (5.5%) per annum, comprised of basic interest at three percent (3%) and a payment-in-kind interest. The payment-in-kind interest compounds quarterly beginning October 28, 2015. The note matures February 1, 2021. In addition to a $50,000 escrow account at closing for store repairs/upgrades, there is a reduction in gain for continent payables of $694,000 for designated repairs and fixed asset additions. Vitaligent, LP agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

September Disposal

 

On September 23, 2015, the Company completed the refranchising of a group of Company-owned stores located in Southern California as part of its refranchising initiative. In connection with the refranchising transaction, the Company transferred to RPM Jamba #5, Inc. all machinery equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, other tangible personal property, and all goodwill associated with the stores for a purchase price of $4,500,000 plus payment of $94,000 for all marketable inventory and cash on hand at each of the stores. RPM Jamba #5, Inc. agreed to enter into the Company’s standard franchise agreement with a ten-year term in connection with entering into the transaction.

 

 10 

 

 

October Disposal

 

On October 28, 2015, the Company completed the refranchising of a group of Company-owned stores the San Francisco Bay Area as part of the Company’s refranchising initiative. In connection with the refranchising transaction, the Company transferred to Valley Juice, LLC all machinery, equipment, computer hardware (including point of sale equipment), furniture, fixtures, tools, signs, other tangible personal property and all goodwill associated with the stores for a purchase price of $3,300,000 plus payment for cash on hand and marketable inventory at each of the stores. In connection with entering into the transaction, Valley Juice, LLC agreed to enter into the Company’s standard franchise agreement with a ten-year term and the Company’s standard development agreement under which it agreed to open eight additional stores over five years in the San Francisco Bay Area.

 

Other Disposals

 

In addition to the transactions mentioned above, the Company entered into multiple individually insignificant agreements and refranchised a small group of stores located in Southern California and in the San Francisco Bay Area during the 13 week periods ended March 31, 2015 and June 30, 2015. In connection with the refranchising transactions, the Company received aggregate proceeds of $2,412,000 and the purchasers entered into the Company’s standard franchise agreements with ten-year terms in connection with entering into the transactions.

 

2.Basis of Presentation

 

The unaudited pro forma condensed consolidated financial statements were prepared in accordance with GAAP and pursuant to U.S. Securities and Exchange Commission Regulation S-X Article 11, and present the pro forma financial position and results of operations of the Company based upon the historical information after giving effect to the disposal and adjustments described in the notes to the unaudited pro forma condensed consolidated financial statements. The unaudited pro forma condensed consolidated balance sheet is presented as if the refranchising had occurred on June 30, 2015, and the unaudited pro forma condensed consolidated statement of operations for the 26 week period ended June 30, 2015 is presented as if the disposal had occurred on January 1, 2014 and carried forward through the 26 week period ended on June 30, 2015.  As a result, pro forma adjustments for refranchising of the group of stores completed during the 26 week period ended June 30, 2015 were reflected in the unaudited pro forma condensed consolidated statement of operations only.

 

The unaudited pro forma condensed consolidated financial information is presented for informational purposes only and is not indicative of the Company’s financial results or financial position as if the transactions reflected herein had occurred, or been in effect during the pro forma periods. This unaudited pro forma condensed consolidated financial information should not be viewed as indicative of the Company’s expected financial results for future periods.

 

3.Adjustments to Unaudited Pro Forma Condensed Consolidated Balance Sheet

 

Adjustments in the columns titled “Pro Forma Adjustments” represent the following:

 

 11 

 

 

(a) - Represents the pro forma adjustments for the proceeds received offset by store-related cash balances at the end of the 26 week period ended June 30, 2015 (in thousands).

 

   Amount 
Proceeds received  $37,597 
Cost to sell   (4,541)
Store-related cash at hand   (163)
   $32,893 

 

(b) - Represents the pro forma adjustments for the inventory and other assets that will no longer be on the Company’s balance sheet as a result of the disposal of the stores to franchise partners.

 

(c) - Represents the pro forma adjustments for the estimated net book value of the store assets purchased by the franchise partners from the Company.

 

(d) - Represents the pro forma adjustments for long-term promissory note given as consideration included in the purchase price (in thousands):

 

   Amount 
      
Vitaligent, LLC  $2,000 

 

(e) - Represents the pro forma adjustments for the effect of amounts refundable to purchasers contingent upon landlords not extending the lease terms for certain store locations or amounts related to development fees for future stores.

 

(f) - Represents the pro forma adjustments for the impact of the refranchising transaction on the Company’s accumulated deficit (in thousands):

 

)
   Amount 
Proceeds received  $37,597 
Promissory Notes   2,000 
Less: Cost to sell   (4,541)
Assets held for sale   (12,094)
Property, fixtures and equipment, net   (3,683)
Goodwill and current assets   (991)
Amounts contingently refundable   (694)
Deferred revenue  (80)
   $17,514 

 

4.Adjustments to Unaudited Pro Forma Condensed Consolidated Statement of Operations

 

A - Reflects the pro forma adjustments for the revenue during the 26 week period ended June 30, 2015 from the stores sold to franchise partners.

 

B - Reflects the pro forma adjustments for estimated royalty income that would have been earned had the stores been owned by franchisees for the 26 week period ended June 30, 2015.

 

 12 

 

 

C - Reflects the pro forma adjustments for the expenses related to the stores sold to franchise partners.

 

D - Reflects the pro forma adjustments to remove the effect of the net gain on refranchising for transactions completed during the 26 week period ended June 30, 2015.

 

E - Reflects the pro forma adjustments to eliminate the 12% noncontrolling interest in JJSC, since the owner of the noncontrolling interest is acquiring the remaining interest on the JJSC stores.

 

 13 
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