Jamba Juice 2007 Annual Report Download - page 36

Table of Contents

The 10-day transition period of the Company from January 1, 2006 to January 10, 2006 has been audited, but is not material to the consolidated
financial statements as a whole. During this 10-day period, we earned approximately $92,000 in interest income from cash held in the Company’s trust
account and recorded a gain on derivative liabilities of $173,000 to account for the change in fair value of the Company’s warrants.

Jamba, Inc. was formed on January 6, 2005, to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar merger
with an operating business that provides services. From January 6, 2005 (inception) until December 31, 2005, we had net income of approximately $3.3
million, derived from dividend and interest income of $1.5 million and a gain on derivative liabilities of $2.1 million, less operating expenses of $197,000
and income tax provision of $85,000.
On July 6, 2005, we consummated our initial public offering of 15,000,000 units. On July 7, 2005, we consummated the closing of an additional
2,250,000 units that were subject to the underwriters’ over-allotment option. Each unit consists of one share of common stock and one redeemable common
stock purchase warrant. Each warrant entitles the holder to purchase from us one share of our common stock at an exercise price of $6.00. Our common stock
and warrants started trading separately as of July 28, 2005. We account for the warrants as derivative liabilities, instead of an equity instrument.
The net proceeds from the sale of the Company’s units, after deducting certain offering expenses of approximately $1.9 million, including $1.2 million
evidencing the underwriters’ non-accountable expense allowance of 1% of the gross proceeds (excluding the proceeds from the underwriters’ over-allotment),
and underwriting discounts of approximately $8.3 million, were approximately $127.9 million. Of this amount, $128.3 million was placed in trust and the
remaining $1.1 million was held outside of the trust. The remaining proceeds were available to be used to provide for business, legal and accounting due
diligence on prospective acquisitions and continuing general and administrative expenses. Substantially all of the net proceeds of the initial public offering were
used to acquire a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business, and structuring,
negotiating and consummating the merger.
Commencing on July 6, 2005 and ending upon the acquisition of Jamba Juice Company, we incurred a fee of $4,875 per month for office space and
certain other additional services from SB Management Corp., an affiliate of Steven R. Berrard, our chairman of the board, and a fee of $2,625 per month for
general and administrative services including secretarial support from Mercantile Companies, Inc., an affiliate of I. Steven Edelson, our former vice chairman
and vice president, and Nathaniel Kramer, one of our former directors. In addition, in January, March and June 2005, Messrs. Berrard, Edelson, Kramer
and Thomas E. Aucamp, our former vice presidents and directors, loaned us an aggregate of $160,000 to us for payment on our behalf of offering expenses.
These loans were repaid following our initial public offering from the proceeds of the offering.

The following is a discussion of Jamba Juice Company’s financial condition and results of operations for the 22-week period from June 28, 2006 to
November 28, 2006 (“22 Week Period”), and fiscal 2006, fiscal 2005 and fiscal 2004. You should read this section together with Jamba Juice Company’s
consolidated financial statements, including the notes to those consolidated financial statements that appear elsewhere in this annual report on Form 10-K.
Jamba Juice Company’s previous fiscal year ended on the Tuesday preceding June 30. Fiscal 2006 and fiscal 2005 include 52 weeks, and fiscal 2004
includes 53 weeks.
36