Jamba Juice 2009 Annual Report Download - page 80

Table of Contents
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Public Stockholders could seek redemption of their shares in the event of a business combination. Such Public Stockholders were entitled to receive their per
share interest in the Trust Fund computed without regard to the shares held by Initial Stockholders. Accordingly, the Company had set up a liability on the
balance sheet for the possible redemption of 3,448,275 shares of common stock in the amount of $25.2 million as of January 10, 2006. No Public
Stockholders voted against the merger with Jamba Juice Company. Upon completion of the Merger, the redemption right no longer existed, therefore, the
liability for possible redemption was reclassified to additional paid-in capital in fiscal 2006.
Earnings Per Share—Earnings per share is computed in accordance with FASB Statement No. 128, Earnings per Share. Basic net income per
share is computed based on the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed based on
the weighted-average number of common shares and potentially dilutive securities, which include outstanding options and restricted stock awards granted
under the Company’s stock option plans and warrants. Anti-dilutive shares of 21.8 million, 21.8 million and 22.0 million have been excluded from diluted
weighted-average shares outstanding in fiscal 2008, fiscal 2007 and fiscal 2006, respectively.
The number of incremental shares from the assumed exercise of options and warrants was calculated by applying the treasury stock method. The
following table summarizes the differences between the basic and diluted weighted-average shares outstanding used to compute diluted net earnings (loss) per
share:
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Basic weighted-average shares outstanding 53,252,855 52,323,898 24,478,384
Incremental shares from assumed exercise of options and warrants and restricted stock awards — — —
Diluted weighted-average shares outstanding 53,252,855 52,323,898 24,478,384
Preferred Stock—The Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting, and other rights and
preferences, as may be determined from time to time by the board of directors.
Share-based compensation—Stock options for a fixed number of shares are granted to certain employees and directors with an exercise price based on
the grant date of the Company’s common stock. The Company also grants restricted stock with a fair value determined based on the closing price of the
Company’s common stock on the date of grant (see Note 12). Stock options excluding performance-based stock option grants and restricted stock generally
vest over a four-year period. Share-based compensation expense is recognized ratably over the service period. Performance-based stock option grants will vest
at a specified date upon the achievement of certain goals. No share-based compensation expense will be recognized until it is probable that the performance
condition will be achieved.
The Company accounts for share-based compensation using the provisions of FASB Statement No. 123 (revised 2004), Share-Based Payment, and
SEC Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, as amended by SAB No. 110, requiring the measurement and recognition of all
share-based compensation under the fair value method.
Fair Value of Financial Instruments—The carrying value of cash and cash equivalents, notes and accounts receivable and accounts payable
approximates fair value.
On September 11, 2008, the Company entered into a financing agreement (the “Financing Agreement”) with Victory Park Management, LLC, as agent,
and its affiliated funds as lenders (“Lenders”) whereby the Lenders
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