Transaction

Other Transaction



BBX Capital, Inc.

IT'SUGAR, LLC

Accounting

Accounting



Historical

Historical

Adjustments

Adjustments

Pro Forma

ASSETS

$

Cash and cash equivalents

(1)

(5)

Restricted cash

 —

 —

Trade accounts receivable, net

 —

 —

Trade inventory

 —

 —

Real estate

 —

 —

 —

Investments in and advances to unconsolidated real estate joint ventures

 —

 —

 —

Investment in and advances to IT'SUGAR, LLC

 —

(2)

(5)

 -

Note receivable from Bluegreen Vacations Holding Corporation

 —

 —

 —

Property and equipment, net

(3)

 —

Goodwill

(3)

Intangible assets, net

(3)

 —

Operating lease assets

(3)

 —

Deferred tax asset, net

 —

(4)

 —

Other assets

 —

(5)

Total assets

LIABILITIES AND EQUITY

Liabilities:

Accounts payable

 —

(5)

Accrued expenses

(1)

(5)

Other liabilities

 —

 —

Operating lease liabilities

(3)

 —

Notes payable and other borrowings

 —

(5)

Total liabilities

Equity:

Redeemable noncontrolling interest

 —

 —

(3)

 —

Preferred stock of $.01 par value; authorized 10,000,000 shares

 —

 —

 —

 —

 -

Class A Common Stock of $.01 par value; authorized 30,000,000 shares; issued and outstanding 15,285,194

 —

 —

 —

Class B Common Stock of $.01 par value; authorized 4,000,000 shares; issued and outstanding 3,693,596

 —

 —

 —

Additional paid-in capital

 —

Accumulated earnings (deficit)

 —

Accumulated other comprehensive income

 —

 —

 —

Total shareholders' equity

 —

Noncontrolling interests

 —

 —

 —

Total equity

 —

Total liabilities and equity

$

1.

Amounts represent adjustments to account for (i) the impact of the Plan on pre-petition liabilities included in IT’SUGAR’s historical statement of financial condition as of March 31, 2021, including amounts paid to IT’SUGAR’s creditors and the reversal of previously accrued liabilities that are no longer outstanding as a result of the Plan, and (ii) the payment of professional fees related to the bankruptcy proceedings. In connection with the effectiveness of the Plan, IT’SUGAR paid approximately $2.5 million to its creditors in relation to construction/mechanic’s lien claims and general unsecured claims and paid $2.2 million of professional fees (excluding professional fees previously paid by IT’SUGAR during the pendency of the Chapter 11 Cases).

2.

Amount represents the elimination of the Company’s equity investment in IT’SUGAR as of March 31, 2021.

3.

Purchase Accounting Adjustments included in the Transaction Accounting Adjustments column are comprised of the following adjustments:





IT'SUGAR

Estimated Fair Value

Purchase



Historical

of  Net Assets

Accounting



As Adjusted (a)

Acquired (b)

Adjustments (b)

Cash and restricted cash

$

 —

Property and equipment

Trade accounts receivable, inventory and other assets

 —

Operating lease assets

Identifiable intangible assets 

Total identifiable assets acquired

Accounts payable and other liabilities

 —

Operating lease liabilities

Total liabilities assumed

Total net identifiable assets acquired

Redeemable noncontrolling interest

 —

Goodwill

Fair value of net assets acquired

$

a.

Amounts included in the IT’SUGAR Historical As Adjusted column represent IT’SUGAR’s historical amounts as of March 31, 2021 adjusted for (i) the items described in Note 1 above and (ii) intercompany balances between IT’SUGAR and BBX Capital that will be eliminated as a result of BBX Capital’s consolidation of IT’SUGAR.

b.

The Estimated Fair Value of Net Assets Acquired column summarizes the estimated provisional fair values of IT’SUGAR’s net assets acquired, including identifiable intangible assets and goodwill, and the Purchase Accounting Adjustments column represents adjustments necessary to remeasure IT’SUGAR’s historical assets and liabilities at their estimated provisional fair values.

4.

Amount represents the recognition of a deferred tax adjustment associated with the remeasurement gain expected to be recognized related to our investment in IT’SUGAR at the estimated statutory effective tax rate of 25%.

5.

Amounts primarily reflect the elimination of intercompany transactions, including credit facilities, between the Company and  IT’SUGAR.





Transaction

Other Transaction



BBX Capital, Inc.

IT'SUGAR, LLC

Accounting

Accounting



Historical (1)

Historical (2)

Adjustments

Adjustments

Pro Forma

Revenues:

Trade sales

$

 —

(4)

Sales of real estate inventory

 —

 —

 —

Interest income

 —

 —

(5)

Net gains on sales of real estate assets

 —

 —

 —

Other revenue

 —

 —

 —

Total revenues

 —

Costs and Expenses:

Cost of trade sales

 —

(6)

Cost of real estate inventory sold

 —

 —

 —

Interest expense

 —

(5)

Recoveries from loan losses, net

 —

 —

 —

Impairment losses

 —

 —

 —

Selling, general and administrative expenses

(3)

(7)

Total costs and expenses

Operating losses

Equity in net earnings of unconsolidated real estate joint ventures

 —

 —

 —

Loss on the deconsolidation of IT'SUGAR, LLC

 —

 —

(8)

 —

Other income (loss)

 —

 —

Foreign exchange loss

 —

 —

 —

Loss before income taxes

Benefit for income taxes

 —

(10)

(9)

Net loss from continuing operations

Discontinued operations

Loss from operations

 —

 —

 —

Benefit for income taxes

 —

 —

 —

Loss from discontinued operations

 —

 —

 —

Net loss

Net loss attributable to noncontrolling interests

 —

Net loss attributable to shareholders

$



Basic and diluted loss per share from continuing operations

Basic and diluted loss per share from discontinued operations

 —

 —

Total basic and diluted loss per share

Weighted average number of common shares outstanding

Net loss

Other comprehensive income, net of tax:

 —

Unrealized gain on securities available for sale

 —

 —

 —

Foreign currency translation adjustments

 —

 —

 —

Other comprehensive income, net

$

 —

 —

 —

Comprehensive loss, net of tax

Less: Comprehensive loss attributable to noncontrolling interests

 —

Comprehensive loss attributable to shareholders

1.

Amounts in the BBX Capital, Inc. Historical column include IT’SUGAR’s operating results from January 1, 2020 through September 22, 2020, the date of the bankruptcy filings and the resulting deconsolidation of IT’SUGAR by BBX Capital.

2.

Amounts in the IT’SUGAR, LLC Historical column represent IT'SUGAR's operating results from September 22, 2020 through the remainder of 2020.

3.

Amount represents the difference between i) the historical depreciation and amortization expense recognized by IT’SUGAR related to its property and equipment and intangible assets and ii) the estimated depreciation and amortization expense expected to be recognized by IT’SUGAR based on the estimated fair values of the IT’SUGAR’s property and equipment and identifiable intangible assets as of the acquisition date, including $346,000 of additional amortization expenses associated with intangible assets and $42,000 of higher depreciation expenses associated property and equipment. As described above, the estimated fair values of the assets acquired and liabilities assumed associated with IT’SUGAR are preliminary and subject to change, as management is in the process of completing its valuation analyses and its accounting for the consolidation of IT’SUGAR is not complete as of the date of this report.

4.

Amount represents the elimination of historical trade sales associated with IT’SUGAR’s retail locations that were closed during the Chapter 11 Cases.

5.

Amounts represent the elimination of interest income and interest expense associated with a prepetition credit facility and debtor-in-possession credit facility due from IT'SUGAR to a subsidiary of BBX Capital. In connection with the Effective Date, these facilities were superseded and replaced by an Exit Facility due from IT’SUGAR to BBX Capital’s subsidiary. As a result of the consolidation of IT’SUGAR, amounts related to the Exit Facility will be eliminated in BBX Capital’s consolidated financial statements.

6.

Amount represents the elimination of historical costs of trade sales (including rent expense and gains from the termination of retail lease obligations) of $0.8 million associated with IT’SUGAR’s retail locations that were closed during the Chapter 11 Cases and a $1.3 million adjustment to reduce operating lease costs associated with IT’SUGAR’s retail locations. As the terms of lease amendments executed by IT’SUGAR and the landlords of its retail locations during the Chapter 11 Cases were an integral component of the Plan and IT’SUGAR’s emergence from bankruptcy, the unaudited pro forma consolidated statements of operations and comprehensive income give effect to the terms of IT’SUGAR’s lease agreements upon its emergence from bankruptcy as if such terms were in place on January 1, 2020. Accordingly, operating lease costs have been adjusted to reflect contractual fixed lease costs contemplated in the terms of the leases that were in place at the time that IT’SUGAR emerged from bankruptcy. Further, variable lease costs based on a percentage of sales generated at leased locations were calculated by applying the contractual percentage contemplated in the terms of the lease at the time of IT’SUGAR’s emergence from bankruptcy to IT’SUGAR’s sales during the applicable period presented, while other variable lease costs, including certain operating costs billed to IT'SUGAR by its landlords pursuant to such lease agreements, were in certain cases estimated based on prior historical amounts billed by landlords.  

7.

Amount is comprised of an adjustment to recognize $2.4 million of professional costs related to the bankruptcy proceedings that were not included in the historical amounts, partially offset by an adjustment of $1.7 million to eliminate selling, general and administrative expenses associated with IT’SUGAR’s retail locations that were closed during the Chapter 11 Cases. The pro forma consolidated statement of operations and comprehensive income for the year ended December 31, 2020 includes approximately $3.7 million in legal and advisory fees related to the bankruptcy proceedings.

8.

Amount represents the elimination of the loss on the deconsolidation of IT’SUGAR recognized by BBX Capital during the year ended December 31, 2020. As the pro forma consolidated statements of operations and comprehensive income give effect to BBX Capital reacquiring control of IT’SUGAR as if IT’SUGAR emerged from the Chapter 11 Cases pursuant to the Plan on January 1, 2020 and BBX Capital applied the acquisition method to account for the emergence on that date, the pro forma consolidated statements of operations and comprehensive income exclude the impact of any gains or losses recognized, or expected to be recognized, in connection with the deconsolidation of IT’SUGAR in September 2020 and the subsequent reconsolidation of IT’SUGAR in June 2021.

9.

Amount represents an adjustment to BBX Capital’s benefit for income taxes by applying the estimated statutory effective tax rate of 25% to the impact of the Other Transaction Accounting Adjustments before income taxes, adjusted for amounts attributable to a noncontrolling interest.

10.

Amount represents an adjustment to BBX Capital’s benefit for income taxes by applying the estimated statutory effective tax rate of 25% to IT’SUGAR’s historical loss before income taxes of $4.8 million and the impact of the Transaction Accounting Adjustments before income taxes, adjusted for amounts attributable to a noncontrolling interest.





Transaction

Other Transaction



BBX Capital, Inc.

IT'SUGAR, LLC

Accounting

Accounting



Historical

Historical

Adjustments

Adjustments

Pro Forma

Revenues:

Trade sales

$

 —

(2)

Sales of real estate inventory

 —

 —

 —

Interest income

 —

 —

(3)

Net gains on sales of real estate assets

 —

 —

 —

Other revenue

 —

 —

Total revenues

 —

Costs and Expenses:

Cost of trade sales

 —

(4)

Cost of real estate inventory sold

 —

 —

 —

Interest expense

 —

(3)

Recoveries from loan losses, net

 —

 —

 —

Impairment losses

 —

 —

 —

 —

 —

Selling, general and administrative expenses

(1)

(5)

Total costs and expenses

Operating profits

Equity in net losses of unconsolidated real estate joint ventures

 —

 —

 —

Other income

 —

 —

Foreign exchange loss

 —

 —

 —

Income (loss) before income taxes

(Provision) benefit for income taxes

 —

(7)

(6)

Net income (loss)

Net (income) loss attributable to noncontrolling interests

 —

Net income (loss) attributable to shareholders

$

Total basic and diluted earnings per share

Weighted average number of common shares outstanding

Net income (loss)

Other comprehensive income, net of tax:

Unrealized loss on securities available for sale

 —

 —

 —

Foreign currency translation adjustments

 —

 —

 —

Other comprehensive income, net

$

 —

 —

 —

Comprehensive income (loss), net of tax

Less: Comprehensive income attributable to noncontrolling interests

 —

Comprehensive income (loss) attributable to shareholders

1.

Amount represents the difference between i) the historical depreciation and amortization expense recognized by IT’SUGAR related to its property and equipment and intangible assets and ii) the estimated depreciation and amortization expense expected to be recognized by IT’SUGAR based on the estimated fair values of the IT’SUGAR’s property and equipment and identifiable intangible assets as of the acquisition date, including $87,000 of additional amortization expenses associated with intangible assets and $69,000 of lower depreciation expenses associated property and equipment. As described above, the estimated fair values of the assets acquired and liabilities assumed associated with IT’SUGAR are preliminary and subject to change, as management is in the process of completing its valuation analyses and its accounting for the consolidation of IT’SUGAR is not complete as of the date of this report.

2.

Amount represents the elimination of historical trade sales associated with IT’SUGAR’s retail locations that were closed during the Chapter 11 Cases.

3.

Amounts represent the elimination of interest income and interest expense associated with a prepetition credit facility and debtor-in-possession credit facility due from IT'SUGAR to a subsidiary of BBX Capital. In connection with the Effective Date, these facilities were superseded and replaced by an Exit Facility due from IT’SUGAR to BBX Capital’s subsidiary. As a result of the consolidation of IT’SUGAR, amounts related to the Exit Facility will be eliminated in BBX Capital’s consolidated financial statements.

4.

Amount primarily represents an adjustment to increase operating lease costs associated with IT’SUGAR’s retail locations. As the terms of lease amendments executed by IT’SUGAR and the landlords of its retail locations during the Chapter 11 Cases were an integral component of the Plan and IT’SUGAR’s emergence from bankruptcy, the unaudited pro forma consolidated statements of operations and comprehensive income give effect to the terms of IT’SUGAR’s lease agreements upon its emergence from bankruptcy as if such terms were in place on January 1, 2020. Accordingly, operating lease costs have been adjusted to reflect contractual fixed lease costs contemplated in the terms of the leases that were in place at the time that IT’SUGAR emerged from bankruptcy. Further, variable lease costs based on a percentage of sales generated at leased locations were calculated by applying the contractual percentage contemplated in the terms of the lease at the time of IT’SUGAR’s emergence from bankruptcy to IT’SUGAR’s sales during the applicable period presented, while other variable lease costs, including certain operating costs billed to IT'SUGAR by its landlords pursuant to such lease agreements, were in certain cases estimated based on prior historical amounts billed by landlords.

5.

Amount is comprised of (i) an adjustment to reverse $0.9 million of professional costs related to the bankruptcy proceedings that were recognized in the historical amounts for the three months ended March 31, 2021 (and have been added to selling, general and administrative expenses in the pro forma consolidated statement of operations and comprehensive income for the year ended December 31, 2020) and (ii) an adjustment of $0.4 million to eliminate selling, general and administrative expenses associated with IT’SUGAR’s retail locations that were closed during the Chapter 11 Cases.

6.

Amount represents an adjustment to BBX Capital’s benefit for income taxes by applying the estimated statutory effective tax rate of 25% to the impact of the Other Transaction Accounting Adjustments before income taxes, adjusted for amounts attributable to a noncontrolling interest.

7.

Amount represents an adjustment to BBX Capital’s benefit for income taxes by applying the estimated statutory effective tax rate of 25% to IT’SUGAR’s historical loss before income taxes of $2.2 million and the impact of the Transaction Accounting Adjustments before income taxes, adjusted for amounts attributable to a noncontrolling interest.