Exhibit 99.1



UNAUDITEd Pro Forma consolidated Financial Information for BBX Capital, Inc.





The unaudited pro forma consolidated financial statements set forth below have been derived from BBX Capital, Inc.’s (“BBX Capital” or the “Company”) historical annual and interim financial statements, including its unaudited statement of financial condition as of March 31, 2021 and its unaudited statement of operations and comprehensive income for the three months ended March 31, 2021, which are included in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2021 filed with the SEC, and its audited statement of operations for the year ended December 31, 2020, which is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC.



BBX Capital, through its wholly-owned subsidiary, BBX Sweet Holdings, LLC, owns approximately 93% of the equity interests in It’Sugar, LLC (collectively with its subsidiaries, “IT’SUGAR”), a specialty candy retailer whose products include bulk candy, candy in giant packaging, and licensed and novelty items. Prior to September 22, 2020, the Company consolidated the financial statements of IT’SUGAR as a result of its 93% ownership of IT’SUGAR. However, on September 22, 2020, IT’SUGAR filed voluntary petitions to reorganize under Chapter 11 of Title 11 of the U.S. Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the Southern District of Florida (the “Bankruptcy Court”) (the cases commenced by such filings, the “Chapter 11 Cases”), and the Company deconsolidated IT’SUGAR as a result of the filings, the uncertainties surrounding the nature, timing, and specifics of the bankruptcy proceedings, and the Company’s resulting loss of control and significant influence over IT’SUGAR. Following the deconsolidation of IT’SUGAR, the Company accounted for its investment in IT’SUGAR at cost less impairment, if any.



Following approval of the proposed plan by IT’SUGAR’s unsecured creditors, the Bankruptcy Court entered an order (the “Confirmation Order”) on June 16, 2021 confirming the plan of reorganization filed by IT’SUGAR, as modified by the Confirmation Order (the “Plan”). The Plan became effective on June 17, 2021 (the “Effective Date”). Pursuant to the terms of the Plan, the Company’s equity interests in IT’SUGAR were revested on the Effective Date, and all organizational documents of IT’SUGAR were assumed, ratified, and reinstated. As a result of the confirmation and effectiveness of the Plan and the revesting of its equity interests in IT’SUGAR, the Company was deemed to have reacquired a controlling financial interest in IT’SUGAR and will consolidate the results of IT’SUGAR into its consolidated financial statements from and after the date that it reacquired control of IT’SUGAR. The Company will account for the consolidation of IT’SUGAR under the acquisition method of accounting, which requires that the assets acquired and liabilities assumed associated with an acquiree be recognized at their fair values at the acquisition date. The Company will be required to remeasure the carrying value of its equity interests in IT’SUGAR at fair value as of the acquisition date, with the remeasurement adjustment recognized in the Company’s statement of operations, and recognize goodwill (or a bargain purchase gain, if applicable) based on the difference between (i) the fair values of IT’SUGAR’s identifiable assets and liabilities at the acquisition date and (ii) the fair values of the Company’s existing interests in IT’SUGAR and the noncontrolling interests in IT’SUGAR.



The unaudited pro forma consolidated statements of operations and comprehensive income for the three months ended March 31, 2021 and the year ended December 31, 2020 give effect to BBX Capital reacquiring control of IT’SUGAR as if IT’SUGAR emerged from the Chapter 11 Cases pursuant to the Plan and BBX Capital applied the acquisition method of accounting for the emergence on January 1, 2020. The unaudited pro forma statement of financial condition as of March 31, 2021 gives effect to BBX Capital reacquiring control of IT’SUGAR as if IT’SUGAR emerged from the Chapter 11 Cases pursuant to the Plan and BBX Capital applied the acquisition method of accounting for the emergence on March 31, 2021. Further, 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 for the three months ended March 31, 2021 and the year ended December 31, 2020 give effect to the terms of IT’SUGAR’s lease agreements upon its emergence from bankruptcy pursuant to the Plan as if such terms were in place on January 1, 2020, while the unaudited pro forma statement of financial condition as of March 31, 2021 gives effect to the terms of such lease agreements as if such terms were in place on March 31, 2021.



The “Transaction Accounting Adjustments” columns in the accompanying unaudited pro forma consolidated financial statements include adjustments necessary to account for IT’SUGAR’s emergence from the Chapter 11 Cases pursuant to the Plan and BBX Capital’s resulting consolidation of IT’SUGAR, including the recognition of the assets acquired

1

 


 

and liabilities assumed associated with IT’SUGAR at their estimated fair values. In addition, the “Transaction Accounting Adjustments” column in the unaudited pro forma statement of financial condition includes reorganization adjustments to account for 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 that will be paid to IT’SUGAR’s creditors pursuant to the Plan and the reversal of previously accrued liabilities that are no longer outstanding as a result of the Plan.



The “Other Transaction Accounting Adjustments” columns in the accompanying unaudited pro forma consolidated financial statements include adjustments related to (i) the elimination of intercompany balances and transactions between BBX Capital and IT’SUGAR as a result of BBX Capital consolidating IT’SUGAR and (ii) the recognition of costs related to the bankruptcy, including legal and advisory fees. In addition, the “Other Transaction Accounting Adjustments” column in the unaudited pro forma statements of operations and comprehensive income include (i) adjustments to remove the operating results of 17 retail locations that were closed by IT’SUGAR during the Chapter 11 Cases and (ii) adjustments necessary to account for IT’SUGAR’s lease agreements as if the terms of such agreements upon its emergence from bankruptcy were in place as of January 1, 2020.



In management’s opinion, the unaudited pro forma consolidated financial statements reflect adjustments necessary to present fairly the Company’s pro forma results and financial position as of and for the periods indicated. The Transaction Accounting Adjustments and Other Transaction Accounting Adjustments reflected in the unaudited pro forma consolidated financial statements are based on currently available information and assumptions management believes are, under the circumstances and given the information available at this time, reasonable and directly attributable to BBX Capital’s consolidation of IT’SUGAR upon IT’SUGAR’s emergence from bankruptcy pursuant to the Plan. In addition, as described in further detail below, BBX Capital’s accounting for the consolidation of IT’SUGAR, including, but not limited to, the estimated fair value of BBX Capital’s existing interests in IT’SUGAR as of the acquisition date and the estimated fair values of the assets acquired and liabilities assumed associated with IT’SUGAR, is 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.



The unaudited pro forma consolidated financial statements are for illustrative and informational purposes only and are not intended to represent what BBX Capital’s results of operations or financial position would have been had the consolidation of IT’SUGAR and related transactions occurred on the dates assumed. The unaudited pro forma consolidated financial statements also should not be considered indicative of BBX Capital’s future results of operations or financial position following the consolidation of IT’SUGAR.



The unaudited pro forma consolidated financial statements have been derived from and should be read in conjunction with BBX Capital’s historical financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020 and its Quarterly Report on Form 10-Q for the three months ended March 31, 2021. The amounts included in the “IT’SUGAR, LLC Historical” columns in the pro forma consolidated financial statements reflect the historical financial statements of IT’SUGAR for the applicable periods presented as derived from the historical accounting records of IT’SUGAR.





2

 


 

BBX Capital, Inc.

Unaudited Pro Forma Consolidated Statement of Financial Condition

As of March 31, 2021

(In thousands, except share data)













 

 

 

 

 

 

 

 

 

 



 

 

 

 

Transaction

 

Other Transaction

 

 



BBX Capital, Inc.

 

IT'SUGAR, LLC

 

Accounting

 

Accounting

 

 



Historical

 

Historical

 

Adjustments

 

Adjustments

 

Pro Forma

ASSETS

$

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

87,807 

 

7,034 

 

(4,719)

(1)

200 

(5)

90,322 

Restricted cash

 

350 

 

20 

 

 —

 

 —

 

370 

Trade accounts receivable, net

 

29,489 

 

504 

 

 —

 

 —

 

29,993 

Trade inventory

 

31,724 

 

4,592 

 

 —

 

 —

 

36,316 

Real estate

 

47,243 

 

 —

 

 —

 

 —

 

47,243 

Investments in and advances to unconsolidated real estate joint ventures

 

60,402 

 

 —

 

 —

 

 —

 

60,402 

Investment in and advances to IT'SUGAR, LLC

 

23,209 

 

 —

 

(12,700)

(2)

(10,509)

(5)

 -

Note receivable from Bluegreen Vacations Holding Corporation

 

75,000 

 

 —

 

 —

 

 —

 

75,000 

Property and equipment, net

 

7,856 

 

20,583 

 

(1,332)

(3)

 —

 

27,107 

Goodwill

 

6,936 

 

14,864 

 

(1,122)

(3)

 

 

20,678 

Intangible assets, net

 

21,999 

 

3,067 

 

6,583 

(3)

 —

 

31,649 

Operating lease assets

 

13,825 

 

55,793 

 

5,445 

(3)

 —

 

75,063 

Deferred tax asset, net

 

7,470 

 

 —

 

(4,474)

(4)

 —

 

2,996 

Other assets

 

28,641 

 

1,130 

 

 —

 

(14)

(5)

29,757 

Total assets

 

441,951 

 

107,587 

 

(12,319)

 

(10,323)

 

526,896 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

13,504 

 

2,116 

 

 —

 

(146)

(5)

15,474 

Accrued expenses

 

30,524 

 

16,526 

 

(11,424)

(1)

(86)

(5)

35,540 

Other liabilities

 

5,649 

 

209 

 

 —

 

 —

 

5,858 

Operating lease liabilities

 

13,643 

 

68,726 

 

(4,129)

(3)

 —

 

78,240 

Notes payable and other borrowings

 

68,947 

 

10,091 

 

 —

 

(10,091)

(5)

68,947 

Total liabilities

 

132,267 

 

97,668 

 

(15,553)

 

(10,323)

 

204,059 

Equity:

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interest

 

 —

 

 —

 

(269)

(3)

 —

 

(269)

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

 

153 

 

 —

 

 —

 

 —

 

153 

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

 

37 

 

 —

 

 —

 

 —

 

37 

Additional paid-in capital

 

308,455 

 

64,299 

 

(64,299)

 

 —

 

308,455 

Accumulated earnings (deficit)

 

(1,112)

 

(54,380)

 

67,802 

 

 —

 

12,310 

Accumulated other comprehensive income

 

1,942 

 

 —

 

 —

 

 —

 

1,942 

Total shareholders' equity

 

309,475 

 

9,919 

 

3,503 

 

 —

 

322,897 

Noncontrolling interests

 

209 

 

 —

 

 —

 

 —

 

209 

Total equity

 

309,684 

 

9,919 

 

3,234 

 

 —

 

322,837 

Total liabilities and equity

$

441,951 

 

107,587 

 

(12,319)

 

(10,323)

 

526,896 





See Notes to Unaudited Pro Forma Statement of Financial Condition

3

 


 

Notes to Unaudited Pro Forma Statement of Financial Condition



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

$

2,335 

 

2,335 

 

 —

Property and equipment

 

20,583 

 

19,251 

 

(1,332)

Trade accounts receivable, inventory and other assets

 

6,226 

 

6,226 

 

 —

Operating lease assets

 

55,793 

 

61,238 

 

5,445 

Identifiable intangible assets 

 

3,067 

 

9,650 

 

6,583 

Total identifiable assets acquired

 

88,004 

 

98,700 

 

10,696 

Accounts payable and other liabilities

 

7,427 

 

7,427 

 

 —

Operating lease liabilities

 

68,726 

 

64,597 

 

(4,129)

Total liabilities assumed

 

76,153 

 

72,024 

 

(4,129)

Total net identifiable assets acquired

 

11,851 

 

26,676 

 

14,825 

Redeemable noncontrolling interest

 

 —

 

269 

 

269 

Goodwill

 

14,864 

 

13,742 

 

(1,122)

Fair value of net assets acquired

$

26,715 

 

40,687 

 

13,972 



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.



Certain of the identifiable net assets acquired in the above table, including, but not limited to, cash and cash equivalents and net working capital, were calculated from IT’SUGAR’s historical financial statements as of March 31, 2021 and will change based on the actual cash and cash equivalents and net working capital acquired on the acquisition date.



The following summarizes the Company’s methodologies for estimating the provisional fair values of certain assets and liabilities associated with the acquisition of IT’SUGAR and the fair value of BBX Capital’s existing investment in IT’SUGAR:



Property and Equipment – Property and equipment acquired consists primarily of leasehold improvements at IT’SUGAR’s retail locations. The fair value of IT’SUGAR’s property and equipment was estimated based on the replacement cost approach.



4

 


 

Identifiable Intangible Assets – The primary identifiable intangible asset acquired consists of IT’SUGAR’s trademark. The fair value of the acquired trademark was estimated using the relief-from-royalty method, a form of the income approach. Under this approach, the fair value was estimated by calculating the present value using a risk-adjusted discount rate of the expected future royalty payments that would have to be paid if the IT’SUGAR trademark was not owned.



Operating Lease Assets and Lease Liabilities – Operating lease assets and lease liabilities were measured based on the present value of the fixed lease payments included in IT’SUGAR’s lease agreements pursuant to the provisions of ASC 842, Leases. In addition, IT’SUGAR’s operating lease assets have been adjusted to reflect an estimate of favorable or unfavorable terms of IT’SUGAR’s lease agreements when compared with market terms. These adjustments were estimated by calculating the present value using a risk-adjusted discount rate of the difference between the contractual amounts to be paid pursuant to the lease agreements and the estimate of market lease rates at the acquisition date.



Goodwill – Goodwill recognized in connection with the consolidation of IT’SUGAR reflects the difference between the (i) the fair values of IT’SUGAR’s identifiable assets and liabilities at the acquisition date and (ii) the fair values of the Company’s existing interests and any noncontrolling interests in IT’SUGAR at the acquisition date



Remeasurement of Existing Investment in IT’SUGAR – As part of the acquisition method of accounting, the Company is required to remeasure the carrying value of its existing interests in IT’SUGAR at fair value as of the acquisition date, with the remeasurement adjustment recognized in the Company’s statement of operations. The Company applied an income approach utilizing a discounted cash flow methodology to estimate the provisional fair value of its investment in IT’SUGAR as of the acquisition date. The Company’s discounted cash flow methodology established a provisional estimate of the fair value of IT’SUGAR by estimating the present value of the projected future cash flows to be generated from IT’SUGAR. The discount rate applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows associated with IT’SUGAR. The most significant assumptions used in the discounted cash flow methodology to estimate the preliminary fair value of IT’SUGAR were the terminal value, the discount rate, and the forecast of future cash flows.  Based on the preliminary estimated fair value of the Company’s interest in IT’SUGAR and the carrying amount of its interests, the Company would recognize a remeasurement gain, net of taxes, of approximately $13.5 million; however, as management completes our valuation analyses and finalizes our accounting for the transaction, we expect that this estimate may be updated in subsequent periods.



Redeemable Noncontrolling Interest - Represents a  9.65% redeemable noncontrolling interest in IT'SUGAR, reduced by $1.4 million of loans receivable due from the noncontrolling interest.



As management is still in the process of completing its valuation analyses related to IT’SUGAR, our accounting for the consolidation of IT’SUGAR is not complete as of the date of this report. As a result, the amounts reported in the above table, including the estimated fair values of the assets acquired and liabilities assumed associated with IT’SUGAR and the estimated fair value of our existing investment in IT’SUGAR, are provisional amounts that may be updated in subsequent periods to reflect the completion of our valuation analyses and any additional information obtained during the measurement period.



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.



5

 


 

BBX Capital, Inc.

Unaudited Consolidated Statement of Operations and Comprehensive Income

For the Year Ended December 31, 2020











 

 

 

 

 

 

 

 

 

 



 

 

 

 

Transaction

 

Other Transaction

 

 



BBX Capital, Inc.

 

IT'SUGAR, LLC

 

Accounting

 

Accounting

 

 



Historical (1)

 

Historical (2)

 

Adjustments

 

Adjustments

 

Pro Forma

Revenues:

 

 

 

 

 

 

 

 

 

 

Trade sales

$

147,210 

 

17,683 

 

 —

 

(2,261)

(4)

162,632 

Sales of real estate inventory

 

20,363 

 

 —

 

 —

 

 —

 

20,363 

Interest income

 

2,399 

 

 —

 

 —

 

(37)

(5)

2,362 

Net gains on sales of real estate assets

 

255 

 

 —

 

 —

 

 —

 

255 

Other revenue

 

3,002 

 

 —

 

 —

 

 —

 

3,002 

Total revenues

 

173,229 

 

17,683 

 

 —

 

(2,298)

 

188,614 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

Cost of trade sales

 

126,152 

 

12,791 

 

 —

 

(2,084)

(6)

136,859 

Cost of real estate inventory sold

 

13,171 

 

 —

 

 —

 

 —

 

13,171 

Interest expense

 

237 

 

50 

 

 —

 

(92)

(5)

195 

Recoveries from loan losses, net

 

(8,876)

 

 —

 

 —

 

 —

 

(8,876)

Impairment losses

 

30,772 

 

 —

 

 —

 

 —

 

30,772 

Selling, general and administrative expenses

 

66,757 

 

9,601 

 

388 

(3)

687 

(7)

77,433 

Total costs and expenses

 

228,213 

 

22,442 

 

388 

 

(1,489)

 

249,554 

Operating losses

 

(54,984)

 

(4,759)

 

(388)

 

(809)

 

(60,940)

Equity in net earnings of unconsolidated real estate joint ventures

 

465 

 

 —

 

 —

 

 —

 

465 

Loss on the deconsolidation of IT'SUGAR, LLC

 

(3,326)

 

 —

 

 —

 

3,326 

(8)

 —

Other income (loss)

 

290 

 

(42)

 

 —

 

 —

 

248 

Foreign exchange loss

 

(692)

 

 —

 

 —

 

 —

 

(692)

Loss before income taxes

 

(58,247)

 

(4,801)

 

(388)

 

2,517 

 

(60,919)

Benefit for income taxes

 

11,231 

 

 —

 

1,173 

(10)

(648)

(9)

11,756 

Net loss from continuing operations

 

(47,016)

 

(4,801)

 

785 

 

1,869 

 

(49,163)

Discontinued operations

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(91)

 

 —

 

 —

 

 —

 

(91)

Benefit for income taxes

 

17 

 

 —

 

 —

 

 —

 

17 

Loss from discontinued operations

 

(74)

 

 —

 

 —

 

 —

 

(74)

Net loss

 

(47,090)

 

(4,801)

 

785 

 

1,869 

 

(49,237)

Net loss attributable to noncontrolling interests

 

4,803 

 

 —

 

535 

 

74 

 

5,412 

Net loss attributable to shareholders

$

(42,287)

 

(4,801)

 

1,320 

 

1,943 

 

(43,825)



 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share from continuing operations

 

(2.19)

 

 

 

 

 

 

 

(2.26)

Basic and diluted loss per share from discontinued operations

 

 —

 

 

 

 

 

 

 

 —

Total basic and diluted loss per share

 

(2.19)

 

 

 

 

 

 

 

(2.26)

Weighted average number of common shares outstanding

 

19,318 

 

 

 

 

 

 

 

19,318 

Net loss

 

(47,090)

 

(4,801)

 

785 

 

1,869 

 

(49,237)

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 —

Unrealized gain on securities available for sale

 

35 

 

 —

 

 —

 

 —

 

35 

Foreign currency translation adjustments

 

241 

 

 —

 

 —

 

 —

 

241 

Other comprehensive income, net

$

276 

 

 —

 

 —

 

 —

 

276 

Comprehensive loss, net of tax

 

(46,814)

 

(4,801)

 

785 

 

1,869 

 

(48,961)

Less: Comprehensive loss attributable to noncontrolling interests

 

4,803 

 

 —

 

535 

 

74 

 

5,412 

Comprehensive loss attributable to shareholders

 

(42,011)

 

(4,801)

 

1,320 

 

1,943 

 

(43,549)





See Notes to Unaudited Pro Forma Statements of Operations and Comprehensive Income

6

 


 

Notes to Unaudited Pro Forma Statement of Operation and Comprehensive Income



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.

7

 


 

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.





8

 


 

BBX Capital, Inc.

Unaudited Consolidated Statement of Operations and Comprehensive Income

For the Three Months Ended March  31, 2021









 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

Transaction

 

 

Other Transaction

 

 

 



BBX Capital, Inc.

 

IT'SUGAR, LLC

 

Accounting

 

 

Accounting

 

 

 



Historical

 

Historical

 

Adjustments

 

 

Adjustments

 

 

Pro Forma

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Trade sales

$

45,914 

 

19,137 

 

 —

 

 

(72)

(2)

 

64,979 

Sales of real estate inventory

 

13,535 

 

 —

 

 —

 

 

 —

 

 

13,535 

Interest income

 

1,650 

 

 —

 

 —

 

 

(51)

(3)

 

1,599 

Net gains on sales of real estate assets

 

105 

 

 —

 

 —

 

 

 —

 

 

105 

Other revenue

 

671 

 

 

 —

 

 

 —

 

 

673 

Total revenues

 

61,875 

 

19,139 

 

 —

 

 

(123)

 

 

80,891 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of trade sales

 

36,893 

 

12,130 

 

 —

 

 

335 

(4)

 

49,358 

Cost of real estate inventory sold

 

7,858 

 

 —

 

 —

 

 

 —

 

 

7,858 

Interest expense

 

290 

 

51 

 

 —

 

 

(51)

(3)

 

290 

Recoveries from loan losses, net

 

(508)

 

 —

 

 —

 

 

 —

 

 

(508)

Impairment losses

 

 —

 

 —

 

 —

 

 

 —

 

 

 —

Selling, general and administrative expenses

 

13,198 

 

9,130 

 

18 

(1)

 

(1,310)

(5)

 

21,036 

Total costs and expenses

 

57,731 

 

21,311 

 

18 

 

 

(1,026)

 

 

78,034 

Operating profits

 

4,144 

 

(2,172)

 

(18)

 

 

903 

 

 

2,857 

Equity in net losses of unconsolidated real estate joint ventures

 

(271)

 

 —

 

 —

 

 

 —

 

 

(271)

Other income

 

63 

 

12 

 

 —

 

 

 —

 

 

75 

Foreign exchange loss

 

(480)

 

 —

 

 —

 

 

 —

 

 

(480)

Income (loss) before income taxes

 

3,456 

 

(2,160)

 

(18)

 

 

903 

 

 

2,181 

(Provision) benefit for income taxes

 

(1,001)

 

 —

 

483 

(7)

 

(204)

(6)

 

(722)

Net income (loss)

 

2,455 

 

(2,160)

 

465 

 

 

699 

 

 

1,459 

Net (income) loss attributable to noncontrolling interests

 

(110)

 

 —

 

245 

 

 

(87)

 

 

48 

Net income (loss) attributable to shareholders

$

2,345 

 

(2,160)

 

710 

 

 

612 

 

 

1,507 

Total basic and diluted earnings per share

 

0.12 

 

 

 

 

 

 

 

 

 

0.08 

Weighted average number of common shares outstanding

 

19,282 

 

 

 

 

 

 

 

 

 

19,282 

Net income (loss)

 

2,455 

 

(2,160)

 

465 

 

 

699 

 

 

1,459 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on securities available for sale

 

(2)

 

 —

 

 —

 

 

 —

 

 

(2)

Foreign currency translation adjustments

 

114 

 

 —

 

 —

 

 

 —

 

 

114 

Other comprehensive income, net

$

112 

 

 —

 

 —

 

 

 —

 

 

112 

Comprehensive income (loss), net of tax

 

2,567 

 

(2,160)

 

465 

 

 

699 

 

 

1,571 

Less: Comprehensive income attributable to noncontrolling interests

 

(110)

 

 —

 

245 

 

 

(87)

 

 

48 

Comprehensive income (loss) attributable to shareholders

 

2,457 

 

(2,160)

 

710 

 

 

612 

 

 

1,619 



See Notes to Unaudited Pro Forma Statements of Operations and Comprehensive Income





9

 


 

Notes to Unaudited Pro Forma Statement of Operation and Comprehensive Income



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.



10