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Crumbs Bake Shop, Inc. Reports Second Quarter 2013 Financial Results

The Company is providing Adjusted EBITDA information, which is defined as net income of the combined company, including net income attributable to any non-controlling interest, determined in accordance with all applicable and effective GAAP pronouncements up to December 31, 2010, before interest income or expense, income taxes and any gains or losses resulting from the change in estimate relating to our tax receivable agreement, depreciation, amortization, deferred rent expense, losses or gains resulting from adjustments to the fair value of the contingent consideration, stock-based compensation expense, extraordinary or non-recurring expenses and all other extraordinary non-cash items for the applicable period as a compliment to GAAP results. Adjusted EBITDA measures are commonly used by management and investors as a measure of leverage capacity, debt service ability and liquidity. Adjusted EBITDA is not considered a measure of financial performance under GAAP, and the items excluded from Adjusted EBITDA are significant components in understanding and assessing our financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to, or superior to, such GAAP measures as net income, cash flows provided by or used in operating, investing or financing activities or other financial statement data presented in our consolidated financial statements as an indicator of financial performance or liquidity. Reconciliations of non-GAAP financial measures are provided in the accompanying tables. Since Adjusted EBITDA is not a measure determined in accordance with GAAP and is susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies.

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
       
 
Three Months Ended June 30, Six Months Ended June 30,
2013   2012   2013   2012  
 
 
Net sales $ 12,350 $ 11,081 $ 24,430 $ 22,358
 
Cost of sales   5,651     4,775     11,008     9,537  
 
Gross profit   6,699     6,306     13,422     12,821  
 
Operating expenses
Selling expenses 542 397 1,113 686
Staff expenses 4,060 3,350 7,892 6,745
Occupancy expenses 3,302 2,427 6,177 4,793
General and administrative 1,049 838 2,022 1,629
New store expenses 271 72 391 181
Depreciation and amortization 631 467 1,190 915
Loss on sale of property and equipment   58     14     100     14  
 
  9,913     7,565     18,885     14,963  
 
Loss from operations   (3,214 )   (1,259 )   (5,463 )   (2,142 )
 
Other income (expense)
Interest expense (75 ) - (75 ) -
Interest and other income 5 10 7 18
Abandoned projects (5 ) (32 ) (15 ) (45 )
Change in fair value of warrant liability   -     546     (109 )   109  
 
  (75 )   524     (192 )   82  
 
Net loss attributable to the controlling and
non-controlling interests (3,289 ) (735 ) (5,655 ) (2,060 )
 
Less: Net loss attributable to
non-controlling interest   537     296     929     182  
 
Net loss attributable to stockholders $ (2,752 ) $ (439 ) $ (4,726 ) $ (1,878 )
 
 
Net loss per common share, basic $ (0.23 )   (0.08 ) $ (0.41 )   (0.22 )
 
Weighted average number of common shares outstanding, basic and diluted
  11,719     5,506     11,569     5,506  
CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
   
 
June 30, December 31,
2013 2012
ASSETS
 
Current assets
Cash $ 6,573 $ 6,270
Trade receivables 657 259
Inventories 570 559
Prepaid rent 724 600
Other current assets   663     410  
 
Total current assets   9,187     8,098  
 
Property and equipment, net   17,090     13,209  
 
Other Assets
Deferred tax asset 4,773 4,773
Restricted certificates of deposit 673 673
Intangible assets, net 298 367
Capitalized lease costs 818 440
Deposits 282 289
Debt issuance costs 909 0
Other   19     38  
 
Total other assets   7,772     6,580  
 
$ 34,049   $ 27,887  
 
LIABILITIES, MEMBERS' EQUITY AND STOCKHOLDERS' EQUITY
 
Current liabilities
Accounts payable and accrued expenses $ 2,775 $ 2,080
Payroll liabilities 337 357
Sales tax payable 251 110
Gift cards and certificates outstanding   221     234  
 
Total current liabilities 3,584 2,781
 
Long-term liabilities
Deferred rent 4,374 3,791
Payable to related parties pursuant to tax receivable agreement 2,387 2,387
Warranty liability 491 381
Convertible notes payable   10,000     -  
 
Total liabilities   20,836     9,340  
 
Commitments and contingencies
 
Stockholders' equity
Preferred stock, $.0001 par value; 1,000 shares authorized;
390 shares issued and outstanding at June 30, 2012
and December 31, 2012 - -
Common stock, $.0001 par value; 100,000 shares authorized;
7,372 shares issued, 5,777 outstanding at June 30, 2012 and
7,100 shares issued, 5,506 outstanding at December 31, 2011 1 1
Additional paid-in capital 39,440 39,117
Accumulated deficit (14,502 ) (9,776 )
Treasury stock, at cost   (15,914 )   (15,914 )
 
Total Crumbs Bake Shop, Inc. stockholders' equity 9,025 13,428
 
Non-controlling interest   4,188     5,117  
 
Total stockholders' equity   13,213     18,545  
 
$ 34,049   $ 27,885  
CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA TO NEAREST COMPARABLE GAAP MEASURE
(in thousands)
           
Three Months Ended June 30, Six Months Ended June 30,
2013   2012   2013   2012  
 
Net income (loss) attributed to the controlling
and non-controlling interest $ (3,289 ) $ (735 ) $ (5,655 ) $ (2,060 )
Depreciation and amortization 631 467 1,190 915
Interest expense 75 - 75 -
Interest income (4 ) (2 ) (4 ) -
Loss on disposal of property and equipment 58 14 100 14
Abandoned projects 5 32 15 45
Deferred rent expense 230 165 431 396
Stock based compensation 172 116 323 163
Change in fair value of warrant liability - (546 ) 109 (109 )
Non-recurring expenses   -     4     -     8  
Adjusted EBITDA $ (2,122 ) $ (485 ) $ (3,416 ) $ (628 )




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