EFTA02488361.pdf

From: Richard Kahn < Sent: Thursday, September 17, 2015 8:33 PM To: Jeffrey E. Subject: Jawbone > i spoke with Andrew Linsey, Anna and Will from Code Advisors =s Hosain was unavailable last week only 5,000,000 of =nvestment would be covered as this can only apply to preferred =hares our =nvestment in Series 5 was as follows: Preferred 695,301 x 7.19113 = =,000,000 Common 1,260,233 x 3.96792 = =,000,000 I =as told on call that valuation of company at time of Series 5 was =,650,000 post Series 6, 7, 8 and Blackrock =ote have further diluted our investment and although they would not =ive me an exact figure our new breakeven without Series 8 participation =ppears to be 3,250,000 With Series 8 investment of 833,000 i believe believe we =ould receive the following on a sale of company post April 28 =016 1,000,000 7,500,000 from preferred and 0 =rom common (0 received without Series 8) 2,000,000 =nbsp; =/span>7,500,000 from preferred and 0 from common (0 received without =eries 8) 3,000,000 7,500,000 =rom preferred and 0 from common (0 received without Series 8) 3,250,000 7,500,000 from preferred and =,000,000 from common (10,000,000 received without Series 8) it appears Series 8 =rotection provides protection from 1,000,000 to 3,250,000 on =iquidation April 28 2016 is key date as it is 1 year anniversary of =lackrock investment and if company sold before that date they have a 3x =iquidation preference As of last friday they have raised 33,000,000 =f the 35,000,000 needed for Blackrock to release final =0,000,000 If that is achieved they =ould have raised since April 28 2015: 220,000,000 Blackrock original =ote 40,000,000 Series 8 JPM (34) and Sequia =6) 50,000,000 Blackrock =dditional 35,000,000 Series 8 (33mm raised =c) date) 50,000,000 =nbsp; Blackrock final 395,000,000 =nbsp;Total raised As of Sep 11, 2015 there =ash flow was as follows: 30,000,000 in cash 85,000,000 (Series 8 and final Blackrock) 115,000,000 potential cash EFTA_R1_01608331 EFTA02488361 Once 85,000,000 is secured they will =inalize deal for an ABL credit line in the amount of 50,000,000 that =ill be collateralized by AR and Inventory They mentioned that Q4 would be cash =low positive however they did not elaborate on what their loss for 2015 =r 2016 would be.. When i pressed them and said i =hought they would would be out of money by mid 2016 and we again may be =urther diluted with a Series 9 or 10 they responded that they had new =anagement that would not allow this They said Jason Child, new CFO, has =lready run analysis to ensure that they remain cash flow positive in =016 Not sure that is so realistic as they also =entioned that Fitbit already has market share and that they will not =hase market share via lower pricing or marketing In =ddition they will not build large inventories with vendors if they need =o conserve cash Andrew stated that Hosain made =oor non financially focused decisions and new CFO will not allow that =oving forward Jawbone believes it will be =he leader in the next phase which will evolve from basic wellness to =ealth and medical (blood pressure, respiration and oxidation) Analogy was used that basic wellness market is similar to =martphones in the early 2000's and Symbian who was leader =isappeared My concerns are as follows: a) Jawbone =s always one step behind and they keep jumping to the next Hot =dea.. b) There will inevitably be a Series 9 / 10 =ound as i believe they will again run out of cash middle of next year =ausing further dilution to Series 8 they are asking us to participate =n Andrew also sent email with codes for free UP 2 or UP 3 =roduct I will order and have for you on your next =isit (do you have a color preference - black, silver, indigo and =ed?) http://www.amazon.com/UP3-Jawbone-Activity-Tracker- Black/dp/B00=9E6DUK/ref=sr_l_l?ie=UTF8&qid=1442521265&sr=8-1&keywo=ds=up3 Please advise how you =ant to proceed with Series 8 proposed investment of 833,000 Thank you Richard Kahn HBRK Associates Inc. 575 Lexington =venue 4th Floor New York, NY 10022 On Sep 17, 2015, at 2:38 PM, jeffrey E. <jeevacation@gmail.com> wrote: did you check with hosssain re amount of investment =overed 2 EFTA_R1_01608332 EFTA02488362 =br class=""> please note The information contained in this =ommunication is confidential, may be attorney-client =rivileged, may constitute inside information, and is =ntended only for the use of the addressee. It is the =roperty of JEE Unauthorized use, disclosure =r copying of this communication or any part thereof is =trictly prohibited and may be unlawful. If you have =eceived this communication in error, please notify us =mmediately by return e-mail or by e-mail to jeevacation@gmail.com, and destroy this =ommunication and all copies thereof, including all =ttachments. copyright -all rights reserved 3 EFTA_R1_01608333 EFTA02488363