** **

**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549**

**FORM 10-Q/A**

**x****                             ****QUARTERLY REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934**

**For the quarterly period ended March 31,2006**

**or**

**o****                                ****TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934**

For the transition period from                to

Commission file number: **001-32552**

**SERVICES ACQUISITION CORP.INTERNATIONAL**(Exact name of registrant as specified in its charter)

 

| **Delaware**                                  |   | **20-2122262**                        |
|-----------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of              |   | (I.R.S. Employer  Identification No.) |
| incorporation or  organization)               |   |                                  |
|                                          |   |                                  |
| **401  East Olas Boulevard, Suite 1140** |   |                                  |
| **Fort  Lauderdale, Florida 33301**           |   | **33301**                             |
| (Address of  principal executive offices)     |   | (Zip Code)                            |

 

**(954) 713-1165**(Registrant’s telephone number, including area code)

Indicate by check markwhether the Registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Exchange Act during the past 12 months (or for suchshorter period that the Registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.    Yesx    Noo

Indicate by check markwhether the Registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” (as defined in Rule 12b-2 of the Exchange Act). (Checkone):

| Large accelerated filer o |   | Accelerated filers  o |   | Non-accelerated  filer x |
|---------------------------|--------|-----------------------|--------|--------------------------|

 

Indicate by check markwhether the Registrant is a shell company (as defined in Rule 12b-2of the Exchange Act). Yes x   No o

As of May 12, 2006, 21,000,000 shares of theregistrant’s common stock, par value $0.001 per share, were outstanding.

 

 

 

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**SERVICES ACQUISITION CORP.INTERNATIONAL AND SUBSIDIARYTable of Contents**

Explanatory Note:

This amendment on the quarterly report onForm 10-Q/A for the quarter ended March 31, 2006 is being filed toreplace the registrant’s 10-Q filed earlier today. Due to an EDGAR filer error,an incorrect version of the registrant’s 10-Q was inadvertantly filed earliertoday.
|                                                                                                      | ** ** | **Page** |
|------------------------------------------------------------------------------------------------------|------------|----------|
| **PART I —  FINANCIAL INFORMATION**                                                        |       |     |
| Item 1. Financial Statements                                                                         |       | 1        |
| Condensed Consolidated Balance Sheets                                                                |       | 1        |
| Condensed Consolidated Statements of Operations                                                      |       | 2        |
| Condensed Consolidated Statements of Cash Flows                                                      |       | 3        |
| Notes to Condensed Consolidated Financial Statements                                                 |       | 4        |
| Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of  Operations |       | 10       |
| Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                  |       | 16       |
| Item 4. Controls and Procedures                                                                      |       | 16       |
| PART II  — OTHER INFORMATION                                                               |       |     |
| Item 1. Legal Proceedings                                                                            |       | 17       |
| Item 1A. Risk Factors                                                                                |       | 17       |
| Item 2. Unregistered Sales of Equity Securities and  Use of Proceeds                                 |       | 17       |
| Item 3. Defaults upon Senior Securities                                                              |       | 17       |
| Item 4.  Submission of Matters to a Vote of Security Holders                                         |       | 17       |
| Item  5. Other Information                                                                           |       | 17       |
| Item 6. Exhibits                                                                                     |       | 17       |
| SIGNATURES                                                                                           |       | 18       |

 

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**PART I— FINANCIAL INFORMATION**

**Item 1.    FinancialStatements.**

**SERVICESACQUISITION CORP. INTERNATIONAL AND SUBSIDIARY**(a corporation in the development stage)

**CONDENSEDCONSOLIDATED BALANCE SHEETS**

 
| ** **                                                                                                                                                                   | ** ** | **March 31, 2006** | ** **  | **December 31, 2005** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|-------------|---------------------------------|------------|
| ** **                                                                                                                                                                   | ** ** | **(unaudited)**              | ** **  | ** **                      | ** ** |
| **ASSETS**                                                                                                                                                                   |       |                         |        |                            |       |
|                                                                                                                                                                         |       |                         |        |                            |       |
| **Current assets**                                                                                                                                                           |       |                         |        |                            |       |
| Cash                                                                                                                                                                         |       | $                            | 741,417     |                            | $          | 976,915 |   |
| Prepaid expenses and  other assets                                                                                                                                           |       | 55,126                       |        | 56,772                          |       |
| Total current assets                                                                                                                                                         |       | 796,543                      |        | 1,033,687                       |       |
| ** **                                                                                                                                                                   | ** ** | ** **                   | ** **  | ** **                      | ** ** |
| **Other assets**                                                                                                                                                             |       |                         |        |                            |       |
| Cash held in trust                                                                                                                                                           |       | 129,066,348                  |        | 128,174,091                     |       |
| Deferred transaction  costs                                                                                                                                                  |       | 1,009,989                    |        |                            |       |
| **Total assets**                                                                                                                                                             |       | $                            | 130,872,880 |                            | $          | 129,207,778 |   |
|                                                                                                                                                                         |       |                         |        |                            |       |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**                                                                                                                               |       |                         |        |                            |       |
|                                                                                                                                                                         |       |                         |        |                            |       |
| **Current liabilities**                                                                                                                                                      |       |                         |        |                            |       |
| Accounts payable                                                                                                                                                             |       | $                            | 486,747     |                            | $          | 54,919 |   |
| Accrued expenses                                                                                                                                                             |       | 660,613                      |        | 114,933                         |       |
| Total current  liabilities                                                                                                                                                   |       | 1,147,360                    |        | 169,852                         |       |
|                                                                                                                                                                         |       |                         |        |                            |       |
| Common stock, subject  to possible redemption, 3,448,275 shares at redemption value                                                                                          |       | 25,241,373                   |        | 25,241,373                      |       |
|                                                                                                                                                                         |       |                         |        |                            |       |
| **Stockholders’ equity**                                                                                                                                                |       |                         |        |                            |       |
| Preferred stock, $.001  par value, authorized 1,000,000 shares; none issued                                                                                                  |       |                         |        |                            |       |
| Common stock, $.001 par  value, authorized 70,000,000 shares; issued and outstanding 21,000,000 shares  (which includes the 3,448,275 shares subject to possible redemption) |       | 21,000                       |        | 21,000                          |       |
| Paid-in capital in  excess of par                                                                                                                                            |       | 102,604,274                  |        | 102,604,274                     |       |
|                                                                                                                                                                         |       |                         |        |                            |       |
| Equity accumulated  during the development stage                                                                                                                             |       | 1,858,873                    |        | 1,171,279                       |       |
| Total stockholders’  equity                                                                                                                                             |       | 104,484,147                  |        | 103,796,553                     |       |
| Total liabilities and stockholders’ equity                                                                                                                              |       | $                            | 130,872,880 |                            | $          | 129,207,778 |   |

 

*Seeaccompanying notes to financial statements.*

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**SERVICESACQUISITION CORP. INTERNATIONAL AND SUBSIDIARY**(a corporation in the development stage)

**CONDENSED CONSOLIDATED STATEMENTS OF  OPERATIONS**

 
| ** **                            | ** ** | **Three months ended March 31,** | ** ** | **From inception** | ** ** |
|---------------------------------------|------------|------------------------------------------------------|------------|-------------------------|------------|
| ** **                            | ** ** | **2006**                                             | ** ** | **2005**                | ** ** | **to March 31, 2006** | ** ** |
| ** **                            | ** ** | **(unaudited)**                                      | ** ** | **(unaudited)**         | ** ** | **(unaudited)** | ** ** |
|                                  |       |                                                 |       |                    |       |   |   |
| Interest and  dividend income         |       | $                                                    | 900,786    |                    | $          | — |   | $ | 2,354,877 |   |
|                                  |       |                                                 |       |                    |       |   |   |
| Formation and  operating costs        |       | 173,812                                              |       | 966                     |       | 370,426 |   |
| Interest expense                      |       | —                                               |       | —                  |       | 1,265 |   |
|                                  |       |                                                 |       |                    |       |   |   |
| **Income (loss) before taxes**        |       | 726,974                                              |       | (966                    | )          | 1,983,186 |   |
|                                  |       |                                                 |       |                    |       |   |   |
| Income taxes                          |       | 39,380                                               |       | —                  |       | 124,313 |   |
|                                  |       |                                                 |       |                    |       |   |   |
| **Net income (loss)**                 |       | $                                                    | 687,594    |                    | $          | (966 | ) | $ | 1,858,873 |   |
|                                  |       |                                                 |       |                    |       |   |   |
| Weighted average  shares outstanding: |       |                                                 |       |                    |       |   |   |
| Basic                                 |       | 21,000,000                                           |       | 3,214,247               |       | 13,940,973 |   |
| Diluted                               |       | 24,884,014                                           |       | 3,214,247               |       | 16,086,105 |   |
|                                  |       |                                                 |       |                    |       |   |   |
| Net income  (loss) per share, basic   |       | $                                                    | 0.03       |                    | $          | (0.00 | ) | $ | 0.13 |   |
|                                  |       |                                                 |       |                    |       |   |   |
| Net income  (loss) per share, diluted |       | $                                                    | 0.03       |                    | $          | (0.00 | ) | $ | 0.12 |   |

 

*Seeaccompanying notes to financial statements.*

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**SERVICES ACQUISITION CORP.INTERNATIONAL AND SUBSIDIARY**(a corporation in the development stage)

**CONDENSED CONSOLIDATED STATEMENTS OF CASH  FLOWS**

 
| ** **                                               | ** ** | **Three months ended March 31,** | ** ** | **From inception** | ** ** |
|----------------------------------------------------------|------------|------------------------------------------------------|------------|-------------------------|------------|
| ** **                                               | ** ** | **2006**                                             | ** ** | **2005**                | ** ** | **To March 31, 2006** | ** ** |
| ** **                                               | ** ** | **(unaudited)**                                      | ** ** | **(unaudited)**         | ** ** | **(unaudited)** | ** ** |
| **Cash flows from operating  activities**                |       |                                                 |       |                    |       |   |   |
| Net income  (loss)                                       |       | $                                                    | 687,594    |                    | $          | (966 | ) | $ | 1,858,873 |   |
| Increase  (decrease) in cash attributable to change in   |       |                                                 |       |                    |       |   |   |
| Deferred  transaction costs                              |       | (1,009,989                                           | )          |                    |       | (1,009,989 | ) |
| Prepaid expenses                                         |       | 1,646                                                |       |                    |       | (55,126 | ) |
| Accounts payable  and accrued expenses                   |       | 977,508                                              |       | 750                     |       | 1,147,360 |   |
|                                                     |       |                                                 |       |                    |       |   |   |
| **Net cash provided by (used in)  operating activities** |       | 656,759                                              |       | (216                    | )          | 1,941,118 |   |
|                                                     |       |                                                 |       |                    |       |   |   |
| **Cash flows from financing  activities**                |       |                                                 |       |                    |       |   |   |
|                                                     |       |                                                 |       |                    |       |   |   |
| Proceeds from  note payable, stockholders                |       |                                                 |       | 90,000                  |       | 160,000 |   |
| Payment of note  payable, stockholders                   |       |                                                 |       |                    |       | (160,000 | ) |
| Proceeds from  sale of stock                             |       |                                                 |       | 25,000                  |       | 29,179 |   |
| Gross proceeds  of public offering                       |       |                                                 |       |                    |       | 120,000,000 |   |
| Payments of  costs of public offering                    |       |                                                 |       | (100,817                | )          | (9,082,632 | ) |
| Gross proceeds  of over-allotment option offering        |       |                                                 |       |                    |       | 18,000,000 |   |
| Payments of  costs of over-allotment option offering     |       |                                                 |       |                    |       | (1,080,000 | ) |
| Proceeds from  issuance of option                        |       |                                                 |       |                    |       | 100 |   |
|                                                     |       |                                                 |       |                    |       |   |   |
| **Net cash provided by financing  activities**           |       | —                                               |       | 14,183                  |       | 127,866,647 |   |
|                                                     |       |                                                 |       |                    |       |   |   |
| Net cash used in  investing activity, cash held in trust |       | (892,257                                             | )          | —                  |       | (129,066,348 | ) |
|                                                     |       |                                                 |       |                    |       |   |   |
| **Net (decrease) increase in cash**                      |       | (235,498                                             | )          | 13,967                  |       | 741,417 |   |
|                                                     |       |                                                 |       |                    |       |   |   |
| **Cash, beginning of period**                            |       | 976,915                                              |       | —                  |       | — |   |
|                                                     |       |                                                 |       |                    |       |   |   |
| **Cash, end of period**                                  |       | $                                                    | 741,417    |                    | $          | 13,967 |   | $ | 741,417 |   |

 

*Seeaccompanying notes to financial statements.*

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SERVICES ACQUISITION CORP. INTERNATIONAL ANDSUBSIDIARY

Notes to UnauditedCondensed Consolidated Financial Statements

The unauditedcondensed consolidated financial statements include the accounts of ServicesAcquisition Corp. International and its wholly owned subsidiary, JJCAcquisition Company, collectively (the “Company”). The unaudited condensedconsolidated financial statements for the three months ended March 31,2006 and 2005 included herein have been prepared in accordance with theinstructions for Form 10-Q under the Securities Exchange Act of1934, as amended, and Article 10 of Regulation S-X under the SecuritiesAct of 1933, as amended. Certain information and footnote disclosures normallyincluded in financial statements prepared in conformity with accountingprinciples generally accepted in the United States of America have beencondensed or omitted pursuant to such rules and regulations relating tointerim financial statements.

In the opinion ofmanagement, the accompanying unaudited condensed consolidated financialstatements contain all material adjustments necessary to present fairly theCompany’s financial position as of March 31, 2006 and the results of itsoperations for the three months ended March 31, 2006 and 2005,respectively, and for the period from January 6, 2005 (inception) to March 31,2006 and cash flows for the three months ended March 31, 2006 and 2005,respectively, and for the period from January 6, 2005 (inception) to March 31,2006. The results of operations for the three months ended March 31, 2006and 2005, and for the period from January 6, 2005 (inception) to March 31,2006, are unaudited and are not necessarily indicative of the results to beexpected for the full year. The unaudited condensed consolidated financial statementsincluded herein should be read in conjunction with the financial statements andrelated footnotes included in the Company’s 2005 Form 10-K.

1.      Nature of operations and summary ofsignificant accounting policies

The Company wasincorporated in Delaware on January 6, 2005 as a blank check company whoseobjective is to acquire through a merger, capital stock exchange, assetacquisition or other similar business combination with an operating business.The Company selected December 31 as its fiscal year end. On March 9,2006, Services Acquisition Corp. International incorporated a wholly-ownedsubsidiary, JJ Acquisition Company. (“JJC”.) As of March 31, 2006, there are no assets or liabilities and therewas no activity for JJC.

The registrationstatement for the Company’s initial public offering (the “Offering”) wasdeclared effective June 29, 2005. The Company consummated the offering on July 6,2005 and received net proceeds of approximately $110,917,000 and executed theover-allotment option offering on July 7, 2005 and received net proceedsof approximately $16,920,000. The Company’s management has broad discretionwith respect to the specific application of the net proceeds of the Offering,although substantially all of the net proceeds of this Offering are intended tobe generally applied toward consummating a business combination with anoperating company. As used herein, a “target business” shall include anoperating business that provides services and a “business combination” shallmean the acquisition by the Company of such a target business.

The Company’sefforts in identifying a prospective business target are not limited to aparticular industry, although management intends to focus on high marginservice businesses with

 

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recurring revenue.The success and ongoing profitability of such business will not necessarily bepredicated on continually generating new revenue, but rather on forging avalued bond for which switching costs may be high or alternatives of lowervalue. Within this context, the Company expects to seek companies displaying anumber of characteristics: recurring revenues, focus on a service rather than aproduct, high gross margins, stable cash flow and opportunities for organic andacquisition growth.

Upon the closingof the Offering, an amount of $126,720,000 was placed in a trust account at JPMorgan Chase NY Bank maintained by Continental Stock Transfer & TrustCompany to be invested until the earlier of (i) the consummation of theCompany’s first business combination or (ii) the liquidation of theCompany. As of March 31, 2006, the balance in the trust account is$129,066,348. The remaining proceeds are available to the Company to payfor business, legal and accounting due diligence on prospective acquisitionsand continuing general and administrative expenses.

The Company, aftersigning a definitive agreement for the acquisition of a target business, willsubmit such transaction for stockholder approval. In the event thatstockholders owning 20% or more of the outstanding stock excluding, for thispurpose, those persons who were stockholders prior to the Offering, voteagainst the business combination, the business combination will not beconsummated. All of the Company’s stockholders prior to the Offering, includingall of the officers and directors of the Company (“Initial Stockholders”), haveagreed to vote their 3,750,000 founding shares of common stock in accordancewith the vote of the majority in interest of all other stockholders of theCompany (“Public Stockholders”) with respect to any business combination. Afterconsummation of the Company’s first business combination, none of these votingsafeguards will be applicable.

With respect tothe first business combination, which is approved and consummated, any PublicStockholder who voted against the business combination may demand that theCompany redeem his or her shares. The per share redemption price will equal theamount in the Trust Fund as of the record date for determination ofstockholders entitled to vote on the business combination divided by the numberof shares of common stock held by Public Stockholders at the consummation ofthe Offering. Accordingly, Public Stockholders holding 19.99% of the aggregatenumber of shares owned by all Public Stockholders may seek redemption of theirshares in the event of a business combination. Such Public Stockholders areentitled to receive their pro rata interest in the trust fund computed withoutregard to the shares held by Initial Stockholders. As of March 31, 2006,the pro rata interest in the trust fund was $7.48 per share.

The Company’sCertificate of Incorporation provides for mandatory liquidation of the Company,without stockholder approval, in the event that the Company does not consummatea business combination within 18 months from the date of the consummation ofthe Offering, or 24 months from the consummation of the Offering, if certainextension criteria have been satisfied. In the event of liquidation, it islikely that the per share value of the residual assets remaining available fordistribution (including trust fund assets) will be less than the offering priceper share in the Offering.

 

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The Company formedJJC Acquisition Company (a wholly owned subsidiary), a California corporation,on March 9, 2006 for the sole purpose of the acquisition of Jamba JuiceCompany, as described in Note 3 below.

There is noassurance that the Company will be successful to find and consummate a businesscombination. Therefore, there is a risk of substantial loss to the stockholders.

*Incomeper Common Share*

Basicearnings-per-share is computed by dividing income available to commonstockholders by the weighted-average number of common shares outstanding duringthe period. Diluted earnings per share is computed by dividing income availableto common stockholders by the weighted-average number of common sharesoutstanding during the period, increased to include the number of additionalcommon shares that would have been outstanding if the dilutive potential commonshares had been issued, by application of the treasury stock method.
| ** **         | ** ** | **March 31, 2006** | ** ** | **March 31, 2005** | ** ** |
|--------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **         | ** ** | **Exercise price**      | ** ** | **Warrants**                 | ** ** | **Warrant price** | ** ** | **Warrants** | ** ** |
| ** **         | ** ** | **From**                     | ** ** | **To**                       | ** ** | **outstanding** | ** ** | **From** | ** ** | **To** | ** ** | **outstanding** | ** ** |
| Dilutive  warrants |       | 6.00                         |       | 10.00                        |       | 18,000,000 |   | — |   | — |   | — |   |

 

|                                                | ** ** | **Three Months Ended March 31,** | ** ** |
|------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                     | ** ** | **2006**                                             | ** ** | **2005** | ** ** |
| Weighted average  number of shares outstanding |       |                                                 |       |   |   |
| Basic                                          |       | 21,000,000                                           |       | 3,214,247 |   |
| Effect of  dilutive securities: Warrants       |       | 4,884,014                                            |       | — |   |
| Diluted                                        |       | 24,884,014                                           |       | 3,214,247 |   |

* *

*Use ofEstimates*

The preparation offinancial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities atthe date of the financial statements and the reported amounts of expensesduring the reporting period. Actual results could differ from those estimates.

*IncomeTaxes*

The Companycomplies with SFAS 109, “Accounting for Income Taxes,” which requires an assetand liability approach to financial accounting and reporting for income taxes. Deferredincome tax assets and liabilities are computed for differences between thefinancial statement

 

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and tax basis ofassets and liabilities that will result in future taxable or deductibleamounts, based on enacted tax laws and rates applicable to the periods in whichthe differences are expected to affect taxable income. Valuation allowances areestablished, when necessary, to reduce deferred tax assets to the amountexpected to be realized.

*Principles of Consolidation*

The consolidatedfinancial statements include the accounts of Services Acquisition Corp.International and its wholly owned subsidiary. All significant intercompanytransactions and balances have been eliminated in consolidation.

2.      Commitments and contingencies

The Company agreedto pay up to $7,500 a month in total for office space and general andadministrative expense to a related entity and two stockholders. Uponcompletion of a business combination or liquidation, the Company will no longerbe required to pay these monthly fees. The monthly fee commenced on July 6,2005.

The Company soldto the representative of the underwriter, for $100, an option to purchase up toa total of 750,000 units. The units issuable upon exercise of this option areidentical to those offered by the Company in the Offering except that thewarrants included in the option have an exercise price of $7.50 (125% of theexercise price of the warrants included in the units sold in the offering). Thisoption is exercisable at $10.00 per unit commencing on the later of theconsummation of a business combination and one year from the date of theOffering and expiring five years from the date of the Offering. The optionmay not be sold, transferred, assigned, pledged or hypothecated for a one-yearperiod following the date of the S-1 filing, or not before June 27,2006. However, the option may be transferred to any underwriter and selecteddealer participating in the Offering and their bona fide officers or partners.

The Companyengaged Broadband Capital Management LLC to act as the representative of theunderwriters, on a non-exclusive basis, as our agent for the solicitation ofthe exercise of the warrants. To the extent not inconsistent with the guidelinesof the NASD and the rules and regulations of the Securities and ExchangeCommission, the Company has agreed to pay the representative for bona fideservices rendered a commission equal to 5% of the exercise price for eachwarrant exercised after June 29, 2006 if the exercise was solicited by theunderwriters. In addition to soliciting, either orally or in writing, theexercise of the warrants, the representative’s services may also includedisseminating information, either orally or in writing, to warrant holdersabout us or the market for our securities, and assisting in the processing ofthe exercise of the warrants. No compensation will be paid to therepresentative upon the exercise of the warrants if:

·                  themarket price of the underlying shares of common stock is lower than theexercise price;

·                  theholder of the warrants has not confirmed in writing that the underwriterssolicited the exercise;

 

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·                  warrantsare held in a discretionary account;

·                  thewarrants are exercised in an unsolicited transaction; or

·                  thearrangement to pay the commission is not disclosed in the prospectus providedto warrant holders at the time of exercise.

3.      Proposed Acquisition

On March 10,2006, the Company entered into an Agreement and Plan of Merger (“MergerAgreement”) with JJC Acquisition Company (“JJC”), a wholly-owned Californiacorporate subsidiary of Company, and Jamba Juice Company, a Californiacorporation (“Jamba Juice”), pursuant to which JJC will merge into Jamba Juiceand Jamba Juice will become a wholly-owned subsidiary of Company. Followingcompletion of the merger, it is anticipated that Company will change its nameto Jamba, Inc. Because the Company will have no other operating businessfollowing the merger, Jamba Juice will effectively become a public company atthe conclusion of the merger. Jamba Juice is headquartered in San Francisco,California. Jamba Juice as of April 4, 2006 has 325 company ownedlocations and 213 franchise locations operating in 24 states, the District ofColumbia and the Bahamas.

The MergerAgreement provides that at the closing of the merger, the Jamba Juicestockholders, subject to certain holdbacks and less (i) $16,000,000 forthe assumption by the Company of Jamba Juice’s line of credit and (ii) allthird-party and expenses incurred by Jamba Juice in connection with the merger,including without limitation, all legal, accounting, financial advisory,consulting and all other fees and expenses of third parties incurred by JambaJuice in connection with the negotiation and completion of the Merger Agreementand the transactions contemplated thereby, will be paid an aggregate of$265,000,000, in cash, for all of the outstanding capital stock of Jamba Juiceand the value of all shares of Jamba Juice capital stock issuable upon exerciseof all “in-the-money” vested and unvested options and warrants of Jamba Juice,subject to the option holders and warrant holders, in certain instances, havingthe right to exchange their respective options and warrants into options andwarrants of the Company, as further described below. A portion of the purchaseprice will be funded with cash currently being held in the trust fundestablished in connection with the Company’s initial public offering and thebalance of the purchase price will be funded from the proceeds of a privateplacement financing, as discussed herein, that is expected to be completedsimultaneously with the merger with Jamba Juice.

Also,as part of a private placement financing, on March 10, 2006 and March 15,2006, Company entered into Securities Purchase Agreements and RegistrationRights Agreements, with prospective investors (including certain current JambaJuice stockholders and board members) that collectively provide for theissuance, simultaneously with the closing of the merger, of approximately 30.9million shares of the Company common stock, at a per share purchase price of$7.50, resulting in aggregate gross proceeds to the Company of approximately$231.6 million, which funds will be used to fund the merger consideration as wellas additional working and expansion capital.

 

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Ifthe acquisition falls through, the $1,009,989 of deferred transaction costs,classified on the balance sheet as other assets, will be immediately expensed.

4.      Liquidity

TheCompany’s current cash position is approximately $741,000. The Company has atthis point outstanding payables, accrued expenses and liabilities ofapproximately $1.1 million. The Company’s short term liabilities exceed ouravailable cash position by approximately $406,000.

Inthe event the business combination is not consummated within the agreed upontime period, the Company does not believe it will have sufficient availablefunds outside of the trust fund to operate through July 6, 2007. TheCompany has incurred approximately $1.0 million in expenses for legal,accounting and other expenses attendant to the due diligence investigations,structuring and negotiating of the business combination. The Company believesthat it will likely be forced to liquidate should the business combination withJamba Juice not be consummated.

5.      Preferred Stock

The Company is authorizedto issue 1,000,000 shares of preferred stock with such designations, voting andother rights and preferences, as may be determined from time to time by theBoard of Directors.

** **

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**Item 2.****                             Management’sDiscussion and Analysis of Financial Condition and Results of Operations.**

The PrivateSecurities Litigation Reform Act of 1995 (the Reform Act) provides a safeharbor for forward-looking statements made by or on behalf of the Company. Weand our representatives may, from time to time, make written or verbalforward-looking statements, including statements contained in our filings withthe Securities and Exchange Commission and in its reports to stockholders.Generally, the inclusion of the words “believe,” “expect,” “intend,” “estimate,”“anticipate,” “will,” and similar expressions identify statements thatconstitute “forward-looking statements” within the meaning of Section 27Aof the Securities Act of 1933 and Section 21E of the Securities ExchangeAct of 1934 and that are intended to come within the safe harbor protectionprovided by those sections. All statements addressing operating performance,events, or developments that we expect or anticipate will occur in the future,including statements relating to earnings or earnings per share growth, as wellas statements expressing optimism or pessimism about future operating results,are forward-looking statements within the meaning of the Reform Act.

Theforward-looking statements are and will be based upon our management’sthen-current views and assumptions regarding future events and operatingperformance, and are applicable only as of the dates of such statements. Weundertake no obligation to update or revise any forward-looking statements,whether as a result of new information, future events, or otherwise.

By their nature,all forward-looking statements involve risks and uncertainties. Actual results,expenses, cash flows, financial condition, and net income, as well as factors suchas our capability in identifying a target business and be able to consummatethe merger transaction may differ materially from those contemplated by theforward-looking statements or those currently being experienced by the Companyfor a number of reasons.

Wewere formed on January 6, 2005, to serve as a vehicle to effect a merger,capital stock exchange, asset acquisition or other similar business combinationwith an operating business that provides services. Our initial businesscombination must be with a target business or businesses whose fair marketvalue is at least equal to 80% of net assets at the time of such acquisition. Weintend to utilize cash derived from the proceeds of our public offering, ourcapital stock, debt or a combination of cash, capital stock and debt, ineffecting a business combination.

Sinceour initial public offering, we have been actively engaged in sourcing asuitable business combination candidate. We have met with target companies,service professionals and other intermediaries to discuss with them ourcompany, the background of our management and our combination preferences. Inthe course of these discussions, we have also spent time explaining the capitalstructure of the initial public offering, the combination approval process, andthe timeline under which we are operating before the proceeds of the offeringare returned to investors.

Consistentwith the disclosures in our prospectus, we have focused our search on companiesin Business Services, Healthcare Services, and Consumer Services. Of thesecategories, Business Services and Healthcare Services have represented themajority of the targets we are exploring,

 

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withmore limited communication with Consumer Service companies. Overall, we wouldgauge the environment for target companies to be competitive and we believethat private equity firms and strategic buyers represent our biggestcompetition.  Our management believesthat many of the fundamental drivers of alternative investment vehicles likeour company are becoming more accepted by investors and potential businesscombination targets; these include a difficult IPO environment, a cash-richinvestment community looking for differentiated opportunities for incrementalyield, and business owners seeking new ways to maximize their shareholder valuewhile remaining invested in the business. However, there can be no assurancethat we will find and close a suitable business combination in the allottedtime.

**Developmentsin Finding a Suitable Business Target**

On March 10,2006, the Company entered into an Agreement and Plan of Merger (“MergerAgreement”) with JJC Acquisition Company (“JJC”), a wholly-owned Californiacorporate subsidiary of Company, and Jamba Juice Company, a Californiacorporation (“Jamba Juice”), pursuant to which JJC will merge into Jamba Juiceand Jamba Juice will become a wholly-owned subsidiary of Company. Followingcompletion of the merger, it is anticipated that Company will change its nameto Jamba, Inc. Because the Company will have no other operating businessfollowing the merger, Jamba Juice will effectively become a public company atthe conclusion of the merger. Jamba Juice is headquartered in San Francisco,California. Jamba Juice as of April 4, 2006 has 325 company ownedlocations and 213 franchise locations operating in 24 states, the District ofColumbia and the Bahamas.

TheMerger Agreement provides that at the closing of the merger, the Jamba Juicestockholders, subject to certain holdbacks and less (i) $16,000,000 forthe assumption by the Company of Jamba Juice’s line of credit and (ii) allthird-party and expenses incurred by Jamba Juice in connection with the merger,including without limitation, all legal, accounting, financial advisory,consulting and all other fees and expenses of third parties incurred by JambaJuice in connection with the negotiation and completion of the Merger Agreementand the transactions contemplated thereby, will be paid an aggregate of$265,000,000, in cash, for all of the outstanding capital stock of Jamba Juiceand the value of all shares of Jamba Juice capital stock issuable upon exerciseof all “in-the-money” vested and unvested options and warrants of Jamba Juice,subject to the option holders and warrant holders, in certain instances, havingthe right to exchange their respective options and warrants into options andwarrants of the Company, as further described below. A portion of the purchaseprice will be funded with cash currently being held in the trust fundestablished in connection with the Company’s initial public offering and thebalance of the purchase price will be funded from the proceeds of a privateplacement financing, as discussed herein, that is expected to be completedsimultaneously with the merger with Jamba Juice.

TheMerger Agreement contains representations and warranties of each of the Companyand Jamba Juice, as applicable, relating to, among other things, (a) propercorporate organization and similar corporate matters, (b) capitalization, (c) theauthorization, performance and enforceability of the Merger Agreement, (d) licensesand permits, (e) taxes, (f) absence of undisclosed liabilities, (g) holdingof leases and ownership of other properties, (h) material contracts, (i) titleand condition of assets, (j) absence of certain changes, (k) employeeand employee benefits

 

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matters,(l) compliance with applicable laws, (m) absence of litigation, (n) environmentalmatters, (o) franchise matters and (p) insurance.

TheCompany and Jamba Juice have each agreed to continue to operate their respectivebusinesses in the ordinary course prior to the closing of the merger andadditional material covenants include that (i) each party shall obtain allnecessary approvals, including stockholder and governmental approvals; (ii) eachparty shall protect confidential information and maintain the confidentialityof the other’s proprietary information; and (iii) until termination of theMerger Agreement (except as discussed below), not to solicit or accept analternative Acquisition Proposal, as such term is defined in the MergerAgreement.

TheMerger Agreement also provides that if Jamba Juice terminates the MergerAgreement either because the board of directors of Jamba Juice recommends asuperior Acquisition Proposal (as such term is defined in the MergerAgreement), the stockholders of Jamba Juice vote against the merger or thestockholders of Jamba Juice do not approve the merger by April 30, 2006,and within six months after the date of such termination, Jamba Juice eitherenters into a definitive agreement to consummate, or consummates any of thefollowing transactions (whether in a single transaction or series oftransactions) (i) a sale by Jamba Juice of all or substantially all of itsassets or (ii) a sale of stock, merger, reorganization or othertransaction that results in transfer of ownership of more than fifty percent ofthe capital stock of Jamba Juice outstanding on the date of termination of themerger agreement, then Jamba Juice shall promptly pay to the Company a fee inthe amount of $10,000,000.

Atthe effective time of the merger, Jamba Juice’s obligations with respect toeach outstanding unvested option, unexercised vested option and unexercisedwarrant (if amended in a manner reasonably acceptable to the Company) will beassumed by the Company, and the Company shall thereafter be obligated to issueCompany common stock upon the exercise thereof. Each Jamba Juice option assumedby the Company shall be re-issued so that the option holder will retain thesame as percentage discount the holder has compared to the Company’s sharesfair value at the time of closing, considering exercise price of the option andthe fair value of Jamba Juice’s shares at $6.03 per share. Furthermore, thetotal bargain purchase element will remain the same by adjusting the number ofoptions the holder will receive.

TheMerger Agreement provides for indemnification of the Company with an escrowarrangement. As the sole remedy for Jamba Juice’s indemnity obligations setforth in the Merger Agreement, at the closing the parties shall deposit$19,875,000 in cash, otherwise payable to Jamba Juice’s stockholders, to beheld during the period ending one year from the closing, all in accordance withthe terms and conditions of an escrow agreement to be entered into at the closingbetween the Company, a representative of the Jamba Juice stockholders (whoshall be designated by Jamba Juice prior to the closing) and Continental StockTransfer and Trust Company. The terms of such escrow provides that, dependingon the amount of any paid claims, pending claims or claims that have not beenapplied against a $2,000,000 basket, $4,968,750 shall be released to the JambaJuice stockholders on each of the six-month and nine-month periods followingthe closing. The balance of any amounts remaining in escrow against which noclaims have been made shall be distributed to Jamba Juice’s stockholders 12months following the closing.

 

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Theobligations of the Company to consummate the merger are subject to closingconditions, including: (i) the Company stockholders shall have approvedthe transactions contemplated by the merger agreement and holders of not more than twenty percent (20%) of Company’sshares issued in the Company’s initial public offering and outstandingimmediately before the closing shall have exercised their rights to converttheir shares into a pro rata share of the trust fund rather than approve themerger; (ii) certain of the officers of Jamba Juice shall have enteredinto employment agreements; (iii)  the Jamba Juice stockholders shall haveapproved the transactions contemplated by the Merger Agreement; (iv) on orbefore April 30, 2006, all Jamba Juice warrants shall have either beenamended in a manner reasonably acceptable to the Company or exercised (subjectto the occurrence of the closing); (v) holders of no more than fivepercent (5%) of the shares of any class of securities of Jamba Juiceoutstanding immediately before the closing shall have taken action to exercisetheir appraisal rights pursuant to Section 1301 of the California GeneralCorporations Law; (vi) no governmental entity shall have enacted, issued,promulgated, enforced or entered any statute, rule, regulation, executiveorder, decree, injunction or other order (whether temporary, preliminary orpermanent) which has the effect of making the merger illegal or otherwiseprohibiting consummation of the merger substantially on the terms contemplatedby the merger agreement; and (vii) the absence of any action, suit orproceeding challenging or preventing the merger.

Theobligations of Jamba Juice to consummate the merger is subject to closingconditions similar to those of the Company, including conditions that inCompany’s common stock will be listed for trading on the AMEX or similarexchange and there will be no action or proceeding pending or threatenedagainst the Company to prohibit or terminate the listing of the Company commonstock on the AMEX.

TheMerger Agreement may be terminated at any time prior to the closing, asfollows: (i) by mutual written consent of the Company and Jamba Juice; (ii) byeither Company or Jamba Juice if a governmental entity shall have issued anorder, decree or ruling or taken any other action, in any case having theeffect of permanently restraining, enjoining or otherwise prohibiting themerger, which order, decree, ruling or other action is final and nonappealable;(iii) by either the Company or Jamba Juice, if, at the Company specialmeeting, (including any adjournments thereof), the Merger Agreement and thetransactions contemplated thereby shall fail to be approved and adopted by theaffirmative vote of the holders of the Company common stock, or the holders of20% or more of the number of shares of Company common stock issued in Company’sinitial public offering and outstanding as of the record date exercise theirrights to convert the shares of the Company common stock held by them into cashin accordance with Company’s certificate of incorporation; (iv) by eitherthe Company or Jamba Juice if the closing has not occurred by August 15,2006; or (v) subject to a 30-day cure period, by either Company orJamba Juice if the other party has breached any of its covenants orrepresentations and warranties in any material respect.

Also,as part of a private placement financing, on March 10, 2006 and March 15,2006, Company entered into Securities Purchase Agreements and RegistrationRights Agreements, with prospective investors (including certain current JambaJuice stockholders and board members) that collectively provide for the issuance,simultaneously with the closing of the

 

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merger,of approximately 30.9 million shares of the Company common stock, at a pershare purchase price of $7.50, resulting in aggregate gross proceeds to theCompany of approximately $231.6 million, which funds will be used to fund themerger consideration as well as additional working and expansion capital.

Inconnection with the private placement financing, the Company also granted theinvestors certain registration rights described below. Shareholder approval forthe issuance of the shares of common stock and for the insider participation inthe private placement financing is required pursuant to the rules of theAmerican Stock Exchange and such approval will be sought simultaneously withthe shareholder approval for the merger.

Pursuantto the Registration Rights Agreements, the Company has granted the investors inthe private placement certain rights to register the resale of the shares ofcommon stock that they will receive. Any costs associated with filing of theregistration statement will be paid by the Company. In the event the financingis completed, if the Company does not timely file the registration statement(the later of 30 days following the closing of the financing or July 7,2006), or have it declared effective in a timely manner (within 90 days, unlessnot reviewed by the Securities and Exchange Commission, of filing of theregistration statement), then the Company may be subject to a penalty (anamount equal to 0.5% of the financing amount payable in cash to the investorsfor every 30 days such delinquencies are not cured). The Company may also besubject to the same penalty if the registration statement, once effective,ceases to be usable for a period of time.

**Comparisonof Three Months Ended March 31, 2006 with Three Months Ended March 31,2005**

Forthe three months ended March 31, 2006, we had net income of approximately$688,000, derived from interest income less operating expenses and taxes, ascompared to a loss of $1,000 derived from formation and operating costs for thesame period the previous year. No interest income was generated in the threemonths ended March 31, 2005 since the proceeds from the offering were notreceived until July 6, 2005.

Forthe period from January 6, 2005 (inception) through March 31, 2006,we had net income of approximately $1.9 million, derived from interest incomeless operating expenses and taxes.

Interestincome is derived primarily from investment of our cash balances held in trust,which aggregated approximately $129 million at March 31, 2006. The cashbalance held in trust is invested primarily in non-taxable securities and otherinvestments.

**Liquidity and Capital Resources**

Our net proceedsfrom the sale of our units were approximately $127,838,200. Of this amount,$126,720,000 was held in trust and interest on this amount is also held in thetrust. The remaining $1,118,200 was held outside of the trust. The remainingproceeds are available to be used by us to provide for business, legal andaccounting due diligence on prospective acquisitions and continuing general andadministrative expenses.

 

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TheCompany’s current cash position is approximately $741,000. We have at thispoint outstanding payables, accrued expenses and liabilities of approximately$1.1 million. Our short term liabilities exceed our available cash position byapproximately $406,000.

Inthe event the business combination is not consummated within the agreed upontime period, we do not believe we will have sufficient available funds outsideof the trust fund to operate through July 6, 2007. We have incurredapproximately $1.0 million in expenses for legal, accounting and other expensesattendant to the due diligence investigations, structuring and negotiating ofthe business combination. We believe that we will likely be forced to liquidatethe Company should the business combination with Jamba Juice not beconsummated.

Aspart of a private placement financing, on March 10, 2006 and March 15,2006, we entered into Securities Purchase Agreements and Registration RightsAgreements, with prospective investors (including certain current Jamba Juicestockholders and board members) that collectively provide for the issuance,simultaneously with the closing of the merger, of approximately 30.9 millionshares of Company common stock, at a per share purchase price of $7.50,resulting in aggregate gross proceeds to Company of approximately $231.6million, which funds will be used to fund the merger consideration as well asadditional working and expansion capital. The private placement will only becompleted upon consummation of the merger with Jamba Juice.

**RelatedParty Transactions**

Commencingon July 6, 2005 and ending upon the acquisition of a target business, webegan incurring a fee of $4,875 per month for office space and certain otheradditional services from SB Management Corp., an affiliate of Steven R.Berrard, our chairman of the board and chief executive officer, and a fee of$2,625 per month for general and administrative services including secretarialsupport from Mercantile Companies, Inc., an affiliate of I. StevenEdelson, our vice chairman and vice president, and Nathaniel Kramer, one of ourdirectors. In addition, in January, March and June 2005, Messrs. Berrard,Edelson, Kramer and Aucamp loaned us an aggregate of $160,000 to us for paymenton our behalf of offering expenses. These loans were repaid following ourinitial public offering from the proceeds of the offering.

Aspart of a private placement financing, on March 10, 2006 and March 15,2006, Company entered into Securities Purchase Agreements and RegistrationRights Agreements, with prospective investors (including certain current JambaJuice stockholders and board members) that collectively provide for theissuance, simultaneously with the closing of the merger, of approximately 30.9million shares of Company common stock, at a per share purchase price of $7.50,resulting in aggregate gross proceeds to Company of approximately $231.6million, which funds will be used to fund the merger consideration as well asadditional working and expansion capital.

Oneof the investors in the private placement, Berrard Holding Limited Partnership,of which Steven R. Berrard, a current director and the Chief Executive Officerof the Company is the President, is investing $400,000. In addition, a familymember of I. Steven Edelson, the Company’s Vice Chairman and Vice President,has committed to investing $50,000 in the private placement financing.

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**Item 3.    Quantitativeand Qualitative Disclosures about Market Risk.**

Marketrisk is the sensitivity of income to changes in interest rates, foreignexchanges, commodity prices, equity prices, and other market-driven rates orprices. We are not presently engaged in and, if a suitable business target isnot identified by us prior to the prescribed liquidation date of the trustfund, we may not engage in, any substantive commercial business. Accordingly,we are not and, until such time as we consummate a business combination, wewill not be, exposed to risks associated with foreign exchange rates, commodityprices, equity prices or other market-driven rates or prices. The net proceedsof our initial public offering held in the trust fund have been invested onlyin money market funds meeting certain conditions under Rule 2a-7promulgated under the Investment Company Act of 1940. Given our limited risk inour exposure to money market funds, we do not view the interest rate risk to besignificant.

**Item 4.    Controlsand Procedures.**

Ourmanagement carried out an evaluation, with the participation of our chiefexecutive officer (principal executive, financial, and accounting officer), ofthe effectiveness of our disclosure controls and procedures as of March 31,2006. Based upon that evaluation, our chief executive officer concluded thatour disclosure controls and procedures were effective to ensure that informationrequired to be disclosed by us in reports that we file or submit under theSecurities Exchange Act of 1934 is recorded, processed, summarized, andreported within the time periods specified in the rules and forms of theSecurities and Exchange Commission, and include controls and proceduresdesigned to ensure that information required to be disclosed by us in suchreports is accumulated and communicated to our management, including our ChiefExecutive Officer, to allow timely decisions regarding required disclosures.

Therehas not been any change in our internal control over financial reporting inconnection with the evaluation required by Rule 13a-15(d) underthe Exchange Act that occurred during the quarter ended March 31, 2006,that has materially affected, or is reasonably likely to materially affect, ourinternal control over financial reporting.

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PART II— OTHER INFORMATION

Item1.        Legal Proceedings.

                    There are no material legalproceedings pending against us.

Item1A.     Risk Factors

                    None.

Item2.        Unregistered Sales ofEquity Securities and Use of Proceeds.

                    Not applicable

Item3.        Defaults upon Senior Securities.

                    Not applicable.

Item4.        Submission of Matters to a Voteof Security Holders.

                    Not applicable.

Item5.        Other Information.

                    Not applicable.

Item6.        Exhibits

                    31.1     Section 302 Certification of Chief Executive Officer

                    31.2     Section 302 Certification of Chief Financial Officer

                    32.1     Section 906 Certification

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**SIGNATURES**

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.

 

 
|                         | **SERVICES ACQUISITION CORP. INTERNATIONAL** |
|-------------------------|----------------------------------------------|
|                    | ** **                                   |
|                    |                                         |   |
| Date: May 15, 2006 | By:                                          | /s/ Steven R.  Berrard |
|                    |                                         | Steven R.  Berrard |
|                    |                                         | *Chairman  of the Board and Chief Executive Officer  (Principal Executive Officer,  Principal Financial and Accounting Officer)* |

 

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