CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

(Formerly Known As 57^th Street General Acquisition Corp.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reverse Merger

On January 9, 2011, Crumbs Bake Shop, Inc. (“CBS”), formerly known as 57^th Street General Acquisition Corp. (“57^th Street”), 57^th Street Merger Sub LLC, a Delaware limited liability company and wholly-owned subsidiary of 57^th Street (“Merger Sub”), Crumbs Holdings LLC, a Delaware limited liability company, and its wholly-owned subsidiaries (“Holdings”), the members of Holdings immediately prior to the consummation of the Merger (individually, a “Member” or, collectively, the “Members”) and the representatives of the Members and Holdings, entered into a Business Combination Agreement, amended on each of February 18, 2011, March 17, 2011 and April 7, 2011 (the “Business Combination Agreement”), pursuant to which Merger Sub merged with and into Holdings with Holdings surviving the merger as a non-wholly owned subsidiary of CBS (the “Merger”). The entity surviving the Merger kept the Crumbs Holdings LLC name; however, references herein to the Members of Holdings refer only to the members of Crumbs Holdings LLC immediately prior to the consummation of the Merger, and therefore exclude the members of Merger Sub. The transactions contemplated by the consummation of the Merger and Business Combination Agreement are referred to herein collectively as the “Transaction.” Management has concluded that Holdings is the accounting acquirer based on its evaluation of the facts and circumstances of the acquisition. 

Pursuant to the Business Combination Agreement, in February 2011, 57^th Street commenced a tender offer, as amended from time to time, to ultimately purchase up to 1,803,607 shares of its issued and outstanding common stock for $9.98 per share, net to the seller in cash without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase, as supplemented by the Schedule TO, and the Third Amended and Restated Letter of Transmittal (which together, as amended or supplemented from time to time, constituted the “Offer”). The Offer expired at 5:00 p.m. Eastern time, on May 4, 2011. 57^th Street promptly purchased all 1,594,584 shares of its common stock validly tendered and not withdrawn, for an aggregate purchase price of approximately $15,914,000.

Upon consummation of the Merger, the Members of Holdings received consideration in the form of newly issued securities and approximately $22,086,000 in cash. The securities consisted of (i) 4,541,394 New Class B Exchangeable Units (“Class B Units”) issued by Holdings (the aggregate of which is exchangeable for 4,541,394 shares of CBS common stock, and 641,394 of which Class B Units have been exchanged for shares of CBS common stock and are being sold by a selling stockholder) and (ii) 454,139.4 shares of Series A Voting Preferred Stock (“Series A Voting Preferred Stock”) issued by CBS (each such share entitling its holder the right to vote 10 votes per share in all matters for which the holders of common stock are entitled to vote, and 64,139.4 of which have been surrendered and cancelled by CBS upon the exchange of 641,394 Class B Units for the 641,394 shares of common stock issued to a selling stockholder). In addition, Holdings, as the entity surviving the Merger, received, as a capital contribution from CBS, the sum of approximately $13,725,000 (not including refunds receivable after the closing of the Merger) after giving effect to the retention of approximately $53,000 by CBS for future public company expenses and the payment of approximately $149,000 for CBS’ then outstanding franchise taxes.

Nature of Business

CBS, through its consolidated subsidiary, Holdings, (together, the “Company”) engages in the business of selling a wide variety of cupcakes, cakes, pies, cookies and other baked goods as well as hot and cold beverages. The Company offers these products through its stores, e-commerce division, catering services and wholesale distribution business.

Basis of Presentation

The consolidated financial statements have been prepared in conformity with the accounting principles generally accepted in the United States of America (“GAAP”).

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

(Formerly Known As 57^th Street General Acquisition Corp.)

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of CBS and Holdings. Intercompany transactions and balances have been eliminated in consolidation.

Trade Receivables

The Company carries its trade receivables at cost less an allowance for doubtful accounts.  On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions. The amount of allowance for doubtful accounts at both December 31, 2011 and 2010 was $0.

Restricted Certificates of Deposit

As of December 31, 2011 and 2010, the Company had $673,000 and $30,000, respectively, of cash restricted from withdrawal and held by banks as certificates of deposit securing letters of credit (see Note 8). The letters of credit are required as security deposits for certain of the Company’s non-cancellable store operating leases.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash in banks, certificates of deposit and trade receivables. The carrying amounts for cash and cash equivalents, certificates of deposit and trade receivables approximate fair value due to the short term nature of the instruments.

Deferred Financing Costs

In 2010, the Company capitalized fees related to the Merger (see “Reverse Merger,” Note 1) as an asset. When the Merger was consummated in 2011, these fees were then recognized as a reduction of equity.

Property and Equipment 

Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided for by the straight-line method over the following estimated useful lives:

Expenditures for repairs and maintenance are charged to operations as incurred.

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

(Formerly Known As 57^th Street General Acquisition Corp.)

Impairment of Long-Lived Assets

When facts and circumstances indicate that the carrying values of long-lived assets may not be recoverable, the Company evaluates long-lived assets for impairment in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment.” The Company first compares the carrying value of the asset to the asset’s estimated future cash flows (undiscounted). If the estimated future cash flows are less than the carrying value of the asset, the Company calculates an impairment loss based on the asset’s estimated fair value. The fair value of the assets is estimated using a discounted cash flow model based on future store revenue and operating costs, using internal projections. Cash flows for store assets are identified at the individual store level. Long-lived assets to be disposed of are reported at the lower of their carrying amount, or fair value less estimated costs to sell. The Company most recently completed an impairment evaluation in the fourth quarter of 2011, and certain assets were determined to be impaired (see Note 5).

Intangible Assets

Intangible assets, including branding costs and website design, are amortized over their useful lives, estimated to be five years.

Tax Receivable Agreement

Holdings intends to make an election under Section 754 of the Internal Revenue Code (the "Code") effective for each taxable year in which an exchange of Class B Units for shares of CBS common stock occurs, which may result in an adjustment to the tax basis of the assets of Holdings at the time of an exchange of Class B Units. As a result of both the initial purchase of Class B Units from the Members in connection with the Merger and these subsequent exchanges, CBS will become entitled to a proportionate share of the existing tax basis of the assets of Holdings. In addition, the purchase of Class B Units and subsequent exchanges are expected to result in increases in the tax basis of the assets of Holdings that otherwise would not have been available. Both this proportionate share and these increases in tax basis may reduce the amount of tax that CBS would otherwise be required to pay in the future. These increases in tax basis may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

CBS entered into a tax receivable agreement with Holdings that will provide for the payment by CBS to the Members of up to 75% of the amount of the tax benefits, if any, that CBS is deemed to realize as a result of (i) the existing tax basis in the intangible assets of Holdings on the date of the Merger, (ii) these increases in tax basis and (iii) certain other tax benefits related to the Company entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. These payment obligations are obligations of CBS and not of Holdings. On November 14, 2011, Julian Geiger became a party to the tax receivable agreement as part of the Geiger Employment Agreement (see Note 11). For purposes of the tax receivable agreement, the benefit deemed realized by CBS will be computed by comparing the actual income tax liability of Holdings (calculated with certain assumptions) to the amount of such taxes that CBS would have been required to pay had there been no increase to the tax basis of the assets of Holdings as a result of the purchase or exchanges, had there been no tax benefit from the tax basis in the intangible assets of Holdings on the date of the Merger and had CBS not entered into the tax receivable agreement. The term of the tax receivable agreement will continue until all such tax benefits have been utilized or expired, unless CBS exercises its right to terminate the tax receivable agreement for an amount based on the agreed payments remaining to be made under the agreement or CBS breaches any of its material obligations under the tax receivable agreement, in which case all obligations will generally be accelerated and due as if CBS had exercised its right to terminate the agreement.

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

(Formerly Known As 57^th Street General Acquisition Corp.)

Income Taxes

The Company complies with FASB ASC 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce the deferred tax asset to the amount expected to be realized.

The Company is required to determine whether its tax positions are more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. De-recognition of a tax benefit previously recognized results in the Company recording a tax liability that reduces stockholders’ equity. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized tax benefits as of December 31, 2011 or 2010. The Company’s conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof.

The Company recognizes interest and penalties related to unrecognized tax benefits in interest expense and other expenses, respectively. No interest expense or penalties have been recognized in 2011 or 2010.

Deposits

Deposits consist of security deposits made in connection with operating lease agreements for the rental of stores and office space and utility deposits made for gas and electric services at several stores. According to the terms of certain lease agreements, a few security deposits are kept in separate bank accounts by the respective landlords and earn interest at various rates, while also being subject to administrative fees. Most utility deposits are eligible for refund after three years of consecutive, timely payments.

Lease Obligations

The Company leases stores and office space under operating leases. Most lease agreements contain tenant improvement allowances, rent holidays, lease premiums, rent escalation clauses and/or contingent rent provisions. For purposes of recognizing incentives, premiums and minimum rental expenses on a straight-line basis over the terms of the leases, the Company uses the date of initial possession to begin amortization, which is generally when the Company enters the space and begins to make improvements in preparation for its intended use. No restrictions are imposed in the lease agreements regarding dividends, additional debt or further leasing.

For tenant improvement allowances and rent holidays, the Company records deferred rent in the consolidated balance sheets and amortizes the deferred rent over the terms of the leases as reductions to occupancy expense in the consolidated statements of operations.

For scheduled rent escalation clauses during the lease terms or for rental payments commencing at a date other than the date of initial occupancy, the Company records minimum rental expenses on a straight-line basis over the terms of the leases in the consolidated statements of operations.

For contingent rent provisions that require payment of additional rent based on a specified percentage of a store’s net sales in excess of a defined breakpoint, the Company records occupancy expense in the consolidated statements of operations during the period the contingency is met.

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

(Formerly Known As 57^th Street General Acquisition Corp.)

Sales Tax

The Company charges sales tax to its customers and records the liability on an individual state basis. No such amounts have been included in the consolidated statements of operations.

Revenue Recognition

The Company recognizes store revenue when payment is tendered at the point of sale. Revenue from the Company’s catering services and wholesale distribution business is recognized once goods are delivered, and revenue from its e-commerce division is recognized once goods are shipped. Revenue is reported net of sales, use or other transaction taxes that are collected from customers and remitted to taxing authorities.

Revenue from the Company’s gift cards and certificates are recognized when tendered for payment, or upon redemption. Outstanding customer balances are included in gift cards and certificates in the consolidated balance sheets. There are no expiration dates on gift cards and certificates, and the Company does not charge any service fees that cause a decrement to customer balances.

While the Company will continue to honor all gift cards and certificates presented for payment, management in the future may determine the likelihood of redemption to be remote for certain cards and certificates due to, among other things, long periods of inactivity. In these circumstances, if management also determines there is no requirement for remitting balances to government agencies under state escheatment laws, card balances may then be recognized in the consolidated statements of operations.

Sales Incentives, Promotions and Marketing

Expenses related to buy-one-get-one-free incentives and product costs associated with redemptions from the Company’s coffee loyalty card program, through which customers receive free product after a designated number of purchases are recorded in cost of sales at the time of redemption (see “Reclassifications,” Note 1). Such costs totaled approximately $86,000 and $54,000, respectively, in 2011 and 2010.

Ongoing promotional product giveaway costs, marketing and public relations costs are included in selling expenses. Product giveaway costs associated with new store openings are included in new store expenses. All costs are expensed as incurred. Amounts recorded in selling expenses totaled approximately $677,000 and $597,000 in 2011 and 2010, respectively, and those included in new store expenses totaled approximately $54,000 and $19,000, in 2011 and 2010, respectively.

New Store Expenses

New store expenses consisting primarily of manager salaries, employee payroll and related training costs incurred prior to the opening of a store, straight-line rent from the possession date to store opening date, related occupancy costs incurred prior to opening and start-up and promotion of new store openings, are expensed as incurred.

Shipping and Handling Costs

Shipping and handling costs related to the e-commerce division are expensed as incurred and included in the cost of sales. Total expenses for 2011 and 2010 were approximately $458,000 and $390,000, respectively.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. 

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

(Formerly Known As 57^th Street General Acquisition Corp.)

Concentrations of Credit Risk

Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of trade receivables. The Company’s wholesale customers, to which the majority of the trade receivables relate, are concentrated in the food service and amusement industries in the New York metropolitan area. Management does not believe significant credit risk existed at December 31, 2011 and 2010.

The Company maintains cash at two financial institutions. The accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per financial institution. In addition, the FDIC enacted temporary unlimited coverage for noninterest-bearing transaction accounts, effective December 31, 2010. The Company’s uninsured bank balances, including certificates of deposit, totaled approximately $569,000 and $307,000 at December 31, 2011 and 2010, respectively.

Net income (loss) per common share

The Company complies with accounting and disclosure requirements of FASB ASC 260, “Earnings Per Share.” Net income (loss) per common share is computed by dividing net income (loss) attributable to stockholders by the weighted average number of common shares outstanding for the period. Warrants to purchase 5,456,300 shares of common stock for the years ended December 31, 2011 and 2010 were excluded from the calculation of diluted income (loss) per share because they would have been anti-dilutive. As a result, diluted income (loss) per common share is the same as basic income (loss) per common share for 2011 and 2010.

Concentrations

Cupcake sales comprised approximately 76.3% and 76.9% of the Company’s net sales for the years ended December 31, 2011 and 2010, respectively. Beverage sales comprised approximately 9.6% and 8.1% of the Company’s net sales for the years ended December 31, 2011 and 2010, respectively.

Recently issued accounting standards

The Company does not believe that the adoption of any recently issued accounting standards will have a material impact on its current financial position and results of operations.

Reclassifications

Certain reclassifications have been made to amounts previously reported for 2010 to conform with the 2011 presentation. Such reclassifications have no effect on previously reported net income.

During 2011, the Company reclassified to cost of sales (i) certain amounts associated with promotional activities, which included expenses related to buy-one-get-one-free incentives, and (ii) product costs associated with redemptions from the Company’s coffee loyalty card program, through which customers receive free product after a designated number of purchases. For 2011 and 2010, the Company reclassified approximately $32,000 and $54,000, respectively, as cost of sales that were previously reported as selling expenses.

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

(Formerly Known As 57^th Street General Acquisition Corp.)

Inventories are valued at the lower of cost or market, with cost being determined using the average cost method. At December 31, 2011 and 2010, inventories were comprised of the following:

Packaging and e-commerce packaging inventories consists of labels, boxes, bags and gel packs for packaging and shipping baked goods, while merchandise inventory consists of logoed hats, t-shirts and aprons primarily used as employee uniforms, and mugs, books and plastic tiers for sale in the stores. Beverage supply inventory consists of coffee, tea and flavored syrups, and store supplies consist of paper goods, decorating materials, and other miscellaneous supplies purchased in bulk and consumed in daily operations.

At December 31, 2011 and 2010 property and equipment were comprised of the following:

Construction in progress relates to leasehold improvements for stores not yet operating at December 31, 2011 and 2010, respectively.

Depreciation expense was approximately $1,323,000 and $811,000 for 2011 and 2010, respectively.

At December 31, 2011 intangible assets were comprised of the following:

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

(Formerly Known As 57^th Street General Acquisition Corp.)

At December 31, 2010 intangible assets were comprised of the following:

Amortization expense was approximately $137,000 and $119,000 for 2011 and 2010 respectively.

Estimated amortization expense for the succeeding five years is:

During the fourth quarter of 2011, an analysis of the Company’s operating performance by store identified impairment indicators at certain stores. The indicators included sustained operating losses with a failure to meet or exceed sales targets. These conditions indicated the carrying values of the leasehold improvements at these stores may not be recoverable. Accordingly, the Company completed an impairment test in accordance with its accounting policy, which resulted in impairment of leasehold improvements of approximately $770,000.

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

(Formerly Known As 57^th Street General Acquisition Corp.)

The Company files an income tax return in the U.S. federal jurisdiction, and may file income tax returns in various states. Generally, the Company is subject to income tax examinations by major taxing authorities since inception. The Company may be subject to potential examination by U.S. federal or states’ authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal and state tax laws. The Company does not expect that the total amount of unrecognized tax benefits, if any, will materially change over the next twelve months.

At the date of the Merger, the Company recorded a deferred tax asset of approximately $9,547,000 for estimated income tax effects of the increase in tax basis of the purchased interests and future projected payments under the tax receivable agreement. An additional deferred tax asset of approximately $35,000 was recorded in 2011 for estimated local income tax effects of the Company’s net loss for the year ended December 31, 2011. The Company had a deferred tax asset of approximately $4,808,000 at December 31, 2011, net of a valuation allowance of approximately $4,774,000, which can be utilized to offset future taxable income through 2026.

Income tax expense (benefit) for the years ended December 31, 2011 and 2010 were comprised of the following:

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

(Formerly Known As 57^th Street General Acquisition Corp.)

A reconciliation of the expected U.S. federal tax rate to the effective tax rate for the years ended December 31, 2011 and 2010 is as follows:

The Company leases buildings from which it conducts retail, wholesale and administrative operations and is obligated under various noncancelable leases through 2027 with options to renew many of the leases for a period of up to 10 years. In addition to base rent, the Company is responsible for insurance, common area maintenance charges, property taxes and utilities at the majority of the properties.

For scheduled escalation provisions or for rental payments commencing on a date other than the date of initial occupancy, the Company records minimum rental expenses on a straight-line basis over terms of the leases in the consolidated statements of operations.

Certain leases have been guaranteed by a Member of Holdings.

Rent expense under the Company’s operating leases was approximately $5,810,000 and $4,025,000 for 2011 and 2010, respectively, and is included in occupancy expenses in the consolidated statements of operations.

At December 31, 2011, the future minimum rental payments due under these operating leases is as follows:

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

(Formerly Known As 57^th Street General Acquisition Corp.)

In lieu of security deposits required pursuant to the terms of several operating leases, Holdings has chosen to obtain letters of credit issued by two financial institutions, when such substitution is allowed by the landlords. As of December 31, 2011 and 2010, issued and unused letters of credit totaled $637,425 and $529,425, respectively. In May 2011, Holdings entered into a loan agreement in connection with the letters of credit issued by one of the institutions in the form of a $575,000 revolving line of credit, with a variable rate based on the Wall Street Journal Prime Rate. Prior to entering into this agreement, the letters of credit were guaranteed by a Member of Holdings. Letters of credit amounting to $539,425 and $499,425 were reserved under this line of credit as of December 31, 2011 and 2010, respectively. The line of credit is secured by a certificate of deposit, and no amounts were outstanding on the line of credit at December 31, 2011 and 2010. Letters of credit in the amount of $98,000 issued by a second financial institution are also secured by certificates of deposit.

The certificates of deposit used to secure the letters of credit are recorded as restricted certificates of deposit in the balance sheet (see “Restricted Certificates of Deposit,” Note 1).

In 2011 and 2010, the Company received 100% of its baked goods from four independent commercial bakeries, located in New York, Los Angeles, Northern Virginia and Chicago, who supplied the stores in their surrounding areas. To mitigate the risks associated with these arrangements, the Company purchased Business Income from Dependent Properties insurance coverage. Should the suppliers experience loss or damage to their facilities due to a covered peril, insurance will cover up to $10,000,000 of the Company’s losses.

In 2010, Holdings leased building space for seven of its stores as sub-leases from Bauer Holdings, Inc., formerly known as Crumbs, Inc., a Member of Holdings, which is controlled and partially owned by two officers of the Company. Holdings paid the original unrelated lessor directly based upon the original terms of the leases. Two of these sub-leases were terminated during 2010, and the remaining five sub-leases were assigned to their respective successor entities in the second quarter of 2011.

In 2011 and 2010, the Company paid approximately $4,900 and $44,000, respectively, in fees, unrelated to audit services, to an accounting firm in which an officer of the Company is a part owner.

In 2011 and 2010, the Company paid approximately $20,000 and $17,000, respectively, in rent to a landlord that is partially owned by an officer of the Company.

CBS is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors. In connection with the Merger (see “Reverse Merger,” Note 1), the Members were issued 4,541,394 Class B Units and 454,139.4 Series A Voting Preferred Stock of CBS. Upon exchange of the Class B Units in accordance with the Exchange and Support Agreement, shares of CBS common stock will be issued at the current ratio of 1:1 (subject to certain adjustments related to organic dilution), and concurrently, a proportionate amount of shares of Series A Voting Preferred Stock will be automatically redeemed and cancelled at the current ratio of 1:10, subject to the availability of lawful funds, for its par value of $0.0001 per share and become authorized but unissued preferred stock. Except in connection with the exchange of the Class B Units, the CBS Series A Voting Preferred Stock will not be redeemable.

CRUMBS BAKE SHOP, INC. AND SUBSIDIARIES

(Formerly Known As 57^th Street General Acquisition Corp.)

In June 2011, 641,394 Class B Units were exchanged for 641,394 shares of common stock, and in turn, 64,139.4 shares of Series A Voting Preferred Stock were automatically redeemed and cancelled pursuant to the Exchange and Support Agreement. In addition, pursuant to the Insider Warrant Exchange Agreement by and among CBS, 57^th Street GAC Holdings LLC (“57^th Street GAC”), Morgan Joseph TriArtisan LLC, Ladenburg Thalmann & Co. Inc., I-Bankers Securities Incorporated, Maxim Group LLC and Rodman & Renshaw, LLC, dated May 5, 2011, 370,000 shares of common stock were issued in exchange for 3,700,000 warrants that were originally purchased by 57^th Street GAC and the underwriters of CBS’ initial public offering in May 2010.

On November 14, 2011, the Company entered into an employment agreement with Julian R. Geiger (the “Geiger Employment Agreement”) pursuant to which Mr. Geiger will serve as President and Chief Executive Officer of the Company commencing November 14, 2011 (the “Effective Date”) and continuing through December 31, 2013. Pursuant to the Geiger Employment Agreement, Mr. Geiger shall receive no salary nor participate in any bonus plan of the Company that may be in effect during the term of the agreement. The Company agreed that promptly following execution of the Geiger Employment Agreement, Holdings shall grant to him 799,000 Class B Units and CBS shall grant to him 79,900 shares of Series A Preferred Stock, subject to the following vesting provisions:

Concurrent with the execution of the Geiger Employment Agreement, EHL Holdings LLC and Bauer Holdings, Inc. (formerly Crumbs, Inc.) agreed to forfeit an aggregate of 799,000 Class B Units and 79,900 share of the Series A Preferred Stock.

Staff expenses related to this stock-based compensation was recorded in connection with the transaction in the amount of $1,877,650, the value of the First Tranche, calculated based upon the price of a share of CBS stock on November 14, 2011. When the Second Tranche vests in November 2012, additional staff expenses related to this stock-based compensation of $1,877,650 will be recorded.

EXHIBIT INDEX