EFTA02486996.pdf

From: jeffrey E. <[email protected]> Sent: Monday, September 28, 2015 4:16 PM To: Richard Kahn Subject: Re: FW: Series 8 Investment to Cover Common Investment yes for our entire inviestment On Sat, Sep 26, 2015 at 12:21 PM, R=chard Kahn <From: <mailto: = target=> Richard Kahn > Date: Friday, September 18, 2015 at 9:=1PM To: Jeffrey Epstein cc= href="mailto:[email protected]" target="_blank">jeevacation@gmail=com> Subject: Fwd: Seri=s 8 Investment to Cover Common Investment Andrew called this afterno=n and asked if we were going to participate in series 8. I expressed our d=spleasure that our entire investment could not be protected. He then said =hat is not true. I said this is now the third time they are changing fact =attern. He prepared attached summary for your review. He said they have 33=5 of 35mm to force black rock to invest final 50mm. Please advise if you h=ve any interest in investing. Thank you. Richard Kahn HBR= Associates Inc. 575 Lexington Avenue, 4th Floor New Y=rk, NY 10022 Tel Fax Cell Begin forwarded message: From: Andrew Lindsay .t illia</=>> Date: September 18, 2015 at 9:27:27 PM EDT To: R=chard Kahn «mailto Hi Rich, It was great chatting =ith you this morning. As I noted, Mort can make an investment in Ser=es 8 to have enough liquidation preference to cover both its common and pr=ferred investments. With an investment of just $1.25M in Series 8 wi=l result in Mort having a resulting total liquidation preference of $11.25=, to cover the previous $5M of common, $5M of preferred and new $1.25M inv=stments. In addition to the increased liquidation=preference, for the $1.25M, Mort will also receive an incremental 677,244 =hares with all the upside of Jawbone equity. That equates to $1.85 p=r share. Detail of the structure is included in t=e attached document. EFTA_R1_01606254 EFTA02486996  I've also include= a summary of the successful launch of our recent UP2 and UP3 products...AO It's been very well received with reviews like this <http://ww=.independent.co.uk/life-style/gadgets-and-tech/features/jawbone-up3- review=is-this-the-best-wearable-fitness-band-on-the-market-10495277.html> . Thanks, Andrew From: Richard Kahn ci n<mailto >> Da=e: Thursday, September 17, 2015 at 4:33 PM To: Jeffrey Epstein <[email protected] <mailto:[email protected]» Subject: Jawbone 4div> i spoke with Andrew Linsey, =nna and Will from Code Advisors as Hosain was unavailable last week on=y 5,000,000 of investment would be covered as this can only apply to prefe=red shares our investment in Series 5 was as foll=ws: Preferred 695,301 x 7.19113 = 5,000,000 Common 1,260,233 x 3.96792 = 5,000,000 I =as told on call that valuation of company at time of Series 5 was 1,650,00= post Series 6, 7, 8 and Blackrock note have further dilut=d our investment and although they would not give me an exact figure our n=w breakeven without Series 8 participation appears to be 3,250,000 With Series 8 investment of 833,000 i believe believe we =ould receive the following on a sale of company post April 28 2016 1,000,000 7,5=0,000 from preferred and 0 from common (0 received without Series 8) =div>2,000,000 7,500,000=from preferred and 0 from common (0 received without Series 8) 3=000,000 7,500,000 from =referred and 0 from common (0 received without Series 8) 3,250,0=0 7,500,000 from preferr=d and 5,000,000 from common (10,000,000 received without Series 8) it appears Series 8 protection provides protection from 1=000,000 to 3,250,000 on liquidation April 28 2016 is key date as =t is 1 year anniversary of Blackrock investment and if company sold before=that date they have a 3x liquidation preference <=iv>As of last friday they have raised 33,000,000 of the 35,000,000 needed =or Blackrock to release final 50,000,000 If that is =chieved they would have raised since April 28 2015: 220,000,000 Blackrock original note 40,000,000 Series 8=1PM (34) and Sequia (6) 50,000,000 Blackrock additional<Aiv> 35,000,000 Series 8 (33mm raised to date) 50,0=0,000 Blackrock final 395,000,000 To=al raised 2 EFTA_R1_01606255 EFTA02486997  As of Sep 11, 2015 there=cash flow was as follows: 30,000,000 in cash40=A0 85,000,000 (Series 8 and final Blackrock) 115,000,000 potential cash Once 85,000,000 is s=cured they will finalize deal for an ABL credit line in the amount of 50,0=0,000 that will be collateralized by AR and Inventory =div>They mentioned that Q4 would be cash flow positive however they did no= elaborate on what their loss for 2015 or 2016 would be.. When i=pressed them and said i thought they would would be out of money by mid 20=6 and we again may be further diluted with a Series 9 or 10 they responded=that they had new management that would not allow this They said Jason Child, new CFO, has already run analysis to ensure th=t they remain cash flow positive in 2016 Not sure that is so rea=istic as they also mentioned that Fitbit already has market share and that=they will not chase market share via lower pricing or marketing =n addition they will not build large inventories with vendors if they need=to conserve cash Andrew stated that Hosain made poor non financi=lly focused decisions and new CFO will not allow that moving forward =/div> Jawbone believes it will be the leader in the next phase which w=ll evolve from basic wellness to health and medical (blood pressure, respi=ation and oxidation) Analogy was used that basic wellness market=is similar to Smartphones in the early 2000's and Symbian who was =eader disappeared My concerns are as follo=s: a) Jawbone is always one step behind and they keep jumping to=the next Hot idea.. b) There will inevitably be a Series 9 / 10 =ound as i believe they will again run out of cash middle of next year caus=ng further dilution to Series 8 they are asking us to participate in =div> Andrew also sent email with codes for free UP 2 or=UP 3 product I will order and have for you on your next visit (d= you have a color preference - black, silver, indigo and red?) <=r> http://www.amazon.com/UP3-Jawbone-=ctivity-Tracker- Black/dp/BOON9E6DUK/ref=sr_l_l?ie=UTF8&qid=14425=1265&sr=8-1&keywords=up3 <http://www.amazon.com/UP3- Jawbone-Activity-Tracker=Black/dp/BOON9E6DUK/ref=sr_1_1?ie=UTF8&qid=1442521265&sr=8=1&keywords=up3> Please advise how you want to proceed with Series 8 proposed investm=nt of 833,000 Thank you =br> Richard Kahn HBRK Ass=ciates Inc. 575 Lexington Avenue 4th Floor New York, NY 10022te1 <tel fax <tel </=iv> 3 EFTA_R1_01606256 EFTA02486998  On Sep 17, 2015, at 2=38 PM, Jeffrey E. <[email protected] <mailto:[email protected]» wrote: =id you check with hosssain re amount of investment covered [email protected],=and destroy this communication and all copies thereof, including all=attachments. copyright -all rights reserved please =ote The information contained in this communication is confiden=ial, may be attorney-client privileged, may constitute inside informati=n, and is intended only for the use of the addressee. It is the propert= of JEE Unauthorized use, disclosure or copying of this communica=ion or any part thereof is strictly prohibited and may be unlawful. If =ou have received this communication in error, please notify us immediat=ly by return e-mail or by e-mail to [email protected] <mailto:jeevacation@gmail=com> , and destroy this comm=nication and all copies thereof, including all attachments. copyright -=11 rights reserved 4 EFTA_R1_01606257 EFTA02486999