Jamba Juice 2006 Annual Report Download - page 18

initial public offering from the proceeds of the offering.
Since our initial public offering, we have been engaged in sourcing a suitable business combination candidate. We have met with target companies,
service professionals and other intermediaries to discuss with them our company, the background of our management and our combination preferences. In the
course of these discussions, we have also spent time explaining the capital structure of the initial public offering, the combination approval process, and the
timeline under which we are operating before the proceeds of the offering are returned to investors.
Overall, we would gauge the environment for target companies to be competitive and we believe that private equity firms and strategic buyers
represent our biggest competition. Our management believes that many of the fundamental drivers of alternative investment vehicles like our company are
becoming more accepted by investors and potential business combination targets; these include a difficult IPO environment, a cash-rich investment
community looking for differentiated opportunities for incremental yield, and business owners seeking new ways to maximize their shareholder value while
remaining invested in the business. However, there can be no assurance that we will find a suitable business combination in the allotted time. Controls and
Procedures


.
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As of the date of this report, we have not completed an assessment, nor have our auditors tested our systems, of internal control. We expect that we
will assess the internal controls of our target business or businesses preceding the completion of a business combination and will then implement a schedule
for implementation and testing of such additional controls as we may determine are required to state that we maintain an effective system of internal controls. A
target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of its internal controls. Many small and mid-
sized target businesses we consider for a business combination may have internal controls that need improvement in areas such as:
• staffing for financial, accounting and external reporting areas, including segregation of duties;
• reconciliation of accounts;
• proper recordation of expenses and liabilities in the period to which they relate;
• proof of internal review and approval of accounting items;
• documentation of key accounting assumptions, estimates and/or conclusions; and
• documentation of accounting policies and procedures.
Because it will take time, management involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet
regulatory requirements and market expectations for our operation of a target business, we may incur significant expense in meeting our public reporting
responsibilities, particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer
than we expect, thus increasing our exposure to financial fraud or erroneous financial reporting.
Once our management’s report on internal controls is complete, we will retain our independent auditors to assess management’s report on internal
controls and to render an opinion on such report when required by Section 404. Additional matters concerning a target business’s internal controls may be
identified in the future when the assessment and testing is performed.

As of December 31, 2005, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have
any commitments or contractual obligations other than our payments to SB Management Corp. and Mercantile Companies, Inc. as described above. No
unaudited quarterly operating data is included in this prospectus as we have conducted no operations to date.

Market risk is the sensitivity of income to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market-driven
rates or prices. We are not presently engaged in, and if a suitable business target is not identified by us prior to the prescribed liquidation of the trust fund we
may not engage in, any substantive commercial business. Accordingly, the risks associated with foreign exchange rates, commodity prices, and equity prices
are not significant. The net proceeds of our initial public offering not held in the trust fund and not immediately required for the purposes set forth above have
been invested only in United States “government securities,” defined as any Treasury Bill issued by the United States having a maturity of one hundred and
eighty days or less, or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940. Given our
limited risk in our exposure to U.S. Treasury Bills and such money market funds, we do not view the interest rate risk to be significant. We do not enter into
derivatives or other financial instruments for trading or speculative purposes.

Reference is made to our financial statements beginning on page F-1 of this report.
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