Jamba Juice 2008 Annual Report Download - page 25

Table of Contents
operations. We are also subject to a variety of other claims arising in the ordinary course of our business, including personal injury claims, contract claims
and claims alleging violations of federal and state law regarding workplace and employment matters, discrimination and similar matters, and we could become
subject to class action or other lawsuits related to these or different matters in the future. Regardless of whether any claims against us are valid, or whether we
are ultimately held liable, claims may be expensive to defend and may divert time and money away from our operations and hurt our performance. A judgment
significantly in excess of our insurance coverage, or for which we are not covered by insurance, could materially and adversely affect our financial condition
or results of operations. Any adverse publicity resulting from these allegations may also materially and adversely affect our reputation or prospects, which in
turn could adversely affect our results.
In addition, the food services industry has been subject to a growing number of claims based on the nutritional content of food products they sell and
disclosure and advertising practices. We may also be subject to this type of proceeding in the future and, even if not, publicity about these matters
(particularly directed at the quick-service and fast-casual segments of the industry) may harm our reputation or prospects and adversely affect our results.


We rely on commercially available software and other technologies to provide security for processing and transmission of customer credit card data.
Approximately 28% of our current revenue is attributable to credit card transactions, and that percentage is expected to climb. Our systems could be
compromised in the future, which could result in the misappropriation of customer information or the disruption of systems. Either of those consequences
could have a material adverse effect on our reputation and business or subject it to additional liabilities.

Our management is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over financial
reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting
principles generally accepted in the United States of America. Internal control over financial reporting includes: (i) maintaining reasonably detailed records that
accurately and fairly reflect our transactions; and (ii) providing reasonable assurance that we (a) record transactions as necessary to prepare the financial
statements, (b) makes receipts and expenditures in accordance with management authorizations, and (c) would timely prevent or detect any unauthorized
acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control
over financial reporting is not intended to provide absolute assurance that we would prevent or detect a misstatement of our financial statements or fraud. Any
failure to maintain an effective system of internal control over financial reporting could limit our ability to report our financial results accurately and timely or
to detect and prevent fraud. A significant financial reporting failure could cause an immediate loss of investor confidence in us and a sharp decline in the
market price of our common stock.


Our outstanding warrants are classified as derivative liabilities and therefore, their fair values are recorded as derivative liabilities on our balance sheet.
Changes in the fair values of the warrants will result in adjustments to the amount of the recorded derivative liabilities and the corresponding gain or loss will
be recorded in our statement of operations. We are required to assess these fair values of derivative liabilities each quarter and as the value of the warrants is
quite sensitive to changes in the market price of our stock, among other things,
25