Jamba Juice 2014 Annual Report Download - page 27

Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such proceedings.
An unfavorable outcome could have a material adverse impact on our business, financial condition and results of operations. In addition, regardless of the
outcome of any litigation or regulatory proceedings, these proceedings could result in substantial costs and may require that we devote substantial resources
to defend our Company and could affect the future premiums we would be required to pay on our insurance policies. Further, changes in governmental
regulations could have adverse effects on our business and subject us to additional regulatory actions.
Food safety concerns and instances of food-borne illnesses could harm our customers, result in negative publicity and cause the temporary closure of some
stores and, in some cases, could adversely affect the price and availability of fruits and vegetables, any of which could harm our brand reputation, result in
a decline in revenue or an increase in costs.
We consider food safety a top priority and dedicate substantial resources toward ensuring that our customers enjoy high-quality, safe and wholesome
products. However, we cannot guarantee that our internal controls and training will be fully effective in preventing all food-borne illnesses. Furthermore, our
reliance on third-party food suppliers and distributors increases the risk that food-borne illness incidents (such as e. coli, hepatitis A, salmonella or listeria)
could occur outside of our control and at multiple locations. Instances of food-borne illnesses, whether real or perceived, and whether at our stores or those of
our competitors, could harm customers and otherwise result in negative publicity about us or the products we serve, which could adversely affect revenue. If
there is an incident involving our stores serving contaminated products, our customers may be harmed, our revenue may decrease and our brand name and
reputation may be impaired. If our customers become ill from food-borne illnesses, we could be forced to temporarily close some stores. In addition, we may
have different or additional competitors for our intended customers as a result of making any such changes and may not be able to compete successfully
against those competitors. Food safety concerns and instances of food-borne illnesses and injuries caused by food contamination have in the past, and could
in the future, adversely affect the price and availability of affected ingredients and cause customers to shift their preferences, particularly if we choose to pass
any higher ingredient costs along to consumers. As a result, our costs may increase and our revenue may decline. A decrease in customer traffic as a result of
these health concerns or negative publicity, or as a result of a change in our menu or dining experience or a temporary closure of any of our stores, could
materially and adversely impact our business, financial condition and results of operations.
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Failure of the Company’s internal control over financial reporting could harm its business and financial results.
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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. 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) make 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. As disclosed in Item 9A, management identified a material weakness in our internal control over financial reporting
related to identifying and accounting for non-standard transactions.
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