You should read the following discussion and analysis in conjunction with our financial statements and related notes included elsewhere in this report. Except for historical information, the discussion in this report contains certain forward-looking statements that involve risks and uncertainties. We have based these forward-looking statements on our current expectations and assumptions about future events. In some cases, you can identify forward-looking statements by terminology, such as "may," "should," "could," "predict," "potential," "continue," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate," "forecast" and similar expressions (or the negative of such expressions). Forward-looking statements include, but are not limited to, statements concerning projected new store openings or refranchising transactions, 2009 revenue growth rates, global sourcing, distribution strategies and capital expenditures. Forward-looking statements are based on our beliefs as well as assumptions based on information currently available to us, including financial and operational information, the volatility of our stock price, and current competitive conditions. As a result, these statements are subject to various risks and uncertainties. For a discussion of material risks and uncertainties that the Company faces, see the discussion titled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 30, 2008 and in our Quarterly Report on Form 10-Q for the period ended July 14, 2009.

JAMBA, INC. OVERVIEW

Jamba, Inc. ("we", "us", "our" or the "Company"), a Delaware corporation, and its wholly owned subsidiary, Jamba Juice Company is a leading restaurant retailer of better-for-you food and beverage offerings, including great tasting fruit smoothies, juices and teas, hot oatmeal made with organic steel cut oats, wraps, salads, sandwiches and California Flatbreads™ and a variety of baked goods and snacks. As of October 6, 2009, there were 742 locations consisting of 488 company owned and operated stores ("Company Stores") and 254 franchise stores ("Franchise Stores"). Jamba Juice Company began operations in 1990.

EXECUTIVE OVERVIEW

2009 Third Fiscal Quarter-In Review

In the third quarter of fiscal 2009, we continued to execute on our strategic initiatives. These efforts focused on five key initiatives: building a customer first "operationally focused" service culture; building retail food capability across all four day parts (breakfast, lunch, afternoon and dinner); accelerating the development of franchise and non-traditional stores; building a licensing growth platform; and continuing to implement a disciplined expense reduction plan.

Some of the most significant events that occurred during the third quarter of fiscal 2009 in furtherance of our business and in each of these areas include:

• Building on the successful launch of food in California, we continued to expand our retail food capability, with the introduction of California Flatbreads or our complete food offering including wraps, salads, sandwiches and California Flatbreads as well as our Fruit Tea Infusion™ beverages in a total of 82 additional retail locations across our New York City, Chicago, Seattle and Hawaii (which is 100% franchised) markets in the second phase of a system-wide rollout. This food offering seeks to satisfy consumer demand for great tasting, high quality, better-for-you, grab-and-go food in furtherance of a healthy lifestyle. As a result, we now offer grab-n-go food and/or California Flatbreads in 377 retail locations and have expanded the sale of oatmeal to over 600 locations. Like all of the Jamba products, these products contain no artificial flavors, 0g trans fat, no artificial preservatives and no high fructose corn syrup.

• We opened ten new Franchise Stores and, in the process, achieved the opening of our thirtieth college campus location which further supported our strategy of growth through a focus on franchise and non-traditional store development. We also continued to develop our traditional store growth plan for 2010.

• In furtherance of our refranchising and franchise growth strategies, we also obtained registration with the Small Business Administration, or SBA. Registration with the SBA includes having Jamba Juice included in a list of businesses whose franchisees can receive expedited loan processing when applying for financial assistance from the SBA. We expect that this registration will help facilitate and in some cases expedite our franchise growth and refranchising initiatives, which is helpful in light of the current challenging credit market and economy.

• We entered into an agreement with Costco Wholesale, or Costco, under which it will sell our jambacards to its members at a discounted rate, with a goal of driving additional traffic into our stores.

• We continue to track to plan in our cost reduction initiatives targeting $25 million in aggregate annual Company Store-level cost savings for fiscal 2009. The primary cost reductions were in the areas of costs of sales and labor. We also continued to manage general and administrative expenses within our targets for the year as we continue to optimize our organizational structure and orient our internal infrastructure to support a more heavily franchise-focused business.

• We launched our Fall Feel Good Campaign which is a multi-faceted comprehensive marketing campaign aimed at driving traffic, trial and awareness of the Jamba brand and products.

Despite the many accomplishments and successes we experienced during the third quarter in furtherance of our strategic initiatives, we believe the current recession continues to have a negative impact on our revenue, which is impacted by consumer confidence and discretionary spending. Despite these economic pressures, however, we have seen less pronounced declines in comparable store sales which was (5.3)% for the third fiscal quarter compared to a (13.7)% decline in our second fiscal quarter. While working to continue to improve comparable store sales and increase average ticket, we also have been diligently managing our costs. Although the economic environment continues to be unpredictable, we believe that these efforts, together with the continued execution of our strategic initiatives, will improve the Company's performance and better position the Company for long-term success with a sustainable business model.

RESULTS OF OPERATIONS-12 WEEK PERIOD ENDED OCTOBER 6, 2009 AS COMPARED TO 12
WEEK

PERIOD ENDED OCTOBER 7, 2008 (UNAUDITED)



                                                              12 Week Period Ended
                                             October 6,                      October 7,
(In thousands)                                  2009           % (1)            2008           % (1)
Revenue:
Company stores                              $     77,493        98.1 %      $     84,427        98.1 %
Franchise and other revenue                        1,498         1.9 %             1,652         1.9 %

Total revenue                                     78,991       100.0 %            86,079       100.0 %

Costs and operating expenses:
Cost of sales                                     19,282        24.9 %            22,746        26.9 %
Labor                                             23,612        30.5 %            28,124        33.3 %
Occupancy                                         10,178        13.1 %            10,679        12.6 %
Store operating                                   10,032        12.9 %            10,721        12.7 %
Depreciation and amortization                      3,943         5.0 %             5,835         6.8 %
General and administrative                         8,839        11.2 %            12,082        14.0 %
Impairment of long-lived assets                      532         0.7 %             5,901         6.9 %
Other operating                                        3         0.0 %             1,427         1.7 %

Total costs and operating expenses                76,421        96.7 %            97,515       113.3 %

Income (loss) from operations                      2,570         3.3 %           (11,436 )     (13.3 )%

Other income (expense):
Loss from derivative liabilities                      -          0.0 %              (520 )      (0.6 )%
Interest income                                       21         0.0 %                69         0.1 %
Interest expense                                    (320 )      (0.4 )%             (485 )      (0.6 )%

Total other (expense)                               (299 )      (0.4 )%             (936 )      (1.1 )%

Income (loss) before income taxes                  2,271         2.9 %           (12,372 )     (14.4 )%
Income tax benefit                                   495         0.6 %                 9         0.0 %

Net income (loss)                                  2,766         3.5 %           (12,363 )     (14.4 )%

Preferred stock dividends                           (653 )      (0.8 )%               -          0.0 %

Net income available (loss attributable)
to common stockholders                      $      2,113         2.7 %      $    (12,363 )     (14.4 )%

(1) Cost of sales, labor, occupancy and store operating percentages are calculated using Company Stores revenue. All other line items are calculated using total revenue.

Revenue

(in 000's)



                                            12 Week           % of               12 Week           % of
                                         Period Ended         Total           Period Ended         Total
                                        October 6, 2009      Revenue         October 7, 2008      Revenue
Revenue:
Company stores                         $          77,493        98.1 %      $          84,427        98.1 %
Franchise and other revenue                        1,498         1.9 %                  1,652         1.9 %

Total revenue                          $          78,991       100.0 %      $          86,079       100.0 %

Total revenue decreased 8.2% to $79.0 million for the 12 week period ended October 6, 2009 compared to $86.1 million for the 12 week period ended October 7, 2008. The $7.1 million decrease in total revenue was attributable to a $6.9 million decrease in Company Store revenue and a $0.2 million decrease in franchise and other revenue.

The decrease in Company Store revenue was primarily attributable to a decrease in Company Store comparable sales of 5.3% for the 12 week period ended October 6, 2009 and was also affected by a net decrease of 32 Company Stores operating since the prior year period, which includes opening one new Company Store, acquiring 13 stores from a franchisee, closing 27 stores and refranchising 19 stores in connection with our refranchising initiative. The number of Company Stores decreased from 520 stores as of October 7, 2008 to 488 stores as of October 6, 2009. Company Store comparable sales represents the change in year-over-year sales for all Company Stores opened for at least 13 full fiscal periods.

The decrease in franchise and other revenue is primarily due to lower comparable franchise store sales and fewer franchise store openings in the third fiscal quarter of 2009 compared to the third quarter of fiscal 2008, resulting in lower franchise fees earned. These decreases were partially offset by an increase in franchise revenue resulting from a net increase of 25 franchise stores since the prior year period. The number of franchise stores as of October 6, 2009 was 254 as compared to 229 stores as of October 7, 2008.

Cost of sales

(in 000's)

                                           % of                             % of
                           12 Week        Company           12 Week        Company
                        Period Ended       Store         Period Ended       Store
                       October 6, 2009    Revenue       October 7, 2008    Revenue
      Cost of sales   $          19,282      24.9 %    $          22,746      26.9 %

Cost of sales is mostly comprised of fruit, dairy and other products used to make smoothies, as well as prepared food and paper products. Cost of sales decreased $3.4 million or 15.2% to $19.3 million for the 12 week period ended October 6, 2009 compared to $22.7 million for the prior year period. The decrease in cost of sales was primarily attributable to a net decrease of 32 Company Stores since the prior year period, cost savings initiatives implemented during late fiscal 2008 and a decrease in Company Store comparable sales, partially offset by increases resulting from our food offering. The decrease as a percentage of Company Store revenue to 24.9% in the third quarter of fiscal 2009 compared to 26.9% in the prior year period was primarily attributable to cost savings initiatives implemented during late fiscal 2008, a shift in product mix and reductions in waste through our food cost system, partially offset by increases related to products offered in our food offering.

Labor

(in 000's)



                                       % of                             % of
                       12 Week        Company           12 Week        Company
                    Period Ended       Store         Period Ended       Store
                   October 6, 2009    Revenue       October 7, 2008    Revenue
          Labor   $          23,612      30.5 %    $          28,124      33.3 %

Labor costs, which include store management salaries and bonuses, hourly team member payroll, training costs and other associated fringe benefits decreased $4.5 million or 16.0% to $23.6 million for the 12 week period ended October 6, 2009 compared to $28.1 million for the prior year period. The $4.5 million decrease was primarily attributable to optimization of our labor scheduling leading to more efficient labor management, a net decrease of 32 Company Stores since

the prior year period and lower staffing in stores due to a decrease in Company Store comparable sales. Labor costs as a percentage of Company Store revenue decreased to 30.5% in the third quarter of fiscal 2009 compared to 33.3% in the prior year period due primarily to optimization of labor scheduling leading to more efficient labor management partially offset by a decrease in Company Store comparable sales in the third quarter of fiscal 2009.

Occupancy

(in 000's)



                                                            % of                                 % of
                                          12 Week          Company             12 Week          Company
                                       Period Ended         Store           Period Ended         Store
                                      October 6, 2009      Revenue         October 7, 2008      Revenue
Rent                                 $           7,848                    $           8,473
Common area maintenance,
property taxes, licenses and
insurance                                        2,330                                2,206

Total occupancy                      $          10,178        13.1 %      $          10,679        12.6 %

Occupancy costs include both fixed and variable portions of rent, common area maintenance charges, property taxes and property insurance for all Company Store locations. Occupancy costs decreased $0.5 million or 4.7% to $10.2 million for the 12 week period ended October 6, 2009 compared to $10.7 million for the prior year period. Rent decreased $0.6 million due primarily to a net decrease of 32 Company Stores operating since the prior year period and benefits from rent reductions we received from certain landlords. The increase in common area maintenance fees, property taxes and insurance was primarily attributable to increased real estate taxes, partially offset by a net decrease of 32 Company Stores since the prior year period. As a percentage of Company Store revenue, occupancy costs increased to 13.1% in the third quarter of fiscal 2009 compared to 12.6% in the prior year period. This increase as a percentage of Company Store revenue was primarily due to deleverage resulting from a decrease in Company Store comparable sales.

Store operating

(in 000's)

                                                % of                             % of
                                12 Week        Company           12 Week        Company
                             Period Ended       Store         Period Ended       Store
                            October 6, 2009    Revenue       October 7, 2008    Revenue
 Utilities                 $           2,996                $           3,183
 Marketing                             1,878                            2,161
 Repairs and maintenance               1,379                            1,362
 Credit card fees                        923                              844
 Other                                 2,856                            3,171

 Total store operating     $          10,032      12.9 %    $          10,721      12.7 %

Store operating expenses consist primarily of various store-level costs such as utilities, marketing, repairs and maintenance, credit card fees and other. Store operating expenses decreased $0.7 million or 6.4% to $10.0 million for the 12 week period ended October 6, 2009 compared to $10.7 million for the prior year period. This decrease was primarily attributable to a $0.3 million decrease in marketing expenses, $0.2 million decrease in utilities due to a net decrease of 32 Company Stores since the prior year period and $0.3 million net decrease from other store operating expenses such as office supplies expense, printing expenses and contract services as a result of our cost savings initiatives, partially offset by increased donations. As a percentage of Company Store revenue, store operating expenses increased to 12.9% for the third quarter of fiscal 2009 compared to 12.7% in the prior year period. This increase as a percentage of Company Store revenue was primarily attributable to deleverage resulting from a decrease in Company Store comparable sales, partially offset by the net effect of reduced expenditures.

Depreciation and amortization

(in 000's)

                                          12 Week            % of                12 Week            % of
                                       Period Ended          Total            Period Ended          Total
                                      October 6, 2009       Revenue          October 7, 2008       Revenue
Depreciation and amortization        $           3,943          5.0 %       $           5,835          6.8 %

Depreciation and amortization expenses include the depreciation and amortization of fixed assets and the amortization of intangible assets. Depreciation and amortization decreased $1.9 million or 32.4% to $3.9 million for the 12 week period ended October 6, 2009 compared to $5.8 million for the prior year period. The $1.9 million decrease is primarily attributable to a net decrease of 32 Company Stores since the prior year period and impairment charges for certain stores previously taken in fiscal 2008 and to date through fiscal 2009. As a percentage of total revenue, depreciation and amortization decreased to 5.0% for the third quarter of fiscal 2009 compared to 6.8% in the prior year period. The decrease in depreciation and amortization as a percentage of revenue is primarily attributable to impairment charges previously taken for certain stores in fiscal 2008 and to date through fiscal 2009, partially offset by deleverage resulting from a decrease in Company Store comparable sales.

General and administrative

(in 000's)

                                          12 Week           % of               12 Week           % of
                                       Period Ended         Total           Period Ended         Total
                                      October 6, 2009      Revenue         October 7, 2008      Revenue
Wages and payroll related            $           5,253                    $           6,353
Outside and contract services                    1,058                                  632
Travel and travel-related                          690                                  717
Accounting and legal fees                          499                                  925
Share-based compensation                           334                                2,151
Other                                            1,005                                1,304

Total general and administrative     $           8,839        11.2 %      $          12,082        14.0 %

General and administrative ("G&A") expenses include costs associated with our corporate support center, field supervision, bonuses, outside and contract services, travel and travel-related expenses, legal and accounting fees, share-based compensation and other. G&A expenses decreased $3.3 million or 26.8% to $8.8 million for the 12 week period ended October 6, 2009 compared to $12.1 million for the prior year period. The $3.3 million decrease was primarily attributable to a $1.9 million reduction in share based compensation, resulting primarily from $2.2 million in share based compensation recorded in the prior year quarter for the acceleration of certain stock options and equity awards granted to a former executive officer of the Company. Also contributing to the $3.3 million decrease in G&A expenses was a $1.1 million reduction of wage and payroll related expenses, resulting from $1.2 million in severance costs related to workforce reductions recorded in the prior year period and headcount reductions implemented during fiscal 2008. Additional contributing factors include a reduction in accounting and legal fees and a reduction in other G&A expenses, partially offset by an increase in outside and contract services related to certain management initiatives. As a percentage of total revenue, G&A expenses decreased to 11.2% for the third quarter of fiscal 2009 compared to 14.0% for the prior year period. This decrease was primarily attributable to decreases in share-based compensation, wages and payroll related expenses, travel and travel-related expenses and accounting and legal fees which were partially offset by increases in outside and contract services and deleverage resulting from a decrease in Company Store comparable sales.

Impairment of long-lived assets

(in 000's)

                                          12 Week            % of                12 Week            % of
                                       Period Ended          Total            Period Ended          Total
                                      October 6, 2009       Revenue          October 7, 2008       Revenue
Impairment of long-lived assets      $             532          0.7 %       $           5,901          6.9 %

Long-lived assets are reviewed for impairment when indicators of impairment are present. Expected future cash flows associated with an asset, in addition to other quantitative and qualitative analyses, including certain assumptions about expected future operating performance and changes in economic conditions are the key factors in determining undiscounted future cash flows. If the sum of the undiscounted cash flows is less than the carrying value of the asset, we recognize an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset.

We recorded long-lived asset impairment expense of $0.5 million for the 12 week period ended October 6, 2009 compared to $5.9 million for the prior year period. As a percentage of total revenue, impairment of long-lived assets decreased to 0.7% for the 12 week period ended October 6, 2009, compared to 6.9% for the prior year period. Impairment charge for the 12 week period ended October 6, 2009 reflects the underperformance of fewer stores as compared to the prior year period.

Other operating

(in 000's)

                            12 Week         % of             12 Week         % of
                         Period Ended       Total         Period Ended       Total
                        October 6, 2009    Revenue       October 7, 2008    Revenue
     Other operating   $               3       0.0 %    $           1,427       1.7 %

Other operating expenses consist primarily of store closure and lease termination costs, pre-opening expense, losses on disposals, amortization of jambacard™ liability and income from jambacard breakage. Other operating expenses decreased $1.4 million to $3,000 for the 12 week period ended October 6, 2009 compared to $1.4 million for the prior year period. As a percentage of total revenue, other operating expenses were 0.0% for the third quarter of fiscal 2009 as compared to 1.7% in the prior year period. This $1.4 million decrease and decrease as a percentage of total revenue is primarily attributable to the $1.0 million expense incurred in the prior year quarter resulting from the write-off of loan origination fees and early termination fee with the lender of our previous credit facility and a $0.6 million decrease in loss on disposals.

Loss from derivative liabilities

(in 000's)

                                          12 Week            % of               12 Week               % of
                                        Period Ended         Total            Period Ended            Total
                                      October 6, 2009       Revenue         October 7, 2008          Revenue
Loss from derivative liabilities      $             -           0.0 %       $           (520 )          (0.6 )%

Loss from derivative liabilities decreased $0.5 million for the 12 week period ended October 6, 2009 compared to a loss of $0.5 million for the prior year period. No gain or loss from derivative liabilities was recorded as the warrants . . .