##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549





FORM 10-Q







|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the Quarterly Period Ended June 26, 2009

OR



| ̈ | Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
|- | -----------------------------------------------------------------------------------------

For the transition period from             to
            .

Commission file number: 000-31715





Jagged Peak, Inc.

(Exact Name of Registrant as Specified in Its Charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                         |  | 91-2007478                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

3000 Bayport Drive, Suite 250, Tampa, FL 33607

(Address of principal executive offices, including zip code)

(813) 637-6900

(Registrants telephone number, including area code)



(Former name or former address, if changed since last report)





Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  YES     ̈  NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web
site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large Accelerated Filer |  |  ̈ |  | Accelerated Filer         |  |  ̈
|                        |  |   | 
|Non-Accelerated Filer   |  |  ̈ |  | Smaller Reporting Company |  | x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act).    Yes   ̈    No  x

The Registrant has 14,677,594 shares of common stock outstanding as of August 6, 2009.









---

##### Table of Contents

Table of Contents

Jagged Peak, Inc.

Contents



|                               |  |                                                                                                                               |  |   
|------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------- |  | --
|Part I  Financial Information |  |                                                                                                                              
|                               |  |                                                                                                                              
|Item 1.                        |  | Financial Statements                                                                                                          |  | 1 
|                               |  |                                                                                                                              
|                               |  | Balance Sheets for the periods ended June 26, 2009 (unaudited) and December 26, 2008 (audited)                                |  | 1 
|                               |  |                                                                                                                              
|                               |  | Statements of Operations for the 13 and 26 week periods ended June 26, 2009 and June 27, 2008 (unaudited)                     |  | 2 
|                               |  |                                                                                                                              
|                               |  | Statement of Changes in Stockholders Equity for the 26 week period ended June 26, 2009 (unaudited)                           |  | 3 
|                               |  |                                                                                                                              
|                               |  | Statements of Cash Flows for the 26 week periods ended June 26, 2009 and June 27, 2008 (unaudited)                            |  | 4 
|                               |  |                                                                                                                              
|                               |  | Notes to the Unaudited Financial Statements for the 13 and 26 week periods ended June 26, 2009 and June 27, 2008 (unaudited). |  | 5 
|                               |  |                                                                                                                              
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                         |  | 14
|                               |  |                                                                                                                              
|Item 3.                        |  | Quantitative and Qualitative Disclosure About Market Risk                                                                     |  | 20
|                               |  |                                                                                                                              
|Item 4(T).                     |  | Controls and Procedures                                                                                                       |  | 20
|                               | 
|Part II  Other Information    |  |                                                                                                                              
|                               |  |                                                                                                                              
|Item 1.                        |  | Legal Proceedings                                                                                                             |  | 21
|                               |  |                                                                                                                              
|Item 1A.                       |  | Risk Factors                                                                                                                  |  | 21
|                               |  |                                                                                                                              
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                   |  | 21
|                               |  |                                                                                                                              
|Item 3.                        |  | Defaults Upon Senior Securities                                                                                               |  | 21
|                               |  |                                                                                                                              
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                                                           |  | 21
|                               |  |                                                                                                                              
|Item 5.                        |  | Other Information                                                                                                             |  | 21
|                               |  |                                                                                                                              
|Item 6.                        |  | Exhibits                                                                                                                      |  | 21
|                               |  |                                                                                                                              
|Signatures                     |  |                                                                                                                               |  | 21



---

##### Table of Contents

PART IFINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

Jagged Peak, Inc.

Balance Sheets



|                                                                                                                                               |  |                         |            |   |                           |   |            |  
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ---------- | - | ------------------------- | - | ---------- | -
|                                                                                                                                               |  | June 26,2009(Unaudited) |            |   | December 26,2008(Audited) |  
|Assets                                                                                                                                         |  |                         |            |   |                           |   |            |  
|Current assets:                                                                                                                                |  |                         |            |   |                           |   |            |  
|Cash                                                                                                                                           |  | $                       | 47,900     |   |                           | $ | 126,500    |  
|Accounts receivable, net of allowance for doubtful accounts of $250,000 and $230,000 at June 26, 2009 and December 26, 2008,
respectively      |  |                         | 1,026,300  |   |                           |   | 1,923,800  |  
|Other receivables                                                                                                                              |  |                         | 130,700    |   |                           |   | 135,000    |  
|Work in process, net of allowance of $30,000 at June 26, 2009 and December 26, 2008                                                            |  |                         | 122,800    |   |                           |   | 149,700    |  
|Deferred tax asset                                                                                                                             |  |                         | 128,600    |   |                           |   | 268,600    |  
|Other current assets                                                                                                                           |  |                         | 291,500    |   |                           |   | 443,800    |  
|                                                                                                                                               |  |                         |            |   |                           |   |            |  
|Total current assets                                                                                                                           |  |                         | 1,747,800  |   |                           |   | 3,047,400  |  
|                                                                                                                                               |  |                        
|Property and equipment, net of accumulated depreciation of $1,990,400 and $1,885,700 at June 26, 2009 and December 26, 2008,
respectively      |  |                         | 283,600    |   |                           |   | 327,400    |  
|                                                                                                                                               |  |                        
|Other assets:                                                                                                                                  |  |                         |            |   |                           |   |            |  
|EDGE and other applications, net of accumulated amortization of $1,340,400 and $1,318,100 at June 26, 2009 and December 26, 2008,
respectively |  |                         | 313,800    |   |                           |   | 79,400     |  
|Deferred tax asset                                                                                                                             |  |                         | 1,428,700  |   |                           |   | 1,138,700  |  
|                                                                                                                                               |  |                         |            |   |                           |   |            |  
|Total long-term assets                                                                                                                         |  |                         | 2,026,100  |   |                           |   | 1,545,500  |  
|                                                                                                                                               |  |                        
|Total assets                                                                                                                                   |  | $                       | 3,773,900  |   |                           | $ | 4,592,900  |  
|                                                                                                                                               |  |                         |            |   |                           |   |            |  
|                                                                                                                                               |  |                        
|Liabilities and Stockholders Equity                                                                                                           |  |                         |            |   |                           |   |            |  
|Current liabilities:                                                                                                                           |  |                         |            |   |                           |   |            |  
|Accounts payable, trade                                                                                                                        |  | $                       | 1,140,000  |   |                           | $ | 1,641,500  |  
|Accrued payroll and bonuses                                                                                                                    |  |                         | 305,300    |   |                           |   | 407,800    |  
|Other accrued expenses                                                                                                                         |  |                         | 53,800     |   |                           |   | 61,900     |  
|Revolving Note, $298,000 and $1,000,000 was available at June 26, 2009 and December 26, 2008, respectively                                     |  |                         | 177,100    |   |                           |   | 0          |  
|Deferred rent                                                                                                                                  |  |                         | 34,900     |   |                           |   | 34,900     |  
|Notes payable                                                                                                                                  |  |                         | 1,145,000  |   |                           |   | 1,415,000  |  
|Deferred revenue and customer deposits                                                                                                         |  |                         | 782,700    |   |                           |   | 600,200    |  
|                                                                                                                                               |  |                         |            |   |                           |   |            |  
|Total current liabilities                                                                                                                      |  |                         | 3,638,800  |   |                           |   | 4,161,300  |  
|                                                                                                                                               |  |                        
|Long-term liabilities:                                                                                                                         |  |                         |            |   |                           |   |            |  
|Deferred rent, long term                                                                                                                       |  |                         | 38,500     |   |                           |   | 57,200     |  
|                                                                                                                                               |  |                         |            |   |                           |   |            |  
|Total long-term liabilities                                                                                                                    |  |                         | 38,500     |   |                           |   | 57,200     |  
|                                                                                                                                               |  |                        
|Stockholders equity:                                                                                                                          |  |                         |            |   |                           |   |            |  
|Preferred stock, $.001 par value; 5,000,000 shares authorized; no shares issued or outstanding at June 26, 2009 and December 26,
2008          |  |                         |            |   |                           |   |            |  
|Common stock, $.001 par value; 70,000,000 shares authorized; 14,677,594 shares issued and outstanding at June 26, 2009 and
December 26, 2008   |  |                         | 14,800     |   |                           |   | 14,800     |  
|Additional paid-in capital                                                                                                                     |  |                         | 3,390,600  |   |                           |   | 3,388,400  |  
|Accumulated deficit                                                                                                                            |  |                         | (3,308,800 | ) |                           |   | (3,028,800 | )
|                                                                                                                                               |  |                         |            |   |                           |   |            |  
|Total stockholders equity                                                                                                                     |  |                         | 96,600     |   |                           |   | 374,400    |  
|                                                                                                                                               |  |                        
|Total liabilities and stockholders equity                                                                                                     |  | $                       | 3,773,900  |   |                           | $ | 4,592,900  |  
|                                                                                                                                               |  |                         |            |   |                           |   |            |  

The accompanying notes are an integral part of the financial statements.



1



---

##### Table of Contents

Jagged Peak, Inc.

Statements of Operations (Unaudited)



|                                                                             |  |                            |            |   |                              |   |            |               |  |   |               |   |  |   |            |  
|---------------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ---------------------------- | - | ---------- | ------------- |  | - | ------------- | - |  | - | ---------- | -
|                                                                             |  | Thirteen Week Period Ended |            |   | Twenty-Six Week Period Ended |  
|                                                                             |  | June 26, 2009              |            |   | June 27, 2008                |   |            | June 26, 2009 |  |   | June 27, 2008 |  
|                                                                             |  |                            |            |  
|Revenue                                                                      |  | $                          | 3,595,700  |   |                              | $ | 3,862,300  |               |  | $ | 7,603,500     |   |  | $ | 7,804,300  |  
|                                                                             |  |                            |            |  
|Cost of revenues                                                             |  |                            | 2,653,000  |   |                              |   | 2,755,700  |               |  |   | 5,637,900     |   |  |   | 5,763,900  |  
|                                                                             |  |                            |            |   |                              |   |            |               |  |   |               |   |  |   |            |  
|                                                                             |  |                            |            |  
|Gross profit                                                                 |  |                            | 942,700    |   |                              |   | 1,106,600  |               |  |   | 1,965,600     |   |  |   | 2,040,400  |  
|                                                                             |  |                            |            |   |                              |   |            |               |  |   |               |   |  |   |            |  
|                                                                             |  |                            |            |  
|Selling, general and administrative expenses                                 |  |                            | 1,039,700  |   |                              |   | 1,065,600  |               |  |   | 2,163,300     |   |  |   | 1,995,000  |  
|                                                                             |  |                            |            |   |                              |   |            |               |  |   |               |   |  |   |            |  
|                                                                             |  |                            |            |  
|Operating (loss) income                                                      |  |                            | (97,000    | ) |                              |   | 41,000     |               |  |   | (197,700      | ) |  |   | 45,400     |  
|                                                                             |  |                            |            |   |                              |   |            |               |  |   |               |   |  |   |            |  
|                                                                             |  |                            |            |  
|Interest expense                                                             |  |                            | 116,700    |   |                              |   | 138,700    |               |  |   | 231,900       |   |  |   | 265,400    |  
|                                                                             |  |                            |            |   |                              |   |            |               |  |   |               |   |  |   |            |  
|                                                                             |  |                            |            |  
|Loss before tax benefit                                                      |  |                            | (213,700   | ) |                              |   | (97,700    | )             |  |   | (429,600      | ) |  |   | (220,000   | )
|                                                                             |  |                            |            |   |                              |   |            |               |  |   |               |   |  |   |            |  
|                                                                             |  |                            |            |  
|Provision for income tax benefit                                             |  |                            | (81,100    | ) |                              |   | (29,600    | )             |  |   | (149,600      | ) |  |   | (66,400    | )
|                                                                             |  |                            |            |   |                              |   |            |               |  |   |               |   |  |   |            |  
|                                                                             |  |                            |            |  
|Net loss                                                                     |  | $                          | (132,600   | ) |                              | $ | (68,100    | )             |  | $ | (280,000      | ) |  | $ | (153,600   | )
|                                                                             |  |                            |            |   |                              |   |            |               |  |   |               |   |  |   |            |  
|                                                                             |  |                            |            |  
|Weighted average number of common shares outstanding  basic & fully diluted |  |                            | 14,677,594 |   |                              |   | 14,631,206 |               |  |   | 14,677,594    |   |  |   | 14,629,400 |  
|                                                                             |  |                            |            |   |                              |   |            |               |  |   |               |   |  |   |            |  
|                                                                             |  |                            |            |  
|Net loss per share  basic & fully diluted                                   |  | $                          | (0.01      | ) |                              | $ | (0.00      | )             |  | $ | (0.02         | ) |  | $ | (0.01      | )
|                                                                             |  |                            |            |   |                              |   |            |               |  |   |               |   |  |   |            |  

The accompanying notes are an integral part of the financial statements.



2



---

##### Table of Contents

Jagged Peak, Inc.

Statement of Changes in Stockholders Equity

26 Week Period Ended June 26,
2009 (Unaudited)



|                                                                               |  |              |  |                          |        |                    |   |           |       |   |            |   |  |   |          |  
|------------------------------------------------------------------------------ |  | ------------ |  | ------------------------ | ------ | ------------------ | - | --------- | ----- | - | ---------- | - |  | - | -------- | -
|                                                                               |  | Common Stock |  | AdditionalPaid inCapital |        | AccumulatedDeficit |   |           | Total |  
|                                                                               |  | Shares       |  | Amount                   |        |                    |  
|Balance, December 26, 2008                                                     |  | 14,677,594   |  | $                        | 14,800 |                    | $ | 3,388,400 |       | $ | (3,028,800 | ) |  | $ | 374,400  |  
|                                                                               |  |              |  |                          |       
|Amortization of officer, director, consultant and employee equity compensation |  |              |  |                          |        |                    |   | 2,200     |       |   |            |   |  |   | 2,200    |  
|                                                                               |  |              |  |                          |       
|Net loss for the period                                                        |  |              |  |                          |        |                    |   |           |       |   | (280,000   | ) |  |   | (280,000 | )
|                                                                               |  |              |  |                          |        |                    |   |           |       |   |            |   |  |   |          |  
|                                                                               |  |              |  |                          |       
|Balance, June 26, 2009                                                         |  | 14,677,594   |  | $                        | 14,800 |                    | $ | 3,390,600 |       | $ | (3,308,800 | ) |  | $ | 96,600   |  
|                                                                               |  |              |  |                          |        |                    |   |           |       |   |            |   |  |   |          |  

The accompanying notes are an integral part of the financial statements.



3



---

##### Table of Contents

Jagged Peak, Inc.

Statements of Cash Flows (Unaudited)



|                                                                                |  |                      |          |   |              |   |           |  
|------------------------------------------------------------------------------- |  | -------------------- | -------- | - | ------------ | - | --------- | -
|                                                                                |  | 26 Week Period Ended |         
|                                                                                |  | June 26,2009         |          |   | June 27,2008 |  
|Operating activities                                                            |  |                      |          |   |              |   |           |  
|Net loss                                                                        |  | $                    | (280,000 | ) |              | $ | (153,600  | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                      |          |   |              |   |           |  
|Depreciation and amortization                                                   |  |                      | 127,000  |   |              |   | 147,900   |  
|Non-cash consulting expense                                                     |  |                      |          |   |              |   | 4,000     |  
|Non-cash amortization of officers, director and employees equity compensation   |  |                      | 2,200    |   |              |   | 35,400    |  
|Amortization of warrants related to long term debt                              |  |                      | 160,700  |   |              |   | 160,700   |  
|Adjustment to allowance for bad debt expense                                    |  |                      | 72,300   |   |              |   | 44,600    |  
|Changes in:                                                                     |  |                      |          |   |              |   |           |  
|Accounts receivable                                                             |  |                      | 825,200  |   |              |   | 1,176,200 |  
|Work-in-process                                                                 |  |                      | 26,900   |   |              |   | (201,500  | )
|Other receivables                                                               |  |                      | 4,300    |   |              |   | 2,000     |  
|Other current assets                                                            |  |                      | (8,400   | ) |              |   | (33,300   | )
|Deferred tax asset and liability, net                                           |  |                      | (150,000 | ) |              |   | (66,400   | )
|Accounts payable                                                                |  |                      | (501,500 | ) |              |   | (389,800  | )
|Accrued payroll                                                                 |  |                      | (102,500 | ) |              |   | (157,500  | )
|Accrued expenses                                                                |  |                      | (8,100   | ) |              |   | (10,800   | )
|Deferred rent                                                                   |  |                      | (18,700  | ) |              |   | (13,700   | )
|Other liabilities                                                               |  |                      | 182,500  |   |              |   | 76,200    |  
|                                                                                |  |                      |          |   |              |   |           |  
|Net cash provided by operating activities                                       |  |                      | 331,900  |   |              |   | 620,400   |  
|                                                                                |  |                      |          |   |              |   |           |  
|                                                                                |  |                     
|Investing activities                                                            |  |                      |          |   |              |   |           |  
|Acquisition of property and equipment                                           |  |                      | (60,900  | ) |              |   | (99,200   | )
|Acquisition/development of software/ Edge platform                              |  |                      | (256,700 | ) |              |   | (20,700   | )
|                                                                                |  |                      |          |   |              |   |           |  
|Cash flows used by investing activities                                         |  |                      | (317,600 | ) |              |   | (119,900  | )
|                                                                                |  |                      |          |   |              |   |           |  
|                                                                                |  |                     
|Financing activities                                                            |  |                      |          |   |              |   |           |  
|Net proceeds and payments on the revolving note                                 |  |                      | 177,100  |   |              |   | (164,900  | )
|Payments on notes payable                                                       |  |                      | (270,000 | ) |              |   | (270,000  | )
|                                                                                |  |                      |          |   |              |   |           |  
|Cash flows used by financing activities                                         |  |                      | (92,900  | ) |              |   | (434,900  | )
|                                                                                |  |                      |          |   |              |   |           |  
|                                                                                |  |                     
|Net (decrease) increase in cash                                                 |  |                      | (78,600  | ) |              |   | 65,600    |  
|                                                                                |  |                     
|Cash, beginning of period                                                       |  |                      | 126,500  |   |              |   | 74,000    |  
|                                                                                |  |                      |          |   |              |   |           |  
|                                                                                |  |                     
|Cash, end of period                                                             |  | $                    | 47,900   |   |              | $ | 139,600   |  
|                                                                                |  |                      |          |   |              |   |           |  
|                                                                                |  |                     
|Supplemental disclosure of cash flow information                                |  |                      |          |   |              |   |           |  
|                                                                                |  |                     
|Cash paid during the period for taxes                                           |  | $                    |          |   |              | $ |           |  
|Cash paid during the period for interest                                        |  | $                    | 104,700  |   |              | $ | 100,700   |  

The accompanying notes are an integral part of the financial statements.



4



---

##### Table of Contents

Jagged Peak, Inc.

Notes to the Unaudited Financial Statements

For the 13 and 26-Week Periods Ended
June 26, 2009 and the 13 and

26-Week Periods Ended June 27, 2008

1. General Background Information

Jagged Peak, Inc. (the Company or Jagged Peak) is an
e-business software and services company headquartered in Tampa, Florida, providing Demand and Supply Chain management, CRM execution and e-Fulfillment solutions and services. The Companys flagship product, EDGE (E-Business Dynamic Global
Engine), is a web-based software application that enables companies to control and coordinate multi-channel orders, catalogs, multi-warehouse inventories, and fulfillment across multiple customers, suppliers, employees, and partners in real-time.
The Companys clients are able to build and operate custom branded portals such as e-commerce, incentive and rebate programs, customer service, repair and reverse logistics and automate other business processes through the use of the EDGE
application and its related tools. The EDGE platform has been deployed in multiple vertical markets such as consumer goods, financial services, distribution, travel and tourism and manufacturing.

Jagged Peaks multi-channel, enterprise EDGE application provides a comprehensive, integrated platform for e-business management that supports a broad range of
business and operational applications. Clients can use EDGE as an enterprise application or as an integrator and consolidator for multiple businesses, processes and applications. EDGE has built in tools to extend the application which enables
clients to create complex and robust e-commerce, CRM related customer services and repair and reverse logistics solutions. The EDGE application permits users to manage order capturing, processing, tracking, fulfillment, settlement, creating and
managing dynamic catalogs, customer relation management, marketing and reporting, all in real-time application. The EDGE application is built to industry-standard best practices. The application has been integrated seamlessly with legacy and
back-office management systems as well as industry leading ERP, WMS, TMS and CRM software systems. In addition to the traditional software license sales model, Jagged Peak offers its software with a flexible managed services transaction based
pricing model.

Jagged Peak provides outsourced e-commerce and supply chain solutions that enable manufacturers, distributors, and consumer brand companies
the ability to quickly and cost effectively establish and operate a direct to customer online business that is fully integrated with their offline sales channels. Jagged Peaks proven solutions provide companies the tools, expertise,
infrastructure and scalability they need to create and maximize their direct to customer sales channel potential without the risk and burden of managing it themselves. The Company uniquely provides companies the benefit of maintaining complete
control of the channel, ownership of the customer relationship and retention of the gross product margin normally lost to distributors, resellers and other trading partners.

Jagged Peak has a network of independently owned fulfillment warehouses throughout North America that enables its clients to provide better service to their customers, while lowering their overall delivery costs. The
EDGE application is able to automatically route the orders to the optimal warehouse based on an established set of factors such as service, cost and priority. This enables our clients to achieve their customer service goals while reducing cost and
internal infrastructure.

Effective January 1, 2003, the Company elected to change its fiscal year end to correspond to accounting periods based on a
52/53 week reporting year. Therefore, the periods ended June 26, 2009 and June 27, 2008 both consist of 13 and 26 weeks.



5



---

##### Table of Contents

2. Significant Accounting Policies

Basis of Presentation

In the opinion of management, all adjustments consisting of normal recurring adjustments
necessary for a fair statement of (a) the financial position at June 26, 2009, (b) the results of operations for the 13 and 26 weeks ended June 26, 2009 and June 27, 2008, (c) the statement of changes in
stockholders equity for the 26 week period ended June 26, 2009 and (d) cash flows for the 26 weeks ended June 26, 2009 and June 27, 2008, have been made.

The unaudited financial statements and notes are presented as permitted by Form 10-Q. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have been omitted. The accompanying statements and notes should be read in conjunction with the audited financial statements and notes of the Company for the 52-week period
ended December 26, 2008.

Use of Estimates

The
Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company reviews its estimates, including but not limited
to, capitalization of software, work in process, recoverability of long-lived assets, recoverability of prepaid expenses, valuation on deferred tax assets and allowance for doubtful accounts, on a regular basis and makes adjustments based on
historical experiences and existing and expected future conditions. These evaluations are performed and adjustments are made as information is available. Management believes that these estimates are reasonable and have been discussed with the audit
committee; however, actual results could differ from these estimates.

Revenue Recognition

Revenue from software license agreements is recognized when an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and
collectability is probable. In software arrangements that include more than one element, the Company allocates the total arrangement fee among the elements based on the relative fair value of each of the elements. Maintenance and support agreement
revenues are amortized over the contract period, which is usually one year.

Additional technology revenues are derived from software development services,
managed services, transaction fees, and consulting and customized technology assignments. Revenue from technology service arrangements and software development services is recognized as services are provided or on the percentage of completion method
for those arrangements with specified milestones. The percentage of completion is based on labor hours incurred to total labor hours expected to be incurred.

Revenue is also derived from fulfillment service arrangements. Services included under fulfillment arrangements include account services, shipping and handling, order processing, packaging, storage and reporting. These services are based on
established monthly charges as well as handling fees based on volume. Work in process represents unbilled costs and services. Shipping and handling costs are classified as cost of revenue.

Software and Development Enhancements

Software development costs,
including costs to develop software products or the software component of products to be marketed to external users, as well as software programs to be used solely to meet our



6



---

##### Table of Contents

internal needs, are accounted for in accordance with generally accepted accounting principles in the United States. Software and development enhancements
expenses include costs such as payroll and employee benefit costs associated with product development. The EDGE product platform, including the order management, the warehouse management and the transportation management systems are continually
being enhanced with new features and functions. Once technological feasibility of new features and functions is established, the cost incurred until release to production is capitalized and once in production the enhancements are amortized over a
three-year useful life.

There was approximately $171,800 capitalized during the 13 week period ended June 26, 2009 and approximately $256,700
capitalized during the 26 week period ended June 26, 2009 and there was no amount capitalized during the 13 week period ended June 27, 2008 and approximately $20,700 capitalized during the 26 week period ended June 27, 2008.
Amortization expense related to capitalized software and charged to operations for the 13 week and 26 week periods ended June 26, 2009 was approximately $15,300 and $22,300, respectively. Amortization expense related to capitalized software and
charged to operations for the 13 week and 26 week periods ended June 27, 2008 was approximately $27,600 and $49,500, respectively.

Cash and Cash
Equivalents

Cash and cash equivalents include cash on hand and investments in money market funds with high quality financial institutions. The Company
considers all highly liquid instruments purchased with a remaining maturity of less than three months at the time of purchase as cash equivalents.

Fiduciary Relationship

The Company has control of funds collected on behalf of customers and funds established by our customers, for the
payment of our customers incentive programs. These accounts totaled approximately $28,100 at June 27, 2008. There were no amounts in these accounts at June 26, 2009. Because the accounts represent funds held for customers and our
customers purposes, the cash and the corresponding liability for future payments are not shown on the financial statements.

Concentration of Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, are cash and cash equivalents and accounts receivables.

The majority of cash is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance
provided on such deposits. Generally, these deposits may be redeemed upon demand, and, therefore, bear minimal risk.

During the 26-week periods ended
June 26, 2009 and June 27, 2008, sales to one customer amounted to approximately $5,560,900 and $4,868,100, respectively, or 73% and 62% of total revenues, respectively. Accounts receivable from the same customer at June 26, 2009
amounted to approximately $354,200 or approximately 28% of the balance. Accounts receivable from two customers at June 27, 2008 amounted to approximately $567,200 or approximately 40% of the balance. This customer is a large international
company with more than one hundred brands and we continue to expand services to additional brands. The Company classifies all business done for all of this customers brands as one single customer for the concentration of risk calculation.

The Company extends credit to its various customers based on evaluation of the customers financial condition and ability to pay the Company in
accordance with the payment terms. The Company provides for estimated losses on accounts receivable considering a number of factors, including the overall aging of accounts receivables, customers payment history and the customers current
ability to pay its obligation.



7



---

##### Table of Contents

Based on managements review of accounts receivable and other receivables, an allowance for doubtful accounts of approximately $250,000 and $230,000 is
considered necessary as of June 26, 2009 and December 26, 2008, respectively. Although management believes that accounts receivable are recorded at their net realizable value, a 10% decline in historical collection rate would increase the
current bad debt expense for the period ended June 26, 2009 by approximately $10,000. We do not accrue interest on past due receivables.

Identified Intangible Assets

The Company reviews long-lived assets to be held and used for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be recoverable. If the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset is less than its carrying amount, the asset is
considered to be impaired. Impairment losses are measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future
cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset. For the 26-week period ended June 26, 2009 and June 27, 2008, there was no impairment of long-lived or intangible assets.

Property and Equipment

Property and equipment are recorded at cost
and depreciated on a straight-line basis over their estimated useful lives, principally three to ten years. Accelerated methods are used for tax depreciation. Maintenance and repairs are charged to operations when incurred. Betterments and renewals
are capitalized. When property and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operations. Equipment held under capital leases is
stated at the present value of the minimum lease payments and amortized on a straight-line basis over the estimated useful life of the asset.

Depreciation
is calculated by the straight-line method over the following estimated useful lives of the related assets:



|                                |  |           
|------------------------------- |  | ----------
|                                |  | Years     
|Furniture and equipment         |  | 3-7       
|Computer equipment and software |  | 1-4       
|Warehouse equipment             |  | 3-10      
|Leasehold improvements          |  | Lease term

Estimated Fair Value of Financial Instruments

The aggregated net fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain on-balance-sheet financial
instruments approximated their fair values. These financial instruments include cash and cash equivalents, receivables, payables, accrued expenses and short-term borrowings. Fair values were assumed to approximate carrying values for these financial
instruments since they are short-term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. The fair value of the Companys debt is estimated based upon the quoted market prices for the same
or similar issues or on the current rates offered to the Company for debt of the same remaining maturities.

Income Taxes

Deferred income tax assets and liabilities are recognized for the expected future tax consequences of events that have been reflected in the financial statements.
Deferred tax assets and liabilities are



8



---

##### Table of Contents

determined based on the differences between the book values and the tax bases of particular assets and liabilities and the tax effects of net operating loss
and capital loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in the tax rate is recognized as income or expense in the period that included the enactment date. Through its reverse acquisition of Absolute Glass, the Company acquired net operating losses for tax
purposes of approximately $2.4 million. Internal Revenue Code Sec. 382 places limitations on the utilization of the acquired net operating losses. Due to the limitation the Company has placed a full valuation against that asset of approximately
$900,000.

Stock-Based Compensation

Generally accepted
accounting principles in the United States require all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The Company is required to measure the
cost of employee services received in exchange for stock options and similar awards based on the grant-date fair value of the award and recognize this cost in the statement of operations over the period during which an employee is required to
provide service in exchange for the award.

Companies must choose among alternative valuation models and amortization assumptions. After assessing
alternative valuation models and amortization assumptions, the Company uses the Black-Scholes valuation model and has elected to use the ratable method to amortize compensation expense over the vesting period of the grant.

The value of each grant is estimated at the grant date using the Black-Scholes option model with the following weighted average assumptions for options granted in 2008:
the historical dividend rate of 0%; the risk-free interest rate of approximately 4%, for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant; the expected term of 5 years, which
was calculated based on the Companys historical pattern of options granted are expected to be outstanding; and expected volatility of 175%, which was calculated by review of the Companys historical activity as well as comparable peer
companies; and an option exercise experience rate for employees of 50% based on the Companys historical rate of employee options being forfeited prior to expiration or termination.

The value of each grant is estimated at the grant date using the Black-Scholes option model with the following weighted average assumptions for options granted in 2009: the historical dividend rate of 0%; the
risk-free interest rate of approximately 3.8%, for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant; the expected term of 5 years, which was calculated based on the
Companys historical pattern of options granted are expected to be outstanding; and expected volatility of 160%, which was calculated by review of the Companys historical activity as well as comparable peer companies; and an option
exercise experience rate for employees of 50% based on the Companys historical rate of employee options being forfeited prior to expiration or termination.

There were 100,000 options granted during the 26-week period ended June 26, 2009 and 125,000 options granted during the 26-week period ended June 27, 2008. As of June 26, 2009, there was approximately $15,000 of unrecognized
stock-based compensation expense related to nonvested stock options.



9



---

##### Table of Contents

The following table represents our nonvested stock option activity for the 26-week period ended June 26, 2009:



|                                      |  |                  |  |                                      |     
|------------------------------------- |  | ---------------- |  | ------------------------------------ | ----
|                                      |  | Number ofOptions |  | Weighted AverageGrant DateFair
Value
|                                      |  |                 
|Nonvested options - December 26, 2008 |  | 50,000           |  | $                                    | 0.19
|                                      |  |                 
|Granted                               |  | 100,000          |  | $                                    | 0.17
|Vested                                |  |                  |  |                                      |     
|Expired                               |  | 50,000           |  | $                                    | 0.19
|                                      |  |                  |  |                                      |     
|                                      |  |                 
|Nonvested options  June 26, 2009     |  | 100,000          |  | $                                    | 0.17
|                                      |  |                  |  |                                      |     

There was no aggregate intrinsic value of options outstanding at June 26, 2009, based on the Companys
closing stock price of $0.15 as of the last business day of the period ended June 26, 2009, which would have been received by the optionees had all options been exercised on that date. There was no aggregate intrinsic value of options
exercisable at June 26, 2009, based on the Companys closing stock price of $0.15 as of the last business day of the period ended June 26, 2009, which would have been received by the optionees had all options exercisable been
exercised on that date. There were no options exercised during the 26-weeks ended June 26, 2009 and June 27, 2008.

Earnings per Share

Basic earnings per share are computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted
earnings per common share are computed by dividing net income by the weighted average number of shares of common stock outstanding and dilutive options outstanding during the year. The weighted average number of shares was approximately 14,677,594
and 14,629,400 for the 26-week periods ended June 26, 2009 and June 27, 2008, respectively. The diluted weighted average number of shares was approximately 14,990,527 and 14,949,349 for the 26-week periods ended June 26, 2009 and
June 27, 2008, respectively.

Common stock equivalents for the 26-week periods ended June 26, 2009 and June 27, 2008 were anti-dilutive due
to the net losses sustained by the Company during these periods. Therefore, the diluted weighted average common shares outstanding for the dilutive weighted average share calculation in the periods ended June 26, 2009 and June 27, 2008
excludes approximately 312,933 and 319,949 shares that could dilute earnings per share in future periods, respectively.

Recently Issued Financial
Accounting Standards

In June 2009, the Financial Accounting Standards Board (FASB) issued SFAS No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principlesa replacement of FASB Statement No. 162, (SFAS 168). SFAS 168 replaces SFAS No. 162, The Hierarchy of Generally Accepted Accounting
Principles, and establishes the FASB Accounting Standards Codification (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial
statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB will no longer issue
new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead the FASB will issue Accounting Standards Updates. Accounting Standards Updates will not be authoritative in their own right as they will
only serve



10



---

##### Table of Contents

to update the Codification. The issuance of SFAS 168 and the Codification does not change GAAP. SFAS 168 becomes effective for the Company for the period
ending September 25, 2009. The adoption of SFAS 168 will not have an impact on the financial statements.

In May 2009, the FASB issued SFAS
No. 165, Subsequent Events (SFAS 165), which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date, but before the financial statements are issued or
available to be issued (subsequent events). SFAS 165 requires disclosure of the date through which the entity has evaluated subsequent events and the basis for that date. For public entities, this is the date the financial
statements are issued. SFAS 165 does not apply to subsequent events or transactions that are within the scope of other GAAP and will not result in significant changes in the subsequent events reported by the Company. SFAS 165 is effective
for interim or annual periods ending after June 15, 2009. The Company implemented SFAS 165 during the quarter ended June 26, 2009. The Company evaluated for subsequent events through August 7, 2009, the issuance date of the
Companys financial statements.

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R), (SFAS
167). SFAS 167 amends FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entitiesan interpretation of ARB No. 51, (FIN 46(R)) to require an enterprise to perform an analysis to
determine whether the enterprises variable interest or interests give it a controlling financial interest in a variable interest entity; to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable
interest entity; to eliminate the quantitative approach previously required for determining the primary beneficiary of a variable interest entity; to add an additional reconsideration event for determining whether an entity is a variable interest
entity when any changes in facts and circumstances occur such that holders of the equity investment at risk, as a group, lose the power from voting rights or similar rights of those investments to direct the activities of the entity that are most
significantly impact the entitys economic performance; and to require enhanced disclosures that will provide users of financial statements with more transparent information about an enterprises involvement in a variable interest entity.
SFAS 167 becomes effective for the Company on January 1, 2010. Management is currently evaluating the potential impact of SFAS 167 on the financial statements.

Other recent accounting pronouncements issued by FASB (including EITF), the AICPA and the SEC did not or are not believed by management to have a material impact on the Companys present or future financial
statements.

3. Other Assets

Other
assets consist of:



|                                                  |  |               |         |                   |   |        
|------------------------------------------------- |  | ------------- | ------- | ----------------- | - | -------
|                                                  |  | June 26, 2009 |         | December 26, 2008
|Capitalized debt cost                             |  | $             | 147,300 |                   | $ | 308,400
|                                                  |  |              
|Current portion classified as other current asset |  |               | 147,300 |                   |   | 308,400
|                                                  |  |               |         |                   |   |        
|                                                  |  | $             | 0       |                   | $ | 0      
|                                                  |  |               |         |                   |   |        

4. Equity

Common Stock

Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends
whenever funds are legally available and when declared by the Board of Directors (the Board), subject to the prior rights of the holders of all classes of stock outstanding. The Company records stock as issued when the consideration is
received or the obligation is incurred.



11



---

##### Table of Contents

The Companys 2005 Stock Incentive Plan, as amended in July 2008, (the Plan) grants the Board of
Directors the authority to grant up to 5,000,000 options to key employees, officers, directors, and consultants. The aggregate fair market value of grants to one individual shall not exceed $100,000 during any one calendar year for grants of both
incentive stock options and non-qualified stock options. Options granted under the Plan must be exercised within ten years of the date of grant. The Option Price payable for the shares of Common Stock covered by any Option shall be determined by the
Board of Directors, but with regards to Incentive Stock Options, shall not be less than the Fair Market Value of one share of Common Stock on the Date of Grant. The Option Price for Nonstatutory Options may be less than the Fair Market Value of
Common Stock on the Date of Grant only if the Board determines that special circumstances warrant a lower exercise price.

The Companys 2000 Stock
Incentive Plan authorizes up to 100,000 shares of common stock to any employee or Consultant during any one calendar year for grants of both incentive stock options and non-qualified stock options to key employees, officers, directors, and
consultants. Options granted under the Plan must be exercised within ten years of the date of grant. The Option Price payable for the shares of Common Stock covered by any Option shall be determined by the Board of Directors, but shall in no event
be less than the par value of Common Stock. The Option Price for Incentive Stock Options shall not be less than the Fair Market Value of one share of Common Stock on the Date of Grant. The Option Price for Nonstatutory Options may be less than the
Fair Market Value of Common Stock on the Date of Grant only if the Board determines that special circumstances warrant a lower exercise price.

The following summarizes the Companys stock option and warrant activity and related information:



|                                               |  |           |   |  |                         |             |                                |   |     
|---------------------------------------------- |  | --------- | - |  | ----------------------- | ----------- | ------------------------------ | - | ----
|                                               |  | Shares    |   |  | Range of ExercisePrices |             | Weighted AverageExercise Price
|                                               |  |           |  
|Outstanding at December 28, 2007               |  | 4,389,898 |   |  | $                       | 0.01 -2.50  |                                | $ | 0.84
|Warrants, Convertible Debt and options granted |  | 125,000   |   |  | $                       | 0.30 - 0.50 |                                | $ | 0.38
|Warrants and options cancelled or expired      |  | (615,000  | ) |  | $                       | 0.55-1.00   |                                | $ | 0.98
|                                               |  |           |   |  |                         |             |                                |   |     
|                                               |  |           |  
|Outstanding at December 26, 2008               |  | 3,899,898 |   |  | $                       | 0.01-2.50   |                                | $ | 0.80
|                                               |  |           |  
|Warrants, Convertible Debt and options granted |  | 100,000   |   |  | $                       | 0.25        |                                | $ | 0.25
|Warrants and options cancelled or expired      |  | (367,058  | ) |  | $                       | 0.50-1.28   |                                | $ | 0.97
|                                               |  |           |   |  |                         |             |                                |   |     
|                                               |  |           |  
|Outstanding at June 26, 2009                   |  | 3,632,840 |   |  | $                       | 0.01-2.50   |                                | $ | 0.77
|                                               |  |           |  
|Exercisable at June 26, 2009                   |  | 3,532,840 |   |  | $                       | 0.01-2.50   |                                | $ | 0.78
|Exercisable at December 26, 2008               |  | 3,849,898 |   |  | $                       | 0.01-2.50   |                                | $ | 0.80



12



---

##### Table of Contents

The following table summarizes information about options and warrants outstanding and exercisable as of
June 26, 2009:



|                        |  |                                  |  |                                  |  |                      |      |                               |            |                   |           |                      |   |     
|----------------------- |  | -------------------------------- |  | -------------------------------- |  | -------------------- | ---- | ----------------------------- | ---------- | ----------------- | --------- | -------------------- | - | ----
|                        |  | Outstanding Warrants and Options |  | Exercisable Warrants and Options
|Range of Exercise Price |  | NumberOutstanding                |  | WeightedAverageRemainingLife     |  | WeightedAveragePrice |      | WeightedAverageRemaining Life |            | NumberExercisable |           | WeightedAveragePrice
|                        |  |                                  |  |                                  |  |                     
|$0.01                   |  | 334,899                          |  | 1.8 years                        |  | $                    | 0.01 |                               | 1.8 years  |                   | 334,899   |                      | $ | 0.01
|$0.25-0.77              |  | 1,618,529                        |  | 2.3 years                        |  | $                    | 0.59 |                               | 2.1 years  |                   | 1,518,529 |                      | $ | 0.61
|$1.00-2.50              |  | 1,679,412                        |  | 0.83 years                       |  | $                    | 1.09 |                               | 0.83 years |                   | 1,679,412 |                      | $ | 1.09

As of June 26, 2009 and December 26, 2008, there were 3,532,840 and 3,849,898 options exercisable at a
weighted average exercise price of $0.78 and $0.80, respectively. The weighted average fair value of options at the date of grant of the options was $0.27 and $0.27 for 2009 and 2008, respectively.

5. Related Party Transaction

The Company contracted with Norco
Accounting and Consulting Inc. (Norco) to provide accounting and consulting services. The Company spent approximately $12,900 and $15,000 during the 26-week periods ended June 26, 2009 and June 27, 2008, respectively. Norco is
50% owned by Andrew J. Norstrud, who joined the Company in October of 2005, as the Companys Chief Financial Officer. The Company continues to occasionally use Norco for temporary accounting staffing needs under the contract signed prior to
Andrew J. Norstrud joining the Company.

The above related party transactions are not necessarily indicative of the amounts and terms that would have been
incurred had comparable transactions been entered into with independent parties.

6. Subsequent Events

In July 2009, Jagged Peak Canada, Inc, a wholly owned subsidiary of Jagged Peak, Inc, began operations in Canada.

In August of 2008, the Company expanded its leased warehouse space into the adjacent building. The adjacent space is approximately 17,000 square feet with a monthly rent
expense of approximately $8,000. The Company has decided not to extend the lease for the adjacent space beyond August of 2009 and has ceased using that facility as of July 31, 2009.



13



---

##### Table of Contents

PART I  FINANCIAL INFORMATION



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS ANTICIPATED, BELIEVE, EXPECT, PLAN, INTEND, SEEK, ESTIMATE,
PROJECT, WILL, COULD, MAY, AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL
EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANYS CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND
BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER
MATTERS, MANY OF WHICH ARE BEYOND THE COMPANYS CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED,
BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.

The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes
appearing elsewhere herein. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives and performance that involve risk,
uncertainties and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional
license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements. The following discussions should be
read in conjunction with our financial statements and the notes thereto presented in Item 1  Financial Statements and our audited financial statements and the related Managements Discussion and Analysis of Financial Condition
and Results of Operations included in our report on Form 10-K for the year ended December 26, 2008.

Background of our Company

Jagged Peak, Inc. (the Company or Jagged Peak) is an e-business software and services company headquartered in Tampa, Florida, providing Demand
and Supply Chain management, CRM execution and e-Fulfillment solutions and services. The Companys flagship product, EDGE (E-Business Dynamic Global Engine), is a web-based software application that enables companies to control and coordinate
multi-channel orders, catalogs, multi-warehouse inventories, and fulfillment across multiple customers, suppliers, employees, and partners in real-time. The Companys clients are able to build and operate custom branded portals such as
e-commerce, incentive and rebate programs, customer service, repair and reverse logistics and automate other business processes through the use of the EDGE application and its related tools. The EDGE platform has been deployed in multiple vertical
markets such as consumer goods, financial services, distribution, travel and tourism and manufacturing.

Jagged Peaks multi-channel, enterprise EDGE
application provides a comprehensive, integrated platform for e-business management that supports a broad range of business and operational applications. Clients can use EDGE as an enterprise application or as an integrator and consolidator for
multiple businesses, processes and applications. EDGE has built in tools to extend the application which enables clients to create complex and robust e-commerce, CRM related customer services and repair and reverse logistics solutions. The EDGE
application permits users to manage order capturing, processing, tracking, fulfillment, settlement, creating and managing dynamic catalogs, customer relation management, marketing and reporting, all in real-time application. The EDGE application is
built to industry-standard best practices. The application has been integrated seamlessly with legacy and back-office management



14



---

##### Table of Contents

systems as well as industry leading ERP, WMS, TMS and CRM software systems. In addition to the traditional software license sales model, Jagged Peak offers
its software with a flexible managed services transaction based pricing model.

Jagged Peak provides outsourced e-commerce and supply chain solutions that
enable manufacturers, distributors, and consumer brand companies the ability to quickly and cost effectively establish and operate a direct to customer online business that is fully integrated with their offline sales channels. Jagged Peaks
proven solutions provide companies the tools, expertise, infrastructure and scalability they need to create and maximize their direct to customer sales channel potential without the risk and burden of managing it themselves. The Company uniquely
provides companies the benefit of maintaining complete control of the channel, ownership of the customer relationship and retention of the gross product margin normally lost to distributors, resellers and other trading partners.

Jagged Peak has a network of independently owned fulfillment warehouses throughout North America that enables its clients to provide better service to their customers,
while lowering their overall delivery costs. The EDGE application is able to automatically route the orders to the optimal warehouse based on an established set of factors such as service, cost and priority. This enables our clients to achieve their
customer service goals while reducing cost and internal infrastructure.

There are a variety of risks associated with the Companys ability to achieve
strategic objectives, including the ability to increase market penetration, acquire and profitably manage additional businesses, current reliance on key customers, the risks inherent in expanding, and the intense competition in the industry. For a
more detailed discussion of these risks, see the section of our December 26, 2008 annual report filed with the SEC under Item 1A entitled Risks Particular to The Companys Business.

RESULTS OF OPERATIONS

For the 13-week period ended
June 26, 2009 compared to the 13-week period ended June 27, 2008

Revenues decreased approximately $266,600, or 7%, to approximately
$3,595,700 for the 13-week period ended June 26, 2009, as compared to approximately $3,862,300 for the 13-week period ended June 27, 2008. The decrease in revenue primarily related to (i) the decline in the overall economy,
(ii) distribution of transactions to network warehouses, and (iii) lower technology services.

Costs of revenue, which consist primarily of
labor, software amortization, technology, facilities, postage, freight, and packing supplies, decreased by approximately $102,700, or 4%, to approximately $2,653,000 for the 13-week period ended June 26, 2009, as compared to approximately
$2,755,700 for the 13-week period ended June 27, 2008. As a percentage of revenues, cost of revenue amounted to approximately 74% of related revenues for the 13-week period ended June 26, 2009, as compared with approximately 71% for the
13-week period ended June 27, 2008. The decrease in cost of revenue and the increase as a percentage of revenue resulted primarily from (i) the decrease in revenue due to the decline in the overall economy, (ii) lower technology
revenue, and (iii) the costs related to the establishment of two new network warehouses. Executive management continues to change the infrastructure and production methods, and to develop technology enhancements to enable the Company to
continue to increase productivity without significant additional resources and to allow the Company to better capitalize on economies of scale as revenues increase.

Selling, general and administrative expense decreased by approximately $25,900, or 2%, to approximately $1,039,700 for the 13-week period ended June 26, 2009 as compared to approximately $1,065,600 for the
13-week period ended June 27, 2008. The decrease was primarily related to (i) elimination of certain administrative costs, (ii) focusing marketing efforts on the core business, and (iii) adjustments in spending budgets to reflect
the current revenue pattern. Management will continue to adjust administrative resources to focus on sales and marketing activities to enable the Company to grow without significant increases in general and administrative expenses.



15



---

##### Table of Contents

The Company realized a loss from continuing operations before provisions for income taxes of approximately $213,700 for
the 13-week period ended June 26, 2009, compared with the loss from continuing operations before provisions for income taxes of approximately $97,700 for the 13-week period ended June 27, 2008.

The income tax benefit was approximately $81,100 for the 13-week period ended June 26, 2009 compared to an income tax benefit of approximately $29,600 for the
13-week period ended June 27, 2008. Differences between the effective tax rate used for 2009 and 2008, as compared to the U.S. federal statutory rate, are primarily due to permanent differences. As of June 26, 2009 the Company had federal
and state net operating loss carry-forwards totaling approximately $1,689,900, which begin to expire in 2021.

Basic loss per share from continuing
operations for the 13-week period ended June 26, 2009 was $0.01 per weighted average share, compared with basic loss of $0.00 per weighted average share for the 13-week period ended June 27, 2008.

For the 26-week period ended June 26, 2009 compared to the 26-week period ended June 27, 2008

Net revenues decreased approximately $200,800, or 3%, to approximately $7,603,500 for the 26-week period ended June 26, 2009, as compared to approximately $7,804,300
for the 26-week period ended June 27, 2008. The decrease in revenue primarily related to (i) the decline in the overall economy, (ii) distribution of transactions to network warehouses, and (iii) lower technology services.

Costs of revenue, which consist primarily of labor, software amortization, technology, facilities, postage, freight, and packing supplies, decreased by
approximately $126,000, or 2%, to approximately $5,637,900 for the 26-week period ended June 26, 2009, as compared to approximately $5,763,900 for the 26-week period ended June 27, 2008. As a percentage of revenues, cost of sales amounted
to approximately 74% of related revenues for the 26-week period ended June 26, 2009, as compared with approximately 74% for the 26-week period ended June 27, 2008. The decrease in cost of revenue resulted primarily from (i) the
decrease in overall revenue, and (ii) the decrease in technology revenue. Executive management continues to change the infrastructure and production methods, and to develop technology enhancements to enable the Company to continue to increase
productivity without significant additional resources and to allow the Company to better capitalize on economies of scale as revenues increase.

Selling,
general and administrative expense increased by approximately $168,300, or 8%, to approximately $2,163,300 for the 26-week period ended June 26, 2009 as compared to approximately $1,995,000 for the 26-week period ended June 27, 2008. The
increase was primarily related to (i) increased staffing during the first quarter to support the expected continued growth in revenue, and (ii) increased marketing efforts. Management will continue to adjust administrative resources to
focus on sales and marketing activities to enable the Company to grow without significant increases in general and administrative expenses.

The Company
realized a loss from continuing operations before provisions for income taxes of approximately $429,600 for the 26-week period ended June 26, 2009, compared with the loss from continuing operations before provisions for income taxes of
approximately $220,000 for the 26-week period ended June 27, 2008.

The income tax benefit was approximately $149,600 for the 26-week period ended
June 26, 2009 compared to an income tax benefit of approximately $66,400 for the 26-week period ended June 27, 2008. Differences between the effective tax rate used for 2009 and 2008, as compared to the U.S. federal statutory rate, are
primarily due to permanent differences. As of June 26, 2009 the Company had federal and state net operating loss carry-forwards totaling approximately $1,689,900, which begin to expire in 2021.



16



---

##### Table of Contents

Basic loss per share from continuing operations for the 26-week period ended June 26, 2009 was $0.02 per weighted
average share, compared with basic loss of $0.01 per weighted average share for the 26-week period ended June 27, 2008.

Critical Accounting
Policies and Estimates

Use of Estimates

The
Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company reviews its estimates, including but not limited
to, capitalization of software, work in process, recoverability of long-lived assets, recoverability of prepaid expenses, valuation on deferred tax assets and allowance for doubtful accounts, on a regular basis and makes adjustments based on
historical experiences and existing and expected future conditions. These evaluations are performed and adjustments are made, as information is available. Management believes that these estimates are reasonable and have been discussed with the audit
committee; however, actual results could differ from these estimates.

Revenue Recognition

Revenue from software license agreements is recognized when an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and
collectability is probable. In software arrangements that include more than one element, the Company allocates the total arrangement fee among the elements based on the relative fair value of each of the elements. Maintenance and support agreement
revenues are amortized over the contract period, which is usually one year.

Additional technology revenues are derived from software development services,
managed services, transaction fees, and consulting and customized technology assignments. Revenue from technology service arrangements and software development services is recognized as services are provided or on the percentage of completion method
for those arrangements with specified milestones. The percentage of completion is based on labor hours incurred to total labor hours expected to be incurred.

Revenue is also derived from fulfillment service arrangements. Services included under fulfillment arrangements include account services, shipping and handling, order processing, packaging, storage and reporting. These services are based on
established monthly charges as well as handling fees based on volume. Work in process represents unbilled costs and services. Shipping and handling costs are classified as cost of revenue.

Concentration of Risk

Financial instruments, which potentially
subject the Company to concentrations of credit risk, are cash and cash equivalents and accounts receivables.

The majority of cash is maintained with a
major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand, and, therefore, bear minimal risk.

During the 26-week periods ended June 26, 2009 and June 27, 2008, sales to one customer amounted to approximately $5,560,900 and $4,868,100, respectively, or
73% and 62% of total revenues, respectively. Accounts receivable from the same customer at June 26, 2009 amounted to approximately $354,200, or approximately 28% of the balance. Accounts receivable from two customers at June 27, 2008
amounted



17



---

##### Table of Contents

to approximately $567,200 or approximately 40% of the balance. This customer is a large international company with more than one hundred brands and we
continue to expand services to additional brands. The Company classifies all business done for all of this customers brands as one single customer for the concentration of risk calculation.

The Company extends credit to its various customers based on evaluation of the customers financial condition and ability to pay the Company in accordance with the
payment terms. The Company provides for estimated losses on accounts receivable considering a number of factors, including the overall aging of accounts receivables, customers payment history and the customers current ability to pay its
obligation. Based on managements review of accounts receivable and other receivables, an allowance for doubtful accounts of approximately $250,000 and $230,000 is considered necessary as of June 26, 2009 and December 26, 2008,
respectively. Although management believes that accounts receivable are recorded at their net realizable value, a 10% decline in historical collection rate would increase the current bad debt expense for the period ended June 26, 2009 by
approximately $10,000. We do not accrue interest on past due receivables.

Income Taxes

Deferred income tax assets and liabilities are recognized for the expected future tax consequences of events that have been reflected in the financial statements.
Deferred tax assets and liabilities are determined based on the differences between the book values and the tax bases of particular assets and liabilities and the tax effects of net operating loss and capital loss carry forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the
tax rate is recognized as income or expense in the period that included the enactment date. Through its reverse acquisition with Absolute Glass, the Company acquired net operating losses for tax purposes of approximately $2.4 million. Internal
Revenue Code Sec. 382 places limitations on the utilization of the acquired net operating losses. Due to the limitation the Company has placed a full valuation against that asset of approximately $900,000.

EBITDA

EBITDA for the 26-week period ended June 26, 2009 was
negative by approximately $70,700 compared to approximately $193,300 in the comparable period of the prior year. The decrease in the EBITDA directly relates to the increase of selling, general and administrative expenses and decreased revenue. The
Company defines EBITDA as earnings before interest, taxes, depreciation and amortization costs. The Company also excludes the cumulative effect of a change in accounting principle, discontinued operations, and the impact of restructuring and other
charges from the computation. The Company believes EBITDA is a useful measure of operating performance before the impact of investing and financing transactions, making comparisons between companies earnings power more meaningful and providing
consistent comparisons of the Companys performance. In order to provide consistent comparisons of year-over-year EBITDA, the following reconciliation is provided.



|                              |  |                        |          |   |              |   |          |  
|----------------------------- |  | ---------------------- | -------- | - | ------------ | - | -------- | -
|                              |  | For the 26-weeks ended |         
|                              |  | June 26,2009           |          |   | June 27,2008 |  
|                              |  |                       
|Net loss as reported          |  | $                      | (280,000 | ) |              | $ | (153,600 | )
|                              |  |                       
|Income tax benefit            |  |                        | (149,600 | ) |              |   | (66,400  | )
|                              |  |                       
|Interest expense              |  |                        | 231,900  |   |              |   | 265,400  |  
|                              |  |                       
|Depreciation and amortization |  |                        | 127,000  |   |              |   | 147,900  |  
|                              |  |                        |          |   |              |   |          |  
|                              |  |                       
|EBITDA                        |  | $                      | (70,700  | ) |              | $ | 193,300  |  
|                              |  |                        |          |   |              |   |          |  



18



---

##### Table of Contents

USE OF GAAP AND NON-GAAP MEASURES

In addition to results presented in accordance with generally accepted accounting principles (GAAP), the Company has included in this report earnings EBITDA, with EBITDA being defined by the
Company as earnings before interest, taxes, depreciation and amortization. The Company also excludes the cumulative effect of a change in accounting principle, discontinued operations, and the impact of restructuring and other charges from the
computation of EBITDA, when applicable. For each non-GAAP financial measure, the Company has presented the most directly comparable GAAP financial measure and has reconciled the non-GAAP financial measure with such comparable GAAP financial measure.

These non-GAAP financial measures provide useful information to investors to assist in understanding the underlying operational performance of the
Company. Specifically, EBITDA is a useful measure of operating performance before the impact of investing and financing transactions, making comparisons between companies earnings power more meaningful and providing consistent
period-over-period comparisons of the Companys performance. In addition, the Company uses these non-GAAP financial measures internally to measure its on-going business performance and in reports to bankers to permit monitoring of the
Companys ability to pay outstanding liabilities.

LIQUIDITY AND CAPITAL RESOURCES

As of June 26, 2009 the Company had approximately $1,891,000 of negative working capital and has cash and cash equivalents of approximately $47,900, compared with
approximately $126,500 of cash and cash equivalents at December 26, 2008. The primary reason for the negative working capital is the classification of the note payable as short term and the normal seasonality of our sales cycle which decreases
our account receivable. The final payment of the note is due in December of 2009 and management expects to refinance this debt, however because of the pre-payment penalty, management does not believe it is in the best interest of the Company to
complete this refinancing early.

During the 26-week period ended June 26, 2009 cash decreased by approximately $78,600. This change was primarily
caused by the significant investing activities and the repayment of debt. Operations generated approximately $331,900 of cash, which was primarily effected by (i) losses from operations, (ii) decrease in accrued salaries, and
(iii) decrease in accounts payable, however was off-set by (iv) the significant decrease in the accounts receivable, (v) non-cash expenses, including but not limited to amortization related to long term debt, depreciation and
amortization, and (vi) other changes in assets and liabilities. Management expects to have positive cash flow from operations going forward, except in periods when the accounts receivable and work in process balances significantly increase
based on revenue growth. Management has approximately $298,000 on the line of credit available at June 26, 2009 for any short term cash needs.

The
Company has purchased approximately $60,900 of computer and warehouse equipment and invested approximately $256,700 in the development and enhancement of the Companys core applications during the 26 week period ended June 26, 2009. In
addition, the Company reduced its overall debt by approximately $92,900 during the 26 week period ended June 26, 2009.



19



---

##### Table of Contents

Management expects that positive cash flow from operations will allow the Company to continue to make payments on the
note payable according to the terms of the loan agreement. Management expects to obtain additional financing to make the final balloon payment of $920,000, due in December of 2009. Based on the cash flow from operations and the Companys past
history, management believes the Company will be able to find financing with reasonable terms. Management does not expect to start the process of obtaining the additional debt until the end of the third or fourth quarter, primarily due to the
significant prepayment penalty of the current note payable. If the Company is unable to obtain the necessary financing from a conventional bank or other debt investor, it is highly likely that the current shareholders would be significantly diluted
if the Company was required to refinance the debt with additional convertible debt at the current market price of the stock.

The Company has embarked on
marketing activities, upgrades to technology and increases to infrastructure that it believes will enhance cash flows and business opportunities in the future. In addition, the Company uses its warehouse to provide a portion of its e-fulfillment
services. When the Company outgrows the capabilities of this warehouse facility, the Company may elect to outsource these additional fulfillment service arrangements to other warehouse services providers, or elect to add additional warehouse space.
There is no assurance that we will be able to obtain financing on terms favorable to the Company or successfully implement infrastructure growth strategies.

Our strategy is to continue to expand primarily through internal development, which will depend on a number of factors that are beyond our control. There can be no assurance that we will be successful in implementing our growth strategy or
in obtaining adequate financing on favorable terms for these strategies.

From time to time the Company may become a defendant in legal proceedings in the
normal course of business. Since the Company has not established a reserve in connection with such claims or any general reserve for legal expenses or claims, any such liability, if at all, would be recorded as an expense in the period incurred or
estimated. This amount, even if not material to the Companys overall financial condition, could adversely affect the Companys results of operations in the period recorded.

SEASONALITY

Historically, the Companys revenues and profitability have been subject to moderate quarterly
seasonal trends. The first quarter has traditionally been the weakest and the fourth quarter has traditionally been the strongest. Typically, this pattern has been the result of factors such as, national holidays, customer demand and economic
conditions. Additionally, significant portions of the Companys revenues are from clients whose business levels are impacted by seasonality and the economy.



|Item 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------

Not
Applicable



|Item 4(T). | Controls and Procedures
|---------- | -----------------------



| | (a) | Evaluation of disclosure controls and procedures. Under the supervision and with the participation of management, including the CEO and CFO, we conducted an evaluation
of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of June 26, 2009. Based on this evaluation, our
principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective for timely gathering, analyzing, and disclosing the information we are required to disclose in our reports filed under
the Securities Act of 1934, as amended.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



20



---

##### Table of Contents

| | (b) | Changes in Internal Control over Financial Reporting.There has been no significant change in the Companys internal control over financial reporting during the
fiscal quarter ended June 26, 2009 that materially affected or is reasonably likely to materially affect the Companys internal control over financial reporting.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

As of the date of this Quarterly Report, there
are no material pending legal proceedings other than ordinary routine litigation to which the Company is a party or of which any of its property is subject.



|Item 1A. | Risk Factors
|-------- | ------------

Not Applicable.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

There
are no unregistered sales of equity securities that have not been previously filed or included in an 8-K report.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

During the
26-week period ended June 26, 2009, the Company did not submit any matters to a vote of its security holders.



|Item 5. | Other Information
|------- | -----------------

None.



|Item 6. | Exhibits
|------- | --------



|(a) | Exhibits included herewith are:
|--- | -------------------------------



|     |  |                                                                       
|---- |  | ----------------------------------------------------------------------
|31.1 |  | Certification of the Chief Executive Officer dated August 7, 2009     
|     | 
|31.2 |  | Certification of the Chief Financial Officer dated August 7, 2009     
|     | 
|32.1 |  | Written Statements of the Chief Executive Officer dated August 7, 2009
|     | 
|32.2 |  | Written Statements of the Chief Financial Officer dated August 7, 2009

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



|                        |  |               
|----------------------- |  | --------------
|Jagged Peak, Inc.       |  |               
|Registrant              |  |               
|                        | 
|/s/ Paul B. Demirdjian  |  | August 7, 2009
|Paul B. Demirdjian      |  | Date          
|Chief Executive Officer |  |               
|                        | 
|/s/ Andrew J. Norstrud  |  | August 7, 2009
|Andrew J. Norstrud      |  | Date          
|Chief Financial Officer |  |               



21