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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549





FORM 10-Q





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

For the Quarterly Period Ended March 26, 2010

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 Issuer 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) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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.    Yes  x    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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No  x

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 had 16,020,961 shares of common stock, par value $0.001 per share, outstanding as of May 6, 2010.









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##### Table of Contents

Jagged Peak, Inc.

Table of Contents



|                                  |  |                                                                                       |  |     
|--------------------------------- |  | ------------------------------------------------------------------------------------- |  | ----
|Part I  Financial Information    |  |                                                                                      
|                                  |  |                                                                                      
|Item 1.                           |  | Financial Statements                                                                  |  |     
|                                  | 
|Consolidated Financial Statements |  |                                                                                      
|                                  |  |                                                                                      
|                                  |  | 13 Week Period Ended March 26, 2010 (Unaudited), the                                  |  |     
|                                  |  |                                                                                      
|                                  |  | 13 Week Period Ended March 27, 2009 (Unaudited) and                                   |  |     
|                                  |  | December 25, 2009 (Audited)                                                           |  |     
|                                  |  |                                                                                      
|                                  |  | Consolidated Balance Sheets                                                           |  | 1   
|                                  |  |                                                                                      
|                                  |  | Consolidated Statements of Operations                                                 |  | 2   
|                                  |  |                                                                                      
|                                  |  | Consolidated Statement of Changes in Stockholders Equity                             |  | 3   
|                                  |  |                                                                                      
|                                  |  | Consolidated Statements of Cash Flows                                                 |  | 4   
|                                  |  |                                                                                      
|                                  |  | Notes to the Unaudited Consolidated Financial Statements                              |  | 5-13
|                                  |  |                                                                                      
|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                                                               |  | 21  
|                                  | 
|Part II  Other Information       |  | 21                                                                                   
|                                  |  |                                                                                      
|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.                           |  | Removedand Reserved                                                                   |  | 21  
|                                  |  |                                                                                      
|Item 5.                           |  | Other Information                                                                     |  | 21  
|                                  |  |                                                                                      
|Item 6.                           |  | Exhibits                                                                              |  | 21  
|                                  | 
|Signatures                        |  | 22                                                                                   



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##### Table of Contents

PART IFINANCIAL INFORMATION



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

Jagged Peak, Inc.

Consolidated Balance Sheets



|                                                                                                                                                                                          |  |                           |            |   |                           |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ---------- | - | ------------------------- | - | ---------- | -
|                                                                                                                                                                                          |  | March 
26,2010(Unaudited) |            |   | December 25,2009(Audited) |  
|Assets                                                                                                                                                                                    |  |                           |            |   |                           |   |            |  
|Current assets:                                                                                                                                                                           |  |                           |            |   |                           |   |            |  
|Cash                                                                                                                                                                                      |  | $                         | 326,800    |   |                           | $ | 331,300    |  
|Accounts receivable, net of allowance for doubtful accounts of $45,000 and $40,000 at March 26, 2010 and December 25,
2009, respectively                                                  |  |                           | 1,453,900  |   |                           |   | 1,357,500  |  
|Other receivables                                                                                                                                                                         |  |                           | 185,500    |   |                           |   | 231,000    |  
|Work in process, net of allowance of $30,000 at March 26, 2010 and December 25, 2009, respectively                                                                                        |  |                           | 30,600     |   |                           |   | 64,000     |  
|Deferred tax asset                                                                                                                                                                        |  |                           | 184,200    |   |                           |   | 173,000    |  
|Other current assets                                                                                                                                                                      |  |                           | 480,100    |   |                           |   | 441,900    |  
|                                                                                                                                                                                          |  |                           |            |   |                           |   |            |  
|Total current assets                                                                                                                                                                      |  |                           | 2,661,100  |   |                           |   | 2,598,700  |  
|                                                                                                                                                                                          |  |                          
|Property and equipment, net of accumulated depreciation of $1,586,600 and $1,547,400 at March 26, 2010 and December 25,
2009, respectively                                                |  |                           | 254,800    |   |                           |   | 239,400    |  
|                                                                                                                                                                                          |  |                          
|Other assets:                                                                                                                                                                             |  |                           |            |   |                           |   |            |  
|EDGE and other applications, net of accumulated amortization of $1,438,500 and $1,406,300 at March 26, 2010 and
December 25, 2009, respectively                                           |  |                           | 469,600    |   |                           |   | 386,000    |  
|Deferred tax asset                                                                                                                                                                        |  |                           | 1,329,400  |   |                           |   | 1,350,500  |  
|Other assets                                                                                                                                                                              |  |                           | 0          |   |                           |   | 68,700     |  
|                                                                                                                                                                                          |  |                           |            |   |                           |   |            |  
|Total long-term assets                                                                                                                                                                    |  |                           | 2,053,800  |   |                           |   | 2,044,600  |  
|                                                                                                                                                                                          |  |                           |            |   |                           |   |            |  
|Total assets                                                                                                                                                                              |  | $                         | 4,714,900  |   |                           | $ | 4,643,300  |  
|                                                                                                                                                                                          |  |                           |            |   |                           |   |            |  
|                                                                                                                                                                                          |  |                          
|Liabilities and Stockholders Equity                                                                                                                                                      |  |                           |            |   |                           |   |            |  
|Current liabilities:                                                                                                                                                                      |  |                           |            |   |                           |   |            |  
|Accounts payable, trade                                                                                                                                                                   |  | $                         | 1,684,800  |   |                           | $ | 1,861,300  |  
|Accrued payroll and bonuses                                                                                                                                                               |  |                           | 376,700    |   |                           |   | 317,200    |  
|Other accrued expenses                                                                                                                                                                    |  |                           | 57,100     |   |                           |   | 149,000    |  
|Deferred rent                                                                                                                                                                             |  |                           | 42,300     |   |                           |   | 37,000     |  
|Notes payable, current portion                                                                                                                                                            |  |                           | 1,250,000  |   |                           |   | 0          |  
|Deferred revenue and customer deposits                                                                                                                                                    |  |                           | 940,300    |   |                           |   | 913,500    |  
|                                                                                                                                                                                          |  |                           |            |   |                           |   |            |  
|Total current liabilities                                                                                                                                                                 |  |                           | 4,351,200  |   |                           |   | 3,278,000  |  
|                                                                                                                                                                                          |  |                          
|Long-term liabilities:                                                                                                                                                                    |  |                           |            |   |                           |   |            |  
|Notes payable long-term                                                                                                                                                                   |  |                           | 0          |   |                           |   | 1,000,000  |  
|Deferred rent, long-term                                                                                                                                                                  |  |                           | 3,100      |   |                           |   | 17,800     |  
|                                                                                                                                                                                          |  |                           |            |   |                           |   |            |  
|Total long-term liabilities                                                                                                                                                               |  |                           | 3,100      |   |                           |   | 1,017,800  |  
|                                                                                                                                                                                          |  |                          
|Temporary equity  Common stock, subject to put rights 775,000 shares                                                                                                                     |  |                           | 162,800    |   |                           |   | 162,800    |  
|                                                                                                                                                                                          |  |                          
|Stockholders equity:                                                                                                                                                                     |  |                           |            |   |                           |   |            |  
|Preferred stock, $.001 par value; 5,000,000 shares authorized; no shares issued or outstanding at March 26, 2010 and
December 25, 2009                                                    |  |                           |            |   |                           |   |            |  
|Common stock, $.001 par value; 70,000,000 shares authorized; 16,020,961 shares issued and outstanding at March 26, 2010 and
15,926,844 shares issued and outstanding at December 25, 2009 |  |                           | 16,100     |   |                           |   | 16,000     |  
|                                                                                                                                                                                          |  |                          
|Additional paid-in capital                                                                                                                                                                |  |                           | 3,421,800  |   |                           |   | 3,420,100  |  
|Accumulated deficit                                                                                                                                                                       |  |                           | (3,240,100 | ) |                           |   | (3,251,400 | )
|                                                                                                                                                                                          |  |                           |            |   |                           |   |            |  
|Total stockholders equity                                                                                                                                                                |  |                           | 197,800    |   |                           |   | 184,700    |  
|                                                                                                                                                                                          |  |                           |            |   |                           |   |            |  
|Total liabilities and stockholders equity                                                                                                                                                |  | $                         | 4,714,900  |   |                           | $ | 4,643,300  |  
|                                                                                                                                                                                          |  |                           |            |   |                           |   |            |  

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



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Jagged Peak, Inc.

Consolidated Statements of Operations (Unaudited)



|                                                                     |  |                      |            |               |   |            |  
|-------------------------------------------------------------------- |  | -------------------- | ---------- | ------------- | - | ---------- | -
|                                                                     |  | Thirteen Weeks Ended |           
|                                                                     |  | March 26,2010        |            | March 27,2009 |  
|Revenue                                                              |  | $                    | 5,140,500  |               | $ | 4,007,800  |  
|Cost of revenue                                                      |  |                      | 3,979,600  |               |   | 2,984,900  |  
|                                                                     |  |                      |            |               |   |            |  
|Gross profit                                                         |  |                      | 1,160,900  |               |   | 1,022,900  |  
|                                                                     |  |                      |            |               |   |            |  
|Selling, general and administrative expenses                         |  |                      | 1,019,800  |               |   | 1,123,600  |  
|                                                                     |  |                      |            |               |   |            |  
|Operating income (loss)                                              |  |                      | 141,100    |               |   | (100,700   | )
|Other expenses                                                       |  |                      | 7,000      |               |   |            |  
|Interest expense                                                     |  |                      | 111,600    |               |   | 115,200    |  
|                                                                     |  |                      |            |               |   |            |  
|Profit (loss) before tax expense (benefit)                           |  |                      | 22,500     |               |   | (215,900   | )
|Provision for income tax expense (benefit)                           |  |                      | 11,200     |               |   | (68,500    | )
|                                                                     |  |                      |            |               |   |            |  
|Net profit (loss)                                                    |  | $                    | 11,300     |               | $ | (147,400   | )
|                                                                     |  |                      |            |               |   |            |  
|Weighted average number of common shares outstanding  basic         |  |                      | 16,020,961 |               |   | 14,677,594 |  
|                                                                     |  |                      |            |               |   |            |  
|Net income (loss) per share  basic                                  |  | $                    | 0.00       |               | $ | (0.01      | )
|                                                                     |  |                      |            |               |   |            |  
|Weighted average number of common shares outstanding  fully diluted |  |                      | 16,030,665 |               |   | 14,677,594 |  
|                                                                     |  |                      |            |               |   |            |  
|Net income (loss) per share  fully diluted                          |  | $                    | 0.00       |               | $ | (0.01      | )
|                                                                     |  |                      |            |               |   |            |  

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



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Jagged Peak, Inc.

Consolidated Statement of Changes in Stockholders Equity

13 Weeks Ended March 26, 2010 (Unaudited)



|                              |  |              |  |                           |        |                    |   |           |       |   |            |   |  |   |        
|----------------------------- |  | ------------ |  | ------------------------- | ------ | ------------------ | - | --------- | ----- | - | ---------- | - |  | - | -------
|                              |  | Common Stock |  | AdditionalPaid 
inCapital |        | AccumulatedDeficit |   |           | Total
|                              |  | Shares       |  | Amount                    |        |                    |  
|Balance, December 25, 2009    |  | 15,926,844   |  | $                         | 16,000 |                    | $ | 3,420,100 |       | $ | (3,251,400 | ) |  | $ | 184,700
|Issuance of stock             |  | 94,117       |  |                           | 100    |                    |   | 900       |       |   |            |   |  |   | 1,000  
|Amortization of stock options |  |              |  |                           |        |                    |   | 800       |       |   |            |   |  |   | 800    
|Net profit for the period     |  |              |  |                           |        |                    |   |           |       |   | 11,300     |   |  |   | 11,300 
|                              |  |              |  |                           |        |                    |   |           |       |   |            |   |  |   |        
|Balance, March 26, 2010       |  | 16,020,961   |  | $                         | 16,100 |                    | $ | 3,421,800 |       | $ | (3,240,100 | ) |  | $ | 197,800
|                              |  |              |  |                           |        |                    |   |           |       |   |            |   |  |   |        

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



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Jagged Peak, Inc.

Consolidated Statements of Cash Flows (Unaudited)



|                                                                                          |  |                |               |   |               |   |               |  
|----------------------------------------------------------------------------------------- |  | -------------- | ------------- | - | ------------- | - | ------------- | -
|                                                                                          |  | 13 Weeks Ended |              
|                                                                                          |  | March 26,2010  |               |   | March 27,2009 |  
|Operating activities                                                                      |  |                |               |   |               |   |               |  
|Net profit (loss)                                                                         |  | $              | 11,300        |   |               | $ | (147,400      | )
|                                                                                          |  |                |               |   |               |   |               |  
|Adjustments to reconcile net loss to net cash (used) in provided by operating activities: |  |                |               |   |               |   |               |  
|Depreciation and amortization                                                             |  |                | 71,400        |   |               |   | 57,600        |  
|Amortization of officers, director and employee compensation                              |  |                | 800           |   |               |   | 0             |  
|Amortization of warrants related to debt                                                  |  |                | 82,300        |   |               |   | 80,400        |  
|Bad debt expense                                                                          |  |                | 19,900        |   |               |   | 35,200        |  
|Changes in:                                                                               |  |                |               |   |               |   |               |  
|Accounts receivable                                                                       |  |                | (116,300      | ) |               |   | 550,300       |  
|Work-in-process                                                                           |  |                | 33,400        |   |               |   | (53,700       | )
|Other current assets
Other receivables                                                    |  |                | 45,500(51,800 | ) |               |   | 23,500(40,400 | )
|Deferred tax asset                                                                        |  |                | 9,900         |   |               |   | (68,900       | )
|Accounts payable                                                                          |  |                | (176,500      | ) |               |   | (423,800      | )
|Accrued payroll                                                                           |  |                | 59,500        |   |               |   | 55,600        |  
|Accrued expenses                                                                          |  |                | (91,900       | ) |               |   | 9,600         |  
|Deferred rent                                                                             |  |                | (9,400        | ) |               |   | (9,300        | )
|Other liabilities                                                                         |  |                | 26,800        |   |               |   | 79,100        |  
|                                                                                          |  |                |               |   |               |   |               |  
|                                                                                          |  |               
|Net cash flows (used in) provided by operating activities                                 |  |                | (85,100       | ) |               |   | 147,800       |  
|                                                                                          |  |                |               |   |               |   |               |  
|                                                                                          |  |               
|Investing activities                                                                      |  |                |               |   |               |   |               |  
|Acquisition of property and equipment                                                     |  |                | (54,600       | ) |               |   | (38,500       | )
|Acquisition/development of softwareEDGE Platform                                         |  |                | (115,800      | ) |               |   | (84,900       | )
|                                                                                          |  |                |               |   |               |   |               |  
|Cash flows used by investing activities                                                   |  |                | (170,400      | ) |               |   | (123,400      | )
|                                                                                          |  |                |               |   |               |   |               |  
|                                                                                          |  |               
|Financing activities                                                                      |  |                |               |   |               |   |               |  
|Net proceeds and payments on revolving note                                               |  |                | 250,000       |   |               |   | 173,800       |  
|Proceeds from the issuance of equity                                                      |  |                | 1,000         |   |               |   | 0             |  
|Payments on notes payable                                                                 |  |                | 0             |   |               |   | (135,000      | )
|                                                                                          |  |                |               |   |               |   |               |  
|Cash flows provided by financing activities                                               |  |                | 251,000       |   |               |   | 38,800        |  
|                                                                                          |  |                |               |   |               |   |               |  
|                                                                                          |  |               
|Net (decrease) increase in cash                                                           |  |                | (4,500        | ) |               |   | 63,200        |  
|                                                                                          |  |               
|Cash, beginning of period                                                                 |  |                | 331,300       |   |               |   | 126,500       |  
|                                                                                          |  |                |               |   |               |   |               |  
|                                                                                          |  |               
|Cash, end of period                                                                       |  | $              | 326,800       |   |               | $ | 189,700       |  
|                                                                                          |  |                |               |   |               |   |               |  
|                                                                                          |  |               
|Supplemental disclosure of cash flow information                                          |  |                |               |   |               |   |               |  
|Cash paid during the period for interest                                                  |  | $              | 29,300        |   |               | $ | 34,800        |  
|                                                                                          |  |                |               |   |               |   |               |  

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



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Jagged Peak, Inc.

Notes to the Unaudited Consolidated Financial Statements

For the 13 Week Periods Ended March 26, 2010 and March 27, 2009

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 enables clients to build and operate custom branded portals such as
e-commerce, incentive and rebate programs, customer service, repair and reverse logistics, marketing materials management, 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 recently announced the launch of TotalCommerce, a solution that includes everything a company needs to quickly and cost effectively
launch a fully operational, best practices direct to consumer sales channel in less than 60 days. TotalCommerce is an outsourced managed services solution that leverages Jagged Peaks extensive technology and supply chain
infrastructure and provides manufacturers with a turnkey, rapidly deployable solution including e-commerce webstore(s); order, inventory and transportation management software; a nationwide network of fulfillment centers; back office program
management; and a range of online marketing services.

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.



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In July 2009, Jagged Peak began operations in Canada through its wholly owned subsidiary, Jagged Peak
Canada, Inc. The operations provide similar services as in the United States through a network of independently owned fulfillment warehouses, which are managed through technology provided by Jagged Peak, Inc.

In addition to application software and demand execution, Jagged Peak also focuses on e-marketing and e-channel management to provide a holistic
e-commerce solution for its clients. The Companys approach to e-marketing is to build marketing programs and systems that elevate clients sites to be viewed by leading search engines as authorities within a particular product
niche or keyword search term. Our services help companies excel in online retailing through the management, development, and optimization of e-commerce stores. Jagged Peaks e-marketing services achieve superior results by utilizing a mix of
traditional and emerging strategies and industry best practices. The Companys e-channel management services help protect clients online pricing and intellectual property policies by utilizing an automated system and business process to
identify, notify and potentially enforce violations. Jagged Peaks holistic approach to e-commerce provides its clients with assurance that their e-business is performing at its highest level.

On July 8, 2005, Absolute Glass Protection, Inc. (Absolute) completed the acquisition of Jagged Peak, Inc. a Florida corporation
(Jagged Peak), through a reverse triangular merger in which Jagged Peak merged with Absolute Glass Protection Acquisition Corporation, a Nevada corporation (Absolute Sub) that was a wholly owned subsidiary of Absolute with no
assets or liabilities formed solely for the purpose of facilitating the merger (the Merger). This transaction is accounted for as a reverse merger, with Jagged Peak treated as the accounting acquirer for financial statement purposes.
This transaction closed effective July 8, 2005, and Absolute changed its corporate name to Jagged Peak, Inc. Only operations of Jagged Peak remain post merger and therefore no pro-forma information is presented in these financial
statements.

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 March 26, 2010 and March 27, 2009 consist of 13 weeks.

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 consolidated
financial position at March 26, 2010, (b) the consolidated results of operations for the 13-weeks ended March 26, 2010 and March 27, 2009, (c) the consolidated statement of changes in stockholders equity ended
March 26, 2010 and (d) consolidated cash flows for the 13-weeks ended March 26, 2010 and March 27, 2009, have been made.

The unaudited consolidated 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 25, 2009.

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



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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 revenues.

Software and Development Enhancements

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 are capitalized and amortized over a three-year useful life. There was approximately $115,800 capitalized during the 13-week period ended March 26, 2010 and approximately $84,900
capitalized during the 13-week period ended March 27, 2009. Amortization expenses related to capitalized software and charged to operations for the 13-week period ended March 26, 2010 and March 27, 2009 were approximately $32,200 and
approximately $7,000, 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.

Concentration of Risk

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



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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 13-week periods ended March 26, 2010 and March 27, 2009, sales to one customer amounted to approximately $4,334,400 and $2,865,100,
respectively, or 84% and 71% of total revenues, respectively. Accounts receivable from the same customer at March 26, 2010 amounted to approximately $976,800 or approximately 65% of the balance. Accounts receivable from the same customer at
March 27, 2009 amounted to approximately $524,000 or approximately 33% of the balance. This customer is a large international company with more than one hundred 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 $45,000 and $40,000 is considered necessary as of March 26, 2010 and December 25, 2009, 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 March 26, 2010 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 13-week periods ended March 26, 2010
and March 27, 2009, 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 are 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



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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.

Uncertain Tax Positions

The Company
periodically assesses its tax positions taken for all open tax years and has not identified any uncertain tax positions. The Company is not subject to examination by taxing authorities for years prior to 2006.

Income Taxes

Deferred income taxes
reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and tax return purposes. 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.

The Company generated deferred tax assets primarily in 2004 and 2005 as a result of expenses from the triangular reverse
merger with Absolute Glass. The write off expenses related to an unsuccessful capital raising, moving the warehouse facility and general operating losses.

The Company periodically assesses the recoverability of its deferred tax assets, as necessary, when the Company experiences changes that could materially
affect its determination of the recoverability of its deferred tax assets. In conducting this assessment, management considered a variety of factors, including the Companys operating profits, the reasons for the Companys operating losses
in prior years, and managements judgment as to the likelihood of continued profitability and expectations of future performance, and other factors. Management does not believe that a valuation allowance is necessary; however the amount of
deferred tax asset realizable could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced. Net loss carry forwards will begin to expire in 2017.

Put Options

The Company recently issued
restricted common shares as partial consideration for a loan obtained from Moriah Capital L.P. (Moriah). Pursuant to the terms and conditions of the governing Securities Issuance Agreement, the holder of such shares has the right,
but not the obligation, to put the shares back to the Company at a fixed price of $0.21 per common share on March 18, 2011. Moriah can sell these shares of common stock at its sole discretion in compliance with applicable securities laws.
The Company has accounted for these shares in accordance with the guidance established by Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 480 as a



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reclassification of the value of the shares from permanent to temporary equity. As of March 18, 2011 if the put expires unexercised, the Company will transfer the value of the shares
back to permanent equity, less any amount recovered from the holder.

Stock-Based Compensation

The Company has stock option and stock incentive plans for employees and non-employee directors that provide for grants of restricted stock awards and
options to purchase shares of Jagged Peak common stock at exercise prices generally equal to the fair values of such stock at the dates of grant. The Company recognizes the cost of all share-based payments in the financial statements using a
fair-value based measurement method. The Company uses a Black-Scholes model to value its stock option grants and expenses the related compensation cost using the straight-line method over the vesting period. The fair value of the stock compensation
is determined on the grant date using assumptions for the expected term, volatility, dividend yield and the risk free interest rate. The period expense is then determined based on the valuation of the options and on estimated forfeitures. Generally,
stock options vest 50 percent on each anniversary of the grant date, are fully vested two years from the grant date, and have a contractual term of five years.

There were no options granted during the 13-week period ended March 26, 2010 and no options granted during the 13-week period ended March 27,
2009. As of March 26, 2010, there was approximately $3,400 of unrecognized stock-based compensation expense related to nonvested stock options.

Foreign Currency

Generally, the
functional currency of our international subsidiary is the local currency. The financial statements are translated to U.S. dollars using month-end rates of exchange for assets and liabilities, and average rates of exchange for revenues, costs and
expenses. Translation gains and losses are recorded in accumulated other comprehensive income as a component of stockholders equity. There were no recorded translation gains for the 13-week period ended March 26, 2010. Net gains and
losses resulting from foreign exchange transactions are recorded as a component of interest income and other, net.

Earnings per Share

The Company computes earnings per share in accordance with FASB ASC 260, Earnings per Share. FASB ASC 260 provides for the calculation
of basic and diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings
per share reflect the potential dilution of securities that could share in the earnings of the Company. Potential common stock shares consist of shares that may arise from outstanding dilutive common stock options and warrants (the number of which
is computed using the treasury stock method) and from outstanding convertible debentures (the number of which is computed using the if converted method). Diluted earnings per share considers the potential dilution that could
occur if the Companys outstanding common stock options, warrants and convertible debentures were converted into common stock that then shared in the Companys earnings (as adjusted for interest expense, that would no longer occur if the
debentures were converted).

The weighted average number of shares was approximately 16,020,961 and 14,677,594 for the 13-week periods ended
March 26, 2010 and March 27, 2009, respectively. The diluted weighted average number of shares was approximately 16,030,665 and 14,990,167 for the 13-week periods ended March 26, 2010 and March 27, 2009, respectively.

Common stock equivalents for the 13-week period ended March 27, 2009 was anti-dilutive due to the net losses sustained by the Company during the
period. Therefore, the diluted weighted average common shares outstanding for the dilutive weighted average share calculation for the period ended March 27, 2009 excludes approximately 312,573 shares that could dilute earnings per share in
future periods.



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Recently Issued Financial Accounting Standards

In May 2009, the FASB issued Subsequent Events, 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). This 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. This 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. The Company has evaluated events and transactions occurring subsequent to the balance sheet date of March 26, 2010, for items that should be recognized or disclosed in these financial statements.

Other recent accounting pronouncements issued by the FASB (including its 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:



|                                                  |  |               |         |                  |   |        
|------------------------------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                                                  |  | March 26,2010 |         | December 25,2009
|Capitalized debt cost                             |  | $             | 323,000 |                  | $ | 397,500
|                                                  |  |               |         |                  |   |        
|                                                  |  |               | 323,000 |                  |   | 397,500
|                                                  |  |              
|Current portion classified as other current asset |  |               | 323,000 |                  |   | 328,800
|                                                  |  |               |         |                  |   |        
|                                                  |  | $             | 0       |                  | $ | 68,700 
|                                                  |  |               |         |                  |   |        

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 any outstanding
senior classes of stock, of which there are currently none. The Company records stock as issued when the consideration is received or the obligation is incurred.

The Companys 2005 Stock Incentive Plan as Amended July 2008 (the Plan) authorizes 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



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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 26, 2008               |  | 3,899,898  |   |  | $                       | 0.01-2.50 |                                | $ | 0.80
|Warrants, convertible debt and options granted |  | 200,000    |   |  | $                       | 0.25      |                                | $ | 0.25
|Warrants exercised                             |  | (230,000   | ) |  | $                       | 0.01      |                                | $ | 0.01
|Warrants and options cancelled or expired      |  | (1,512,058 | ) |  | $                       | 0.50-1.28 |                                | $ | 1.00
|                                               |  |            |   |  |                         |           |                                |   |     
|Outstanding at December 25, 2009               |  | 2,357,840  |   |  | $                       | 0.01-2.50 |                                | $ | 0.70
|                                               |  |            |  
|Warrants exercised                             |  | (94,117    | ) |  | $                       | 0.01      |                                | $ | 0.01
|Warrants and options cancelled or expired      |  | (100,000   | ) |  | $                       | 0.25      |                                | $ | 0.25
|                                               |  |            |   |  |                         |           |                                |   |     
|                                               |  |            |  
|Outstanding at March 26, 2010                  |  | 2,163,723  |   |  | $                       | 0.01-2.50 |                                | $ | 0.76
|                                               |  |            |  
|Exercisable at March 26, 2010                  |  | 2,063,723  |   |  | $                       | 0.01-2.50 |                                | $ | 0.78
|Exercisable at December 25, 2009               |  | 2,157,840  |   |  | $                       | 0.01-2.50 |                                | $ | 0.75

The following table summarizes
information about options and warrants outstanding and exercisable as of March 26, 2010:



|                        |  |                                  |  |                                  |  |                      |      |                               |           |                   |           |                      |   |     
|----------------------- |  | -------------------------------- |  | -------------------------------- |  | -------------------- | ---- | ----------------------------- | --------- | ----------------- | --------- | -------------------- | - | ----
|                        |  | Outstanding Warrants and Options |  | Exercisable Warrants and Options
|Range of Exercise Price |  | NumberOutstanding                |  | WeightedAverageRemainingLife     |  | WeightedAveragePrice |      | WeightedAverageRemaining Life |           | NumberExercisable |           | WeightedAveragePrice
|$0.01                   |  | 10,782                           |  | 41 years                         |  | $                    | 0.01 |                               | 41 years  |                   | 10,782    |                      | $ | 0.01
|$0.25-0.77              |  | 1,618,529                        |  | 1.6 years                        |  | $                    | 0.59 |                               | 1.4 years |                   | 1,518,529 |                      | $ | 0.61
|$1.00-2.50              |  | 534,412                          |  | 1.3 years                        |  | $                    | 0.85 |                               | 1.3 years |                   | 534,412   |                      | $ | 0.85

As of March 26, 2010 and
December 25, 2009, there were approximately 2,063,723 and 2,157,840 options exercisable at a weighted average exercise price of $0.78 and $0.75, respectively. There were no options granted in 2010 and the weighted average fair value of options
at the date of grant of the options was $0.25 for 2009.



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5. Segment Information

The Company had two reportable segments during the 13 weeks ended March 26, 2010: Jagged Peak, Inc and Jagged Peak Canada, Inc. Although both of
these segments are in the same industry, provide the same services, have similar clients, are managed by the same team and use the same technology, they provide the services in different locations. Revenue for Jagged Peak Canada Inc. began in the
third quarter of 2009. Therefore, for the 13 weeks ended March 26, 2010 the Company has included segment reporting; however for the 13 weeks ended March 27, 2009 there was no reportable segment activity.

For the 13 weeks ended March 26, 2010, information regarding operations by segment is as follows:



|                        |  |                  |           |                          |   |         |       |  |   |          
|----------------------- |  | ---------------- | --------- | ------------------------ | - | ------- | ----- |  | - | ---------
|                        |  | Jagged Peak, Inc |           | Jagged Peak Canada, Inc. |   |         | Total
|Revenue                 |  | $                | 4,577,500 |                          | $ | 563,000 |       |  | $ | 5,140,500
|Cost of revenues        |  | $                | 3,424,400 |                          | $ | 555,200 |       |  | $ | 3,979,600
|Operating income (loss) |  | $                | 156,700   |                          | $ | (15,600 | )     |  | $ | 141,100  
|Net profit (loss)       |  | $                | 24,000    |                          | $ | (12,700 | )     |  | $ | 11,300   

Jagged Peak Canada, Inc has no
long-term assets and there was approximately $18,000 of intercompany management charges that were eliminated in consolidation.

6. Related
Party Transaction

The Company contracted with Norco Accounting and Consulting Inc. (Norco) to provide accounting and
consulting services. The Company did not use the services of Norco during the 13-week period ended March 26, 2010 and paid approximately $12,900 during the 13-week period ended March 27, 2009. 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.



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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 25, 2009.

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 enables clients to build and operate custom branded portals such as e-commerce, incentive and rebate programs, customer service, repair and reverse logistics, marketing
materials management, 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



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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 recently announced the launch of TotalCommerce, a solution that includes everything a company needs to quickly and cost effectively
launch a fully operational, best practices direct to consumer sales channel in less than 60 days. TotalCommerce is an outsourced managed services solution that leverages Jagged Peaks extensive technology and supply chain
infrastructure and provides manufacturers with a turnkey, rapidly deployable solution including e-commerce webstore(s); order, inventory and transportation management software; a nationwide network of fulfillment centers; back office program
management; and a range of online marketing services.

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.

In July 2009, Jagged Peak began operations in Canada through its wholly owned subsidiary, Jagged Peak Canada, Inc. The operations provide similar
services as in the United States through a network of independently owned fulfillment warehouses, which are managed through technology provided by Jagged Peak, Inc.

In addition to application software and demand execution, Jagged Peak also focuses on e-marketing and e-channel management to provide a holistic
e-commerce solution for its clients. The Companys approach to e-marketing is to build marketing programs and systems that elevate clients sites to be viewed by leading search engines as authorities within a particular product
niche or keyword search term. Our services help companies excel in online retailing through the management, development, and optimization of e-commerce stores. Jagged Peaks e-marketing services achieve superior results by utilizing a mix of
traditional and emerging strategies and industry best practices. The Companys e-channel management services help protect clients online pricing and intellectual property policies by utilizing an automated system and business process to
identify, notify and potentially enforce violations. Jagged Peaks holistic approach to e-commerce provides its clients with assurance that their e-business is performing at its highest level.

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 25, 2009 annual report filed with the SEC under Item 1A entitled Risks Factors.



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RESULTS OF OPERATIONS

For the 13-week period ended March 26, 2010 compared to the 13-week period ended March 27, 2009

Revenues increased approximately $1,132,700, or 28%, to approximately $5,140,500 for the 13-week period ended March 26, 2010, as compared to
approximately $4,007,800 for the 13-week period ended March 27, 2009. The increase in revenue primarily related to (i) continued growth in order/transaction volume, (ii) the continued expansion of services to existing customers,
(iii) the newly operating Canadian operation and (iv) new customers resulting from our marketing efforts. The Canadian operation is similar to our United States fulfillment operation, however all technology services are still performed and
billed from the United States.

Costs of revenue, which consist primarily of labor, software amortization, technology, facilities, postage,
freight, and packing supplies, increased by approximately $994,700, or 33%, to approximately $3,979,600 for the 13-week period ended March 26, 2010, as compared to approximately $2,984,900 for the 13-week period ended March 27, 2009. As a
percentage of revenues, costs of revenue amounted to approximately 77% of related revenues for the 13-week period ended March 26, 2010, as compared with approximately 74% for the 13-week period ended March 27, 2009. Increased costs of
revenue and increases as a percentage of revenue resulted primarily from (i) increased order / transaction volume, (ii) a decrease in technology revenue, which has a lower cost of revenue, (iii) increased orders flowing through the
Companys North America distribution network, which has a higher cost of revenue, and (iv) the newly operating Canadian operation, which has a higher cost of revenue as a percentage of 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. We are currently working to implement a new pick to light system, which is expected to increase productivity more than 200%. Management expects the percentage of cost of revenue to revenue to decrease as sales increase and we are
able to capitalize on the additional capacity and improve the Canadian operations.

Selling, general and administrative expense decreased by
approximately $103,800, or 10%, to approximately $1,019,800 for the 13-week period ended March 26, 2010 as compared to approximately $1,123,600 for the 13-week period ended March 27, 2009. The decrease was primarily related to (i) a
management effort beginning in 2009 to reduce overall general and administrative expense, (ii) automation of certain functions, and (iii) the completion of the new accounting system implementation. Management continues to
re-deploy 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 is in the process of implementing a new
warehouse management system, which will increase the general and administrative expense during the second and third quarter of 2010.

The
Company realized a profit from continuing operations before provision for income taxes of approximately $22,500 for the 13-week period ended March 26, 2010, compared with a loss from continuing operations before provision for income taxes of
approximately $215,900 for the 13-week period ended March 27, 2009.

The income tax expense was approximately $11,200 for the 13-week
period ended March 26, 2010 compared to an income tax benefit of approximately $68,500 for the 13-week period ended March 27, 2009. Differences between the effective tax rate used for 2010 and 2009, as compared to the U.S. federal
statutory rate, are primarily due to permanent differences. As of March 26, 2010 the Company had federal and state net operating loss carry-forwards totaling approximately $4,200,000, which begin to expire in 2017.

Basic income per share from continuing operations for the 13-week period ended March 26, 2010 was $0.00 per weighted average share, compared with a
basic loss of $0.01 per weighted average share for the 13-week period ended March 27, 2009.



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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 revenues.

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
13-week periods ended March 26, 2010 and March 27, 2009, sales to one customer amounted to approximately $4,334,400 and $2,865,100, respectively, or 84% and 71% of total revenues, respectively. Accounts receivable from the same customer at
March 26, 2010 amounted to approximately $976,800 or approximately 65% of the balance. Accounts receivable from the same customer at March 27, 2009 amounted to approximately $524,000 or approximately 33% of the balance. This customer is a
large international company with more than one hundred brands. The Company classifies all business done for all of this customers brands as one single customer for the concentration of risk calculation.



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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 $45,000 and $40,000 is considered
necessary as of March 26, 2010 and December 25, 2010, 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 March 26, 2010 by approximately $10,000. We do not accrue interest on past due receivables.

Income Taxes

Deferred income taxes
reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and tax return purposes. 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.

The Company generated deferred tax assets primarily in 2004 and 2005 as a result of expenses from the triangular reverse
merger with Absolute Glass, the write off expenses related to an unsuccessful capital raising, moving the warehouse facility and general operating losses.

The Company periodically assesses the recoverability of its deferred tax assets, as necessary, when the Company experiences changes that could materially
affect its determination of the recoverability of its deferred tax assets. In conducting this assessment, management considered a variety of factors, including the Companys operating profits, the reasons for the Companys operating losses
in prior years, and managements judgment as to the likelihood of continued profitability and expectations of future performance, and other factors. Management does not believe that a valuation allowance is necessary; however the amount of
deferred tax asset realizable could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced. Net loss carry forwards will begin to expire in 2017.

Put Options

The Company recently issued
restricted common shares as partial consideration for a loan obtained from Moriah Capital L.P. (Moriah). Pursuant to the terms and conditions of the governing Securities Issuance Agreement, the holder of such shares has the right,
but not the obligation, to put the shares back to the Company at a fixed price of $0.21 per common share on March 18, 2011. Moriah can sell these shares of common stock at its sole discretion in compliance with applicable securities laws.
The Company has accounted for these shares in accordance with the guidance established by FASB ASC 480 as a reclassification of the value of the shares from permanent to temporary equity. As of March 18, 2011 if the put expires
unexercised, the Company will transfer the value of the shares back to permanent equity, less any amount recovered from the holder.

EBITDA

EBITDA for the 13-week period ended March 26, 2010 was approximately $205,500 compared to approximately $(43,100) in the comparable
period of the prior year. The increase in the EBITDA directly relates to the increase in sales compared to 2009 and the decrease in selling, general and administrative expenses. The Company defines EBITDA as earnings before interest, taxes,
depreciation and



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amortization costs. The Company also excludes, if applicable, 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 13-weeks ended |        
|                              |  | March 26,2010          |         | March 27,2009 |  
|                              |  |                       
|Net profit (loss) as reported |  | $                      | 11,300  |               | $ | (147,400 | )
|                              |  |                       
|Income tax expense (benefit)  |  |                        | 11,200  |               |   | (68,500  | )
|                              |  |                       
|Interest expense              |  |                        | 111,600 |               |   | 115,200  |  
|                              |  |                       
|Depreciation and amortization |  |                        | 71,400  |               |   | 57,600   |  
|                              |  |                        |         |               |   |          |  
|                              |  |                       
|EBITDA                        |  | $                      | 205,500 |               | $ | (43,100  | )
|                              |  |                        |         |               |   |          |  

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. 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 March 26, 2010, the Company had approximately $1,690,100 of negative working capital and had cash and cash equivalents of
approximately $326,800, compared with approximately $331,300 of cash and cash equivalents at December 25, 2009. The decrease in working capital is primarily the result of the debt that was refinanced in December of 2009 that has a maturity date
of March 18, 2011, which is now less than one year.

During the 13-week period ended March 26, 2010, cash decreased by approximately
$4,500. Management expects to return to 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.



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In December 2009, the Company entered into a Loan and Security Agreement with Moriah Capital L.P., a
Delaware limited partnership (Moriah), whereby we agreed to a Term Note (the Note) in the principal amount of one million five hundred thousand dollars ($1,500,000). The interest rate of the Note is six percent
(6%) above prime with a floor of eleven percent (11%) and is paid on a monthly basis. There are no monthly principal payments; a final balloon payment of $1,500,000 is due in March of 2011. The proceeds from the Note were used to
extinguish all remaining loans of the Company and provide the necessary working capital to accelerate the Companys growth initiatives. A portion of the Note is secured by the Jagged Peak common stock held by certain stockholders of the
Company, which could cause a change of control if the Company was to default on the loan.

Management expects to obtain additional financing
or an equity infusion to make the final payment to Moriah, due in March of 2011. The current principal balance is $1,250,000. Based on the cash flow from operations and the Companys past history, management believes it will be able to find
conventional financing with reasonable terms. If the Company is unable to obtain the necessary financing from a conventional bank, 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 increasing 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. The
Companys current strategy has been to build a network of partner warehouses to fulfill the additional order requirements. If the Company elected to add additional warehouse space, we may need to obtain additional financing. 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 through both internal development and mergers and acquisitions, 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 successful 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



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|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 March 26, 2010. 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.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Changes in Internal Control over Financial Reporting.There has been no change in the Companys internal control over financial reporting during the
fiscal quarter ended March 26, 2010 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
|------- | -----------------------------------------------------------

In January of 2010 the Company issued 94,117 common stock shares, $0.001 par value per share, under Regulation D promulgated under the Securities Act of
1933, as amended. The issuance was related to the exercise of warrants and the consideration paid was approximately $900 and the use of these proceeds will be working capital.



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

Not
applicable



|Item 4. | Removed and Reserved
|------- | --------------------



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

None.



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



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



|     |  |                                                                    
|---- |  | -------------------------------------------------------------------
|31.1 |  | Certification of the Chief Executive Officer dated May 6, 2010     
|     | 
|31.2 |  | Certification of the Chief Financial Officer dated May 6, 2010     
|     | 
|32.1 |  | Written Statements of the Chief Executive Officer dated May 6, 2010
|     | 
|32.2 |  | Written Statements of the Chief Financial Officer dated May 6, 2010



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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        |  |  |  | May 6,
2010
|Paul B. Demirdjian            |  |  |  | Date       
|Chief Executive Officer       |  |  |  |            
|(Principle Executive Officer) |  |  |  |            
|                              |  | 
|/s/ Andrew J. Norstrud        |  |  |  | May 6,
2010
|Andrew J. Norstrud            |  |  |  | Date       
|Chief Financial Officer       |  |  |  |            
|(Principle Financial Officer) |  |  |  |            



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