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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-QSB



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

For the Quarterly Period Ended March 31, 2006

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



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Jagged Peak, Inc.

(Exact Name of Small Business Issuer as Specified in Its Charter)



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

13577 Feather Sound Dr Suite 390, Clearwater, FL 33762

(Address of principal executive offices, including zip code)

(800) 430-1312

(Registrants telephone number, including area code)

2701 N. Rocky Point Drive, Suite 1250, Tampa, FL 33607

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



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Check whether the issuer is not required to file reports pursuant to section 13 or 15(d) of the Exchange Act. ̈

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

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

Issuers net revenues for its most recent fiscal quarter ended March 31, 2006 was $2,968,800.

Aggregate market
value of the voting stock held by non-affiliates of the registrant at May 10, 2006 was $25,841,300.

The Registrant has 70,000,000 shares of common
stock, par value $0.001, authorized and 13,969,297 shares of common stock outstanding as of May 10, 2006.

Transitional Small Business Format (check
one).    Yes ̈No  x



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##### Table of Contents

Table of Contents

Jagged Peak, Inc.

Contents



|                               |  |                                                                                   |  |   
|------------------------------ |  | --------------------------------------------------------------------------------- |  | --
|Part I 
Financial Information |  |                                                                                  
|                               |  |                                                                                  
|Item 1.                        |  | Financial Statements                                                              |  |   
|                               |  |                                                                                  
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Plan of Operation |  | 12
|                               |  |                                                                                  
|Item 3.                        |  | Controls and Procedures                                                           |  | 17
|                               | 
|Part II 
Other Information    |  | 17                                                                               
|                               |  |                                                                                  
|Item 1.                        |  | Legal Proceedings                                                                 |  | 17
|                               |  |                                                                                  
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                       |  | 17
|                               |  |                                                                                  
|Item 3.                        |  | Defaults Upon Senior Securities                                                   |  | 17
|                               |  |                                                                                  
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                               |  | 18
|                               |  |                                                                                  
|Item 5.                        |  | Other Matters.                                                                    |  | 18
|                               |  |                                                                                  
|Item 6.                        |  | Exhibits                                                                          |  | 18
|                               | 
|Signatures                     |  | 18                                                                               



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##### Table of Contents

PART IFINANCIAL INFORMATION

Item 1. Financial Statements

Jagged Peak, Inc.

Financial Statements

13 Week Periods Ended

March 31, 2006 (Unaudited) and April 1, 2005 (Unaudited)

Contents

Financial Statements



|                                             |  |     
|-------------------------------------------- |  | ----
|Balance Sheet                                |  | 1   
|Statements of Operations                     |  | 2   
|Statement of Changes in Stockholders Equity |  | 3   
|Statements of Cash Flows                     |  | 4   
|Notes to the Unaudited Financial Statements  |  | 5-11



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##### Table of Contents

Jagged Peak, Inc.

Balance Sheet

March 31, 2006 (Unaudited)



|                                                                                                      |  |   |            |  
|----------------------------------------------------------------------------------------------------- |  | - | ---------- | -
|Assets                                                                                                |  |   |            |  
|Current assets:                                                                                       |  |   |            |  
|Cash                                                                                                  |  | $ | 73,400     |  
|Accounts receivable, net of allowance for doubtful accounts of $38,500                                |  |   | 1,777,200  |  
|Other receivable                                                                                      |  |   | 30,000     |  
|Work in process, net of allowance of $28,100                                                          |  |   | 91,700     |  
|Deferred tax asset                                                                                    |  |   | 171,100    |  
|Deposits and other current assets                                                                     |  |   | 112,700    |  
|                                                                                                      |  |   |            |  
|Total current assets                                                                                  |  |   | 2,256,100  |  
|                                                                                                      | 
|Property and equipment, net of accumulated depreciation of $1,509,800                                 |  |   | 360,000    |  
|Other assets:                                                                                         |  |   |            |  
|EDGE Platform, net of accumulated amortization of $835,800                                            |  |   | 459,600    |  
|Deferred tax asset                                                                                    |  |   | 558,200    |  
|Other assets                                                                                          |  |   | 1,066,500  |  
|                                                                                                      |  |   |            |  
|Total long-term assets                                                                                |  |   | 2,444,300  |  
|                                                                                                      | 
|Total assets                                                                                          |  | $ | 4,700,400  |  
|                                                                                                      |  |   |            |  
|Liabilities and Stockholders Equity                                                                  |  |   |            |  
|Current liabilities:                                                                                  |  |   |            |  
|Accounts payable, trade                                                                               |  | $ | 1,046,700  |  
|Accrued payroll                                                                                       |  |   | 205,500    |  
|Other accrued expenses                                                                                |  |   | 218,500    |  
|Deferred rent                                                                                         |  |   | 14,200     |  
|Notes payable, current portion                                                                        |  |   | 716,600    |  
|Notes payable, related parties                                                                        |  |   | 150,000    |  
|Deferred revenue and customer deposits                                                                |  |   | 940,100    |  
|                                                                                                      |  |   |            |  
|Total current liabilities                                                                             |  |   | 3,291,600  |  
|                                                                                                      | 
|Long-term liabilities:                                                                                |  |   |            |  
|Notes payable, net of current portion and unamortized discount of $88,800                             |  |   | 136,200    |  
|Deferred rent                                                                                         |  |   | 135,800    |  
|                                                                                                      |  |   |            |  
|Total long-term liabilities                                                                           |  |   | 272,000    |  
|                                                                                                      | 
|Stockholders equity:                                                                                 |  |   |            |  
|Common stock, $.001 par value; 70,000,000 shares authorized; 13,844,297 shares issued and outstanding |  |   | 13,900     |  
|Additional paid-in capital                                                                            |  |   | 2,259,100  |  
|Accumulated deficit                                                                                   |  |   | (1,136,200 | )
|                                                                                                      |  |   |            |  
|Total stockholders equity                                                                            |  |   | 1,136,800  |  
|                                                                                                      | 
|Total liabilities and stockholders equity                                                            |  | $ | 4,700,400  |  
|                                                                                                      |  |   |            |  

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



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##### Table of Contents

Jagged Peak, Inc.

Statements of Operations (Unaudited)



|                                                                             |  |                      |            |   |               |   |            |  
|---------------------------------------------------------------------------- |  | -------------------- | ---------- | - | ------------- | - | ---------- | -
|                                                                             |  | Thirteen Weeks Ended |           
|                                                                             |  | March 31,2006        |            |   | April 1, 2005 |  
|Revenue                                                                      |  |                      |            |   |               |   |            |  
|Gross revenue                                                                |  | $                    | 3,656,900  |   |               | $ | 2,696,800  |  
|Discounts, freight and other                                                 |  |                      | (688,100   | ) |               |   | (310,300   | )
|                                                                             |  |                      |            |   |               |   |            |  
|Net revenues                                                                 |  |                      | 2,968,800  |   |               |   | 2,386,500  |  
|                                                                             |  |                     
|Cost of sales                                                                |  |                      | 2,233,400  |   |               |   | 1,818,000  |  
|                                                                             |  |                      |            |   |               |   |            |  
|Gross profit                                                                 |  |                      | 735,400    |   |               |   | 568,500    |  
|                                                                             |  |                      |            |   |               |   |            |  
|Operating expenses:                                                          |  |                      |            |   |               |   |            |  
|General and administrative expenses                                          |  |                      | 755,300    |   |               |   | 574,100    |  
|                                                                             |  |                      |            |   |               |   |            |  
|Operating loss                                                               |  |                      | (19,900    | ) |               |   | (5,600     | )
|                                                                             |  |                      |            |   |               |   |            |  
|Other expenses:                                                              |  |                      |            |   |               |   |            |  
|Interest expense                                                             |  |                      | 39,900     |   |               |   | 53,500     |  
|                                                                             |  |                      |            |   |               |   |            |  
|Total other expenses                                                         |  |                      | 39,900     |   |               |   | 53,500     |  
|                                                                             |  |                      |            |   |               |   |            |  
|Loss before tax benefit                                                      |  |                      | (59,800    | ) |               |   | (59,100    | )
|                                                                             |  |                      |            |   |               |   |            |  
|Provision for income tax benefit                                             |  |                      | (18,500    | ) |               |   | (17,500    | )
|                                                                             |  |                     
|Net loss                                                                     |  | $                    | (41,300    | ) |               | $ | (41,600    | )
|                                                                             |  |                      |            |   |               |   |            |  
|Weighted average number of common shares outstanding  basic & fully diluted |  |                      | 13,784,266 |   |               |   | 12,628,092 |  
|                                                                             |  |                      |            |   |               |   |            |  
|Net loss per share  basic & fully diluted                                   |  | $                    | (0.00      | ) |               | $ | (0.00      | )
|                                                                             |  |                      |            |   |               |   |            |  

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



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##### Table of Contents

Jagged Peak, Inc.

Statement of Changes in Stockholders Equity

13 Weeks Ended March 31, 2006 (Unaudited)



|                                              |  |              |   |  |                           |        |   |                    |   |           |       |  |   |            |   |  |   |           |  
|--------------------------------------------- |  | ------------ | - |  | ------------------------- | ------ | - | ------------------ | - | --------- | ----- |  | - | ---------- | - |  | - | --------- | -
|                                              |  | Common Stock |   |  | Additional Paid inCapital |        |   | AccumulatedDeficit |   |           | Total | 
|                                              |  | Shares       |   |  | Amount                    |        |   |                    |  
|Balance, December 30, 2005                    |  | 13,619,759   |   |  | $                         | 13,600 |   |                    | $ | 2,050,400 |       |  | $ | (1,094,900 | ) |  | $ | 969,100   |  
|Issuance of stock, net of offering costs      |  | 619,000      |   |  |                           | 700    |   |                    |   | 308,300   |       |  |   |            |   |  |   | 309,000   |  
|Acquisition of stock from dissenting investor |  | (394,462     | ) |  |                           | (400   | ) |                    |   | (99,600   | )     |  |   |            |   |  |   | (100,000  | )
|Net loss for the period                       |  |              |   |  |                           |        |   |                    |   |           |       |  |   | (41,300    | ) |  |   | (41,300   | )
|                                              |  |              |   |  |                           |        |   |                    |   |           |       |  |   |            |   |  |   |           |  
|Balance, March 31, 2006                       |  | 13,844,297   |   |  | $                         | 13,900 |   |                    | $ | 2,259,100 |       |  | $ | (1,136,200 | ) |  | $ | 1,136,800 |  
|                                              |  |              |   |  |                           |        |   |                    |   |           |       |  |   |            |   |  |   |           |  

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



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Jagged Peak, Inc.

Statements of Cash Flows (Unaudited)



|                                                                                          |  |                |              |   |              |   |          |  
|----------------------------------------------------------------------------------------- |  | -------------- | ------------ | - | ------------ | - | -------- | -
|                                                                                          |  | 13 Weeks Ended |             
|                                                                                          |  | March 31,2006  |              |   | April 1,2005 |  
|Operating activities                                                                      |  |                |              |   |              |   |          |  
|Net loss                                                                                  |  | $              | (41,300      | ) |              | $ | (41,600  | )
|                                                                                          |  |                |              |   |              |   |          |  
|Adjustments to reconcile net loss to net cash (used by) provided by operating activities: |  |                |              |   |              |   |          |  
|Depreciation and amortization                                                             |  |                | 133,100      |   |              |   | 132,200  |  
|Non-cash consulting expense                                                               |  |                | 21,200       |   |              |   |          |  
|Amortization related to long term debt                                                    |  |                | 5,600        |   |              |   |          |  
|Adjustment to allowance for bad debt expense                                              |  |                | 31,100       |   |              |   | 15,000   |  
|Changes in:                                                                               |  |                |              |   |              |   |          |  
|Accounts receivable                                                                       |  |                | (745,000     | ) |              |   | 470,000  |  
|Work-in-process                                                                           |  |                | 57,100       |   |              |   | (293,100 | )
|Other current assets Other assets                                                         |  |                | 30,80015,900 |   |              |   | (42,000  | )
|Deferred tax asset                                                                        |  |                | (18,500      | ) |              |   | (17,500  | )
|Accounts payable                                                                          |  |                | 14,200       |   |              |   | (209,300 | )
|Accrued payroll                                                                           |  |                | 135,200      |   |              |   | (45,500  | )
|Accrued expenses                                                                          |  |                | (9,400       | ) |              |   | (22,800  | )
|Deferred rent                                                                             |  |                | (3,200       | ) |              |   | 39,800   |  
|Other liabilities                                                                         |  |                | 181,400      |   |              |   | 64,000   |  
|                                                                                          |  |                |              |   |              |   |          |  
|Total adjustments                                                                         |  |                | (150,500     | ) |              |   | 90,800   |  
|                                                                                          |  |                |              |   |              |   |          |  
|Net cash (used by) provided by operating activities                                       |  |                | (191,800     | ) |              |   | 49,200   |  
|                                                                                          |  |                |              |   |              |   |          |  
|Investing activities                                                                      |  |                |              |   |              |   |          |  
|Acquisition of property and equipment                                                     |  |                | (22,600      | ) |              |   | (900     | )
|Acquisition/development of software - EDGE Platform                                       |  |                |              |   |              |   | (136,200 | )
|                                                                                          |  |                |              |   |              |   |          |  
|Cash flows used by investing activities                                                   |  |                | (22,600      | ) |              |   | (137,100 | )
|                                                                                          |  |                |              |   |              |   |          |  
|Financing activities                                                                      |  |                |              |   |              |   |          |  
|Payments made on capital leases                                                           |  |                |              |   |              |   | (5,400   | )
|Net proceeds and payments on bank credit line                                             |  |                | (25,000      | ) |              |   |          |  
|Proceeds from notes payable and warrants issued                                           |  |                |              |   |              |   | 250,000  |  
|Proceeds from related party notes payable                                                 |  |                | 150,000      |   |              |   |          |  
|Payments on notes payable                                                                 |  |                | (66,700      | ) |              |   | (24,800  | )
|Issuance of common stock, net                                                             |  |                | 209,000      |   |              |   |          |  
|                                                                                          |  |                |              |   |              |   |          |  
|Cash flows provided by financing activities                                               |  |                | 267,300      |   |              |   | 219,800  |  
|                                                                                          |  |                |              |   |              |   |          |  
|Net increase in cash                                                                      |  |                | 52,900       |   |              |   | 131,900  |  
|                                                                                          |  |               
|Cash, beginning of period                                                                 |  |                | 20,500       |   |              |   | 86,200   |  
|                                                                                          |  |                |              |   |              |   |          |  
|Cash, end of period                                                                       |  | $              | 73,400       |   |              | $ | 218,100  |  
|                                                                                          |  |                |              |   |              |   |          |  
|Supplemental disclosure of cash flow information                                          |  |                |              |   |              |   |          |  
|Cash paid during the period for interest                                                  |  | $              | 34,300       |   |              | $ | 53,500   |  

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



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Jagged Peak, Inc.

Notes to the Unaudited Financial Statements

For the 13 Week Periods Ended March 31, 2006 and April 1, 2005

1. General Background Information

Compass Marketing Services, Inc. (Compass), a Florida corporation, was
formed in 1990. On August 22, 2000, Compass merged with IBIS Business Internet Solutions, Inc., a Florida corporation, in a merger of equals and amended its name to Jagged Peak, Inc. (Jagged Peak or the Company).

Jagged Peak, Inc. is headquartered in Clearwater, Florida, providing enterprise commerce management (ECM) solutions. The Companys proprietary
Enterprise Dynamic Global Engine (EDGE) software is a multi language, completely web-based solution, which allows our clients to promote and maintain their brands while leveraging our investment in infrastructure and technology. Our
clients access our platform over the Internet, enabling companies to capture orders through e-commerce or other business to business portals, control and coordinate distribution of orders, manage inventory, and fulfill orders electronically or
physically across multiple suppliers, warehouses and partners in real-time. From a shopper perspective, end-users enter the client site and seamlessly communicate with EDGE. End-users can then browse for products and create orders online, once
orders are made, we either deliver the products digitally through the Internet or communicate the order seamlessly to either our own fulfillment warehouse or to a third-party fulfillment agency for physical delivery, which is all based on
established client business rules to ensure optimal delivery performance.

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 31, 2006 and April 1, 2005 consists of 13 weeks.

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 the information presented is of Jagged Peak for the periods ended March 31, 2006 and April 1, 2005 and no pro-forma
information is presented in these financial statements.

2. Significant Accounting Policies

Basis of Presentation

In the opinion of management, all adjustments
consisting of normal recurring adjustments necessary for a fair statement of (a) the financial position at March 31, 2006, (b) the results of operations for the 13 weeks ended March 31, 2006 and April 1, 2005, (c) the
statement of changes in stockholders equity ended March 31, 2006 and (d) cash flows for the 13 weeks ended March 31, 2006 and April 1, 2005, have been made.

The unaudited financial statements and notes are presented as permitted by Form 10-QSB. 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 30, 2005.



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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.

Reclassifications

Certain prior year amounts shown in the accompanying financial statements have been reclassified to conform to the 2006 presentation. These reclassifications did not have
any effect on total assets, total liabilities, total stockholders equity or net income.

Revenue
Recognition

The Company recognizes revenues in accordance with Statement of Position (SOP) 97-2, (Software Revenue Recognition) as amended by SOP 98-9
(Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions).Revenue from software license agreements is recognized when an agreement exists, delivery of the software has occurred, the fee is fixed or
determinable, and collectibility 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 sales.

Software and Development Enhancements

Software and development enhancements expenses include payroll and employee benefit costs associated with product development. The EDGE product platform is 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 were no amounts capitalized during the 13-week period ended March 31,
2006 and approximately $136,200 during the 13-week period ended April 1, 2005. Amortization expenses related to capitalized software and charged to operations for the 13-week period ended March 31, 2006 and April 1, 2005 were
approximately $96,700 and approximately $96,200, respectively.



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Cash and Cash Equivalents

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

Fiduciary Relationship

The Company has control of funds collected on behalf of customers and funds established by our customers, for the payment of our customers incentive programs. These accounts total approximately $15,300 at
March 31, 2006. Because the accounts represent funds held for customers and our customers purposes, the cash and the corresponding liability for future payments are not shown on the statement.

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 period ended March 31, 2006 and April 1, 2005, sales to one and two customers amounted to approximately $1,096,100 and $1,274,900,
respectively, or 37% and 53% of total revenues, respectively. Accounts receivable from the one customer at March 31, 2006 amounted to approximately $480,900 or approximately 27% of the balance. The risk of this is mitigated as the deferred
revenue and customer deposits from this customer at March 31, 2006 amounted to approximately $213,500.

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 $38,500 is considered necessary as of March 31, 2006. 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 31, 2006 by approximately $5,000. We do not accrue interest on past due receivables.

Identified Intangible Assets

The Company follows the provisions of SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, which establishes accounting standards for the impairment of long-lived assets such as property, plant and equipment and intangible assets subject to amortization. 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 period ended March 31, 2006 and April 1, 2005, there was no impairment of
long-lived or intangible assets.



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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.

Income Taxes

Taxes on income are provided in accordance with SFAS No. 109, Accounting for Income Taxes. Deferred income tax assets and liabilities are recognized for the
expected future tax consequences of events that have been reflected in the consolidated financial statements. Deferred tax assets and liabilities are determined based on the differences between the book values and the tax bases of particular assets
and liabilities and the tax effects of net operating loss and capital loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized as income or expense in the period that included the enactment date. There is no valuation allowance as of
March 31, 2006.

Stock-Based Compensation

The
Company previously applied the intrinsic value method provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations for stock-based compensation. Accordingly, the Company
recognized compensation expense on our restricted stock awards, but no compensation expense was recognized for fixed option plans as all option grants under the plan had an exercise price equal or greater to the fair market value of the underlying
common stock on the date of grant. As permitted, the Company had previously elected to adopt the disclosure-only provisions of Statement of Financial Accounting Standard No. 123, Accounting for Stock-Based Compensation.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment (SFAS 123R), which replaces SFAS No. 123;
Accounting for Stock-Based Compensation, (SFAS 123) and supercedes APB Opinion No. 25, Accounting for Stock Issued to Employees, (APB 25). SFAS 123R requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the financial statements based on their fair values. Under SFAS 123R, the Company is required to measure the cost of employee services received in exchange for stock options and similar
awards based on the grant-date fair value of the award and recognize this cost in the income statement over the period during which an employee is required to provide service in exchange for the award. The pro forma disclosures previously permitted
under SFAS 123 are no longer an alternative to financial statement recognition. The Company adopted SFAS 123R on December 31, 2005 using the modified prospective method, which did not require the recognition of any non-cash charges,
as there were no unvested stock options on that date.

The fair value concepts were not changed significantly in FAS 123R; however, in adopting
FAS 123R, companies must choose among alternative valuation models and amortization assumptions. After assessing alternative valuation models and amortization assumptions, the Company will continue using the Black-Scholes valuation model and
has elected to use the ratable method to amortize compensation expense over the vesting period of the grant.



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Since there were no stock option grants during the 13 week period ended April 1, 2005 no table is required
illustrating the pro forma effect on net income for periods prior to the adoption of SFAS 123R as if we had applied the fair value recognition provisions of SFAS 123 during such period.

Earnings per Share

Earnings per common share are computed in accordance with SFAS No. 128, Earnings Per
Share, which requires companies to present basic earnings per share and diluted earnings per share. Basic earnings per share are computed by dividing net income by the weighted average number of shares of common stock outstanding during the
year. Diluted earnings per common share are computed by dividing net income by the weighted average number of shares of common stock outstanding and dilutive options outstanding during the year. The weighted average number of shares was
approximately 13,784,266 and 12,628,092 for the 13-week periods ended March 31, 2006 and April 1, 2005, respectively. The diluted weighted average number of shares was approximately 14,810,566 and 12,914,569 for the 13-week period ended
March 31, 2006 and April 1, 2005, respectively. The earning per share calculation for the 13-week period ended March 31, 2006 and April 1, 2005 considers the shares issued in the reverse acquisition as outstanding at the
beginning of 2005.

Common stock equivalents for the 13-week periods ended March 31, 2006 and April 1, 2005 were anti-dilutive due to the net
losses sustained by the Company during these periods. Therefore, the diluted weighted average common shares outstanding for the dilutive weighted average share calculation in the period ended March 31, 2006 excludes approximately 1,026,300
shares that could dilute earnings per share in future periods.

3. Other Assets

Other assets consist of:



|                                                                    |  |               |           |  
|------------------------------------------------------------------- |  | ------------- | --------- | -
|                                                                    |  | March 31,2006 |          
|Escrow deposit                                                      |  | $             | 254,000   |  
|Deferred offering cost                                              |  |               | 537,300   |  
|Prepaid management fee                                              |  |               | 359,900   |  
|                                                                    |  |               | 1,151,200 |  
|                                                                    |  |               |           |  
|Current portion of management fee classified as other current asset |  |               | (84,700   | )
|                                                                    |  |               |           |  
|                                                                    |  | $             | 1,066,500 |  
|                                                                    |  |               |           |  

4. Equity

Common Stock

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

The Companys 2005 Stock Incentive Plan (the Plan) authorizes the Board of Directors the
authority to grant up to 2,000,000 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 shall in no event be less than the fair market value of the 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 Committee determines that special circumstances warrant a lower exercise price.



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The Companys 2000 Stock Incentive Plan authorizes up to 100,000 shares of common stock to any employee or
Consultant during any one calendar year for grants of both incentive stock options and non-qualified stock options to key employees, officers, directors, and consultants. Options granted under the Plan must be exercised within ten years of the date
of grant. The Option Price payable for the shares of Common Stock covered by any Option shall be determined by the Board of Directors, but shall in no event be less than the par value of Common Stock. The Option Price for Incentive Stock Options
shall not be less than the Fair Market Value of one share of Common Stock on the Date of Grant. The Option Price for Nonstatutory Options may be less than the Fair Market Value of Common Stock on the Date of Grant only if the Committee 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 Exercise Prices |           | Weighted Average Exercise Price
|Outstanding at December 31, 2004          |  | 973,598   |   |  | $                        | 1.01-1.50 |                                 | $ | 0.92
|Warrants and options granted              |  | 1,156,871 |   |  | $                        | 0.01-1.10 |                                 | $ | 0.76
|Warrants and options cancelled or expired |  | (479,482  | ) |  | $                        | 0.75-2.13 |                                 | $ | 0.83
|                                          |  |           |   |  |                          |           |                                 |   |     
|Outstanding at December 30, 2005          |  | 1,650,987 |   |  | $                        | 0.01-2.13 |                                 | $ | 0.80
|Warrants and options granted              |  | 25,000    |   |  | $                        | 2.50      |                                 | $ | 2.50
|Warrants and options cancelled or expired |  | 0         |   |  | $                        | 0         |                                 | $ | 0   
|                                          |  |           |   |  |                          |           |                                 |   |     
|Outstanding at March 31, 2006             |  | 1,675,987 |   |  | $                        | 0.01-2.50 |                                 | $ | 0.83

The following table summarizes information about options and warrants outstanding and exercisable as of
March 31, 2006:



|                      |  |                                  |  |                                  |  |                      |      |                               |           |                   |         |                      |   |     
|--------------------- |  | -------------------------------- |  | -------------------------------- |  | -------------------- | ---- | ----------------------------- | --------- | ----------------- | ------- | -------------------- | - | ----
|                      |  | Outstanding Warrants and Options |  | Exercisable Warrants and Options
|Range ofExercisePrice |  | NumberOutstanding                |  | WeightedAverageRemaining Life    |  | WeightedAveragePrice |      | WeightedAverageRemaining Life |           | NumberExercisable |         | WeightedAveragePrice
|$0.01                 |  | 327,460                          |  | 4.5 years                        |  | $                    | 0.01 |                               | 4.5 years |                   | 327,460 |                      | $ | 0.01
|$0.50-1.00            |  | 523,529                          |  | 4.3 years                        |  | $                    | 0.77 |                               | 4.3 years |                   | 523,529 |                      | $ | 0.77
|$1.00-2.50            |  | 824,998                          |  | 4.8 years                        |  | $                    | 1.19 |                               | 4.8 years |                   | 799,998 |                      | $ | 1.15

As of March 31, 2006 there were approximately 1,651,000 options exercisable at a weighted average exercise
price of $0.82. The intrinsic value of the exercisable warrants at March 31, 2006, based on the quoted market rate of $1.85 per common share is approximately $1,730,000.

Equity Funding

In January of 2006, the Company issued 125,000 common stock shares, $0.001 par value per share, under
Regulation D promulgated under the Securities Act of 1933, as amended. The purchase price of the stock was $125,000 or $1.00 per share and used for working capital.

In February of 2006, the Company purchased 394,462 shares from a certain investor for $100,000 and an option to purchase 20,000 Jagged Peak common shares at $2.00 per share. The purchase price of the stock was $0.25 per share. The stock was
purchased for another investor where Jagged Peak issued 394,000 common stock shares, $0.001 par value per share, under Regulation D promulgated under the Securities Act of 1933, as amended. The purchaser was an accredited investor as
such term is defined under such Regulation D. The purchase price of the stock is $110,000 or $0.28 per share. In addition the Company issued 100,000 common stock shares, $0.001 par value per share, under Regulation D



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promulgated under the Securities Act of 1933, as amended. The purchaser was an accredited investor as such term is defined under such Regulation
D. The purchase price of the stock is $100,000 or $1.00 per share. Approximately $26,000 was paid in fees related to these transactions. The net cash received from the above transactions was $84,000, which will be used for working capital.

In April of 2006, the Company issued 125,000 common stock shares, $0.001 par value per share, under Regulation D promulgated under the Securities Act of
1933, as amended. The purchase price of the stock was $125,000 or $1.00 per share and used for working capital.

5. Related Party Transaction

To ensure that the Company has adequate near-term liquidity, the officers of the Company have loaned the Company short-term capital. In most cases the
loans are for less than 30 days and no interest is expensed or paid to the officers. As of March 31, 2006 there was $150,000 due to one of the officers.

The Company contracted with Norco Accounting and Consulting Inc. (Norco) to provide accounting and consulting services. The Company spent approximately $7,600 during the 13-week period ended March 31, 2006. 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 Plan
of Operation

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.

Background of our Company

Jagged Peak, Inc. (the
Company or Jagged Peak) is headquartered in Clearwater, Florida, providing outsourced e-commerce solutions. The Companys proprietary Enterprise Dynamic Global Engine (EDGE) software is a multi language,
completely web-based solution, which allows our clients to promote and maintain their brands while leveraging our investment in infrastructure and technology. Our clients access our platform over the Internet, enabling companies to capture orders
through e-commerce or other business to business portals, control and coordinate distribution of orders, manage inventory, and fulfill orders electronically or physically across multiple suppliers, warehouses and partners in real-time. From a
shopper perspective, end-users enter the client site and seamlessly communicate with EDGE. End-users can then browse for products, create orders online and pay for those orders, once orders are processed, we either deliver the products digitally
through the Internet or communicate the order seamlessly to either our own fulfillment warehouse or to various third-party fulfillment agencies for physical delivery, which is all based on established client business rules to ensure optimal delivery
performance.

Jagged Peaks multi-channel, enterprise EDGE software solution provides a comprehensive, integrated platform for e-business management
that supports a broad range of applications. EDGE enables clients to create complex and robust e-commerce solutions and permits users real-time online order processing, order tracking, order fulfillment, order settlement, dynamic catalog management,
customer relation management, marketing and reporting. The EDGE technology is built to industry-standard best practices, allowing it to integrate 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 customers its software with a flexible managed services transaction based pricing model. Jagged Peak also offers its customers third party
fulfillment services that are typically bundled with its software and included in a turnkey web-to-ship solution.



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The EDGE platform has been deployed in multiple vertical markets such as consumer goods, financial services,
distribution, travel and tourism and manufacturing.

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 30, 2005 annual report filed with the SEC under Item 1 entitled Risks Particular to The Companys Business.

For the 13-week period ended March 31, 2006 compared to the 13-week period ended April 1, 2005

Net revenues increased approximately $582,300, or 24%, to approximately $2,968,800 for the 13-week period ended March 31, 2006, as compared to approximately
$2,386,500 for the 13-week period ended April 1, 2005. The increases in revenue primarily related to (i) significant increase in order / transaction volume, (ii) the continued expansion of services to existing customers and
(iii) the new customers resulting from marketing efforts.

Costs of sales, which consist primarily of labor, software amortization, technology,
facilities, postage, freight, and packing supplies increased by approximately $415,400, or 23%, to approximately $2,233,400 for the 13-week period ended March 31, 2006, as compared to approximately $1,818,000 for the 13-week period ended
April 1, 2005. As a percentage of revenues cost of sales amounted to approximately 75% of related revenues for the 13-week period ended March 31, 2006, as compared with approximately 76% for the 13-week period ended April 1, 2005.
Increase in costs of service and the decrease as a percentage of revenue resulted primarily from (i) increased order / transaction volume, (ii) increased productivity (iii) increased higher margined professional services and
(iv) costs related to increased shipping revenue. Executive management has started the implementation of its strategic plan 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.

General and administrative expense increased by approximately $181,200 or 32% to approximately $755,300 for the 13-week period ended March 31, 2006 as compared to approximately $574,100 for the 13-week period
ended April 1, 2005. The increase was primarily related to (i) increased personnel and other overhead expenses related to the sales and marketing plan, (ii) increases in infrastructure cost to support the current and expected growth,
(iii) employee benefits and bonus accruals, and (vii) increases in expenses directly related to being a public entity. Management will continue to implement strategies to maintain low general and administrative expenses while building a
scaleable infrastructure.

The Company realized a loss from continuing operations before provisions for income taxes of approximately $59,800 for the
13-week period ended March 31, 2006, compared with the loss from continuing operations before provisions for income taxes of approximately $59,100 for the 13-week period ended April 1, 2005.

The income tax benefit was approximately $18,500 for the 13-week period ended March 31, 2006 compared to an income tax benefit of approximately $17,500 for the
13-week period ended April 1, 2005. Differences between the effective tax rate used for 2006 and 2005, as compared to the U.S. federal statutory rate, are primarily due to permanent differences. As of March 31, 2006 the Company had federal
and state net operating loss carry-forwards totaling approximately $2,400,000, which begin to expire in 2021.

Basic loss per share from continuing
operations for the 13-week period ended March 31, 2006 was $0.00 per weighted average share, compared with basic loss of $0.00 per weighted average share for the 13-week period ended April 1, 2005.



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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

The Company
recognizes revenues in accordance with Statement of Position (SOP) 97-2, (Software Revenue Recognition) as amended by SOP 98-9 (Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions).Revenue from
software license agreements is recognized when an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectibility 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 sales.

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 period ended March 31, 2006
and April 1, 2005, sales to one and two customers amounted to approximately $1,096,100 and $1,274,900, respectively, or 37% and 53% of total revenues, respectively. Accounts receivable from the one customer at March 31, 2006 amounted to
approximately $480,900 or approximately 27% of the balance. The risk of this is mitigated as the deferred revenue and customer deposits from this customer at March 31, 2006 amounted to approximately $213,500.



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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 $38,500 is considered necessary as of March 31,
2006. 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 31, 2006 by approximately
$5,000. We do not accrue interest on past due receivables.

Contingent Liabilities

In the normal course of business the Company is party to legal actions, which are not material to operations pursuant to Item 301 of Regulation S-B.

EBITDA

EBITDA for the 13-week period ended March 31, 2006 was approximately $113,200 compared to approximately
$126,600 in the comparable period of the prior year. The decrease in the EBITDA directly relates to the increased administrative cost and the non-capitalization EDGE enhancements. The Company defines EBITDA as earnings before interest, taxes,
depreciation and amortization costs. The Company also excludes the cumulative effect of a change in accounting principle, discontinued operations, and the impact of restructuring and other charges from the computation. The Company believes EBITDA is
a useful measure of operating performance before the impact of investing and financing transactions, making comparisons between companies earnings power more meaningful and providing consistent comparisons of the Companys performance. In
order to provide consistent comparisons of year-over-year EBITDA, the following reconciliation is provided.



|                              |  |                        |         |   |              |   |         |  
|----------------------------- |  | ---------------------- | ------- | - | ------------ | - | ------- | -
|                              |  | For the 13-weeks ended |        
|                              |  | March 31,2006          |         |   | April 1,2005 |  
|Net loss as reported          |  | $                      | (41,300 | ) |              | $ | (41,600 | )
|Income tax benefit            |  |                        | (18,500 | ) |              |   | (17,500 | )
|Interest expense              |  |                        | 39,900  |   |              |   | 53,500  |  
|Depreciation and amortization |  |                        | 133,100 |   |              |   | 132,200 |  
|                              |  |                        |         |   |              |   |         |  
|EBITDA                        |  | $                      | 113,200 |   |              | $ | 126,600 |  
|                              |  |                        |         |   |              |   |         |  

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



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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 31, 2006 the Company has approximately $1,035,500 of negative working capital and has cash
and cash equivalents of approximately $73,400, compared with approximately $20,500 of cash and cash equivalents at December 30, 2005. A significant portion of this negative working capital is related to the notes payable due in the first
quarter of 2007, the high balance of deferred revenue and customer deposits and the timing of accounts payable payments. The Company anticipates that through the sale of securities and by continued restructuring of the debt, the Company will be able
to have positive working capital by the end of 2006.

During the 13-week period ended March 31, 2006 cash has increased by approximately $52,900.
During the 13-week period ended March 31, 2006 the change was primarily caused by (i) losses from operations, (ii) the increase of debt and equity of approximately $209,000; (iii) the significant increase in the accounts
receivable; (iv) non-cash expenses, including but not limited to depreciation and amortization, (v) increase in accrued salaries, (vi) increases in deferred revenue and customer deposits, and (vi) other changes in assets and
liabilities. Management expects to have negative cash flow from operations in the short term, while the Company continues to experience rapid internal growth, progresses with the Companys marketing campaigns and establishes the necessary
infrastructure to support the Companys future plans. Management expects this trend to slow and become positive cash flow from operations as the product becomes more mature in the market and the Company is able to capitalize on its technology
investments.

The Company has continued its capital raising efforts and has raised approximately $200,000 in the first quarter of 2006 as follows:

In January of 2006, the Company issued 125,000 common stock shares, $0.001 par value per share, under Regulation D promulgated under the Securities Act of
1933, as amended. The purchase price of the stock was $125,000 or $1.00 per share.

In February of 2006, the Company purchased 394,462 shares from a certain
investor for $100,000 and an option to purchase 20,000 Jagged Peak common shares at $2.00 per share. The purchase price of the stock was $0.25 per share. The stock was purchased for another investor where Jagged Peak issued 394,000 common stock
shares, $0.001 par value per share, under Regulation D promulgated under the Securities Act of 1933, as amended. The purchaser was an accredited investor as such term is defined under such Regulation D. The purchase price of the stock is
$110,000 or $0.28 per share. In addition, the Company issued 100,000 common stock shares, $0.001 par value per share, under Regulation D promulgated under the Securities Act of 1933, as amended. The purchaser was an accredited investor
as such term is defined under such Regulation D. The purchase price of the stock is $100,000 or $1.00 per share. Approximately $26,000 was paid in fees related to these transactions. The net cash received from the above transaction was $84,000.



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All of the capital raised has been used as working capital.

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. There is no assurance that we will be able to obtain financing on terms favorable to the Company or successfully implement
infrastructure growth strategies.

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

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

Item 3. 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 31, 2006. 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. There has been no significant change in the Companys internal control over financial reporting during the fiscal
quarter ended March 31, 2006 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, neither we nor any of our officers or directors is
involved in any litigation either as plaintiffs or defendants. As of this date, to our knowledge there is not any threatened or pending litigation against us or any of our officers or directors.

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

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

Item 3. Defaults Upon Senior Securities

During the 13-week period ended March 31, 2006, the Company was in default on
the financial covenants of the Companys bank loans and bank line of credit. The Company has received a forbearance agreement related to this debt, which provides for payments through February of 2007. The Company is in compliance with the
forbearance agreement and has timely paid all amounts due under the agreement. The entire debt due under this agreement is classified as current. The forbearance agreement is filed with the December 30, 2005 annual report filed on the form
10KSB.



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##### Table of Contents

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

During the 13-week period ended March 31, 2006, the
Company did not submit any matters to a vote of its security holders.

Item 5. Other Matters

Andrew J. Norstruds employment agreement dated December 29, 2005 was amended on
May 9, 2006 to extend the term of the contract through December 29, 2009 and change the terms of the change of control section. See exhibit 10.5 Amendment to Andrew J. Norstrud employment agreement.

Item 6. Exhibits



|     |  |                                                                                                                                                                                                                                                                                     
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)  |  | Exhibits included herewith are:                                                                                                                                                                                                                                                     
|     | 
|10.5 |  | Amendment to Andrew J. Norstrud employment agreement                                                                                                                                                                                                                                
|     | 
|31.1 |  | Certification of the Chief Executive Officer dated May 10, 2006 (This certification required as Exhibit 31 under Item 601(a) of Regulation S-K is filed as Exhibit 99.1 pursuant to SEC interim
filing guidance.)                                                                   
|     | 
|31.2 |  | Certification of the Chief Financial Officer dated May 10, 2006 (This certification required as Exhibit 31 under Item 601(a) of Regulation S-K is filed as Exhibit 99.2 pursuant to SEC interim
filing guidance.)                                                                   
|     | 
|32.1 |  | Written Statements of the Chief Executive Officer dated May 10, 2006 (This certification required as Exhibit 32 under Item 601(a) of Regulation S-K is furnished in accordance with Item
601(b)(32)(iii) of Regulation S-K as Exhibit 99.3 pursuant to SEC interim filing guidance.)
|     | 
|32.2 |  | Written Statements of the Chief Financial Officer dated May 10, 2006 (This certification required as Exhibit 32 under Item 601(a) of Regulation S-K is furnished in accordance with Item
601(b)(32)(iii) of Regulation S-K as Exhibit 99.3 pursuant to SEC interim filing guidance.)

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 10, 2006 |  | 
|Paul B. Demirdjian      |  | Date         |  | 
|Chief Executive Officer |  |              |  | 
|                        |  |             
|/s/ Andrew J. Norstrud  |  | May 10, 2006 |  | 
|Andrew J. Norstrud      |  | Date         |  | 
|Chief Financial Officer |  |              |  | 



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