##### Table of Contents

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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 30, 2007

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 Drive Suite 330, Clearwater, FL 33762

(Address of principal executive offices, including zip code)

(727) 499-1717

(Registrants telephone number, including area code)



(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 30, 2007 was $3,268,000.

Aggregate market
value of the voting stock held by non-affiliates of the registrant at May 10, 2007 was $2,510,971.

The Registrant has 70,000,000 shares of common
stock, par value $0.001, authorized and 13,949,837 shares of common stock outstanding as of May 10, 2007.

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



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##### Table of Contents

Table of Contents

PART IFINANCIAL INFORMATION



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

Jagged Peak, Inc.

Financial Statements

13 Week Periods
Ended

March 30, 2007 (Unaudited) and March 31, 2006 (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  |  | 5-12

|                            |  |                                                                                   |  |   
|--------------------------- |  | --------------------------------------------------------------------------------- |  | --
|                            |  |                                                                                  
|Item 2.                     |  | Managements Discussion and Analysis of Financial Condition and Plan of Operation |  | 13
|                            |  |                                                                                  
|Item 3.                     |  | Controls and Procedures                                                           |  | 17
|                            | 
|Part II  Other Information |  | 18                                                                               
|                            |  |                                                                                  
|Item 1.                     |  | Legal Proceedings                                                                 |  | 18
|                            |  |                                                                                  
|Item 2.                     |  | Unregistered Sales of Equity Securities and Use of Proceeds                       |  | 18
|                            |  |                                                                                  
|Item 3.                     |  | Defaults Upon Senior Securities                                                   |  | 18
|                            |  |                                                                                  
|Item 4.                     |  | Submission of Matters to a Vote of Security Holders                               |  | 18
|                            |  |                                                                                  
|Item 5.                     |  | Other Matters                                                                     |  | 18
|                            |  |                                                                                  
|Item 6.                     |  | Exhibits                                                                          |  | 18
|                            |  |                                                                                  
|Signatures                  |  |                                                                                   |  | 19



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Jagged Peak, Inc.

Balance Sheet

March 30, 2007 (Unaudited)



|                                                                                                      |  |   |            |  
|----------------------------------------------------------------------------------------------------- |  | - | ---------- | -
|Assets                                                                                                |  |   |            |  
|Current assets:                                                                                       |  |   |            |  
|Cash                                                                                                  |  | $ | 830,900    |  
|Accounts receivable, net of allowance for doubtful accounts of $90,000                                |  |   | 1,350,200  |  
|Other receivable                                                                                      |  |   | 51,000     |  
|Work in process, net of allowance of $20,000                                                          |  |   | 168,000    |  
|Deferred tax asset                                                                                    |  |   | 67,700     |  
|Deposits and other current assets                                                                     |  |   | 391,400    |  
|                                                                                                      |  |   |            |  
|Total current assets                                                                                  |  |   | 2,859,200  |  
|                                                                                                      | 
|Property and equipment, net of accumulated depreciation of $1,567,000                                 |  |   | 306,500    |  
|                                                                                                      | 
|Other assets:                                                                                         |  |   |            |  
|EDGE Platform, net of accumulated amortization of $1,146,400                                          |  |   | 149,000    |  
|Deferred tax asset                                                                                    |  |   | 1,191,000  |  
|Other assets                                                                                          |  |   | 549,100    |  
|                                                                                                      |  |   |            |  
|Total long-term assets                                                                                |  |   | 2,195,600  |  
|Total assets                                                                                          |  | $ | 5,054,800  |  
|                                                                                                      |  |   |            |  
|Liabilities and Stockholders Equity                                                                  |  |   |            |  
|Current liabilities:                                                                                  |  |   |            |  
|Accounts payable, trade                                                                               |  | $ | 1,079,400  |  
|Accrued payroll                                                                                       |  |   | 225,000    |  
|Other accrued expenses                                                                                |  |   | 42,000     |  
|Deferred rent                                                                                         |  |   | 20,300     |  
|Notes payable, current portion                                                                        |  |   | 180,000    |  
|Revolving Note, $1,000,000 available at March 30, 2007                                                |  |   |           |  
|Deferred revenue and customer deposits                                                                |  |   | 893,700    |  
|                                                                                                      |  |   |            |  
|Total current liabilities                                                                             |  |   | 2,440,400  |  
|Long-term liabilities:                                                                                |  |   |            |  
|Notes payable, net of current portion                                                                 |  |   | 1,820,000  |  
|Deferred rent                                                                                         |  |   | 114,400    |  
|                                                                                                      |  |   |            |  
|Total long-term liabilities                                                                           |  |   | 1,934,400  |  
|Stockholders equity:                                                                                 |  |   |            |  
|Common stock, $.001 par value; 70,000,000 shares authorized; 13,949,837 shares issued and outstanding |  |   | 14,000     |  
|Additional paid-in capital                                                                            |  |   | 3,296,000  |  
|Accumulated deficit                                                                                   |  |   | (2,630,000 | )
|                                                                                                      |  |   |            |  
|Total stockholders equity                                                                            |  |   | 680,000    |  
|Total liabilities and stockholders equity                                                            |  | $ | 5,054,800  |  
|                                                                                                      |  |   |            |  

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



1



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##### Table of Contents

Jagged Peak, Inc.

Statements of Operations (Unaudited)



|                                                                             |  |                      |            |   |                |   |            |  
|---------------------------------------------------------------------------- |  | -------------------- | ---------- | - | -------------- | - | ---------- | -
|                                                                             |  | Thirteen Weeks Ended |           
|                                                                             |  | March 30, 2007       |            |   | March 31, 2006 |  
|Revenue                                                                      |  |                      |            |   |                |   |            |  
|Gross revenue                                                                |  | $                    | 4,202,600  |   |                | $ | 3,656,900  |  
|Discounts, freight and other                                                 |  |                      | (934,600   | ) |                |   | (688,100   | )
|                                                                             |  |                      |            |   |                |   |            |  
|Net revenues                                                                 |  |                      | 3,268,000  |   |                |   | 2,968,800  |  
|Cost of sales                                                                |  |                      | 2,583,000  |   |                |   | 2,233,400  |  
|                                                                             |  |                      |            |   |                |   |            |  
|Gross profit                                                                 |  |                      | 685,000    |   |                |   | 735,400    |  
|                                                                             |  |                      |            |   |                |   |            |  
|Operating expenses:                                                          |  |                      |            |   |                |   |            |  
|General and administrative expenses                                          |  |                      | 787,500    |   |                |   | 755,300    |  
|                                                                             |  |                      |            |   |                |   |            |  
|Operating loss                                                               |  |                      | (102,500   | ) |                |   | (19,900    | )
|                                                                             |  |                      |            |   |                |   |            |  
|Other expenses:                                                              |  |                      |            |   |                |   |            |  
|Interest expense                                                             |  |                      | 129,400    |   |                |   | 39,900     |  
|                                                                             |  |                      |            |   |                |   |            |  
|Total other expenses                                                         |  |                      | 129,400    |   |                |   | 39,900     |  
|                                                                             |  |                      |            |   |                |   |            |  
|Loss before tax benefit                                                      |  |                      | (231,900   | ) |                |   | (59,800    | )
|                                                                             |  |                      |            |   |                |   |            |  
|Provision for income tax benefit                                             |  |                      | (75,900    | ) |                |   | (18,500    | )
|Net loss                                                                     |  | $                    | (156,000   | ) |                | $ | (41,300    | )
|                                                                             |  |                      |            |   |                |   |            |  
|Weighted average number of common shares outstanding  basic & fully diluted |  |                      | 13,886,588 |   |                |   | 13,784,266 |  
|                                                                             |  |                      |            |   |                |   |            |  
|Net loss per share  basic & fully diluted                                   |  | $                    | (0.01      | ) |                | $ | (0.00      | )
|                                                                             |  |                      |            |   |                |   |            |  

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



2



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Jagged Peak, Inc.

Statement of Changes in Stockholders Equity

13 Weeks Ended March 30, 2007 (Unaudited)



|                                                            |  |              |  |            |        |                |   |                    |  |   |            |   |  |   |          |  
|----------------------------------------------------------- |  | ------------ |  | ---------- | ------ | -------------- | - | ------------------ |  | - | ---------- | - |  | - | -------- | -
|                                                            |  | Common Stock |  | Additional |        |                |   |                    |  |  
|                                                            |  | Shares       |  | Amount     |        | Paid inCapital |   | AccumulatedDeficit |  |   | Total      |  
|Balance, December 29, 2006                                  |  | 13,869,297   |  | $          | 13,900 |                | $ | 3,274,100          |  | $ | (2,474,000 | ) |  | $ | 814,000  |  
|Issuance of stock related to compensation and warrants      |  | 80,540       |  |            | 100    |                |   | 3,900              |  |   |            |   |  |   | 4,000    |  
|Amortization of officer, director and employee compensation |  |              |  |            |        |                |   | 18,000             |  |   |            |   |  |   | 18,000   |  
|Net loss for the period                                     |  |              |  |            |        |                |   |                    |  |   | (156,000   | ) |  |   | (156,000 | )
|                                                            |  |              |  |            |        |                |   |                    |  |   |            |   |  |   |          |  
|Balance, March 30, 2007                                     |  | 13,949,837   |  | $          | 14,000 |                | $ | 3,296,000          |  | $ | (2,630,000 | ) |  | $ | 680,000  |  
|                                                            |  |              |  |            |        |                |   |                    |  |   |            |   |  |   |          |  

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 30, 2007 |          |   | March 31, 2006 |  
|Operating activities                                                        |  |                |          |   |                |   |          |  
|Net loss                                                                    |  | $              | (156,000 | ) |                | $ | (41,300  | )
|                                                                            |  |                |          |   |                |   |          |  
|Adjustments to reconcile net loss to net cash used by operating activities: |  |                |          |   |                |   |          |  
|Depreciation and amortization                                               |  |                | 107,800  |   |                |   | 133,100  |  
|Non-cash consulting expense                                                 |  |                | 3,400    |   |                |   | 21,200   |  
|Non-cash amortization of officers, director and employees compensation      |  |                | 18,000   |   |                |   |          |  
|Amortization related to long term debt                                      |  |                | 80,300   |   |                |   | 5,600    |  
|Adjustment to allowance for bad debt expense                                |  |                | 23,900   |   |                |   | 31,100   |  
|Changes in:                                                                 |  |                |          |   |                |   |          |  
|Accounts receivable                                                         |  |                | (182,000 | ) |                |   | (745,000 | )
|Work-in-process                                                             |  |                | (144,300 | ) |                |   | 57,100   |  
|Other current assets                                                        |  |                | 5,600    |   |                |   | 30,800   |  
|Other assets                                                                |  |                |          |   |                |   | 15,900   |  
|Deferred tax asset                                                          |  |                | (75,900  | ) |                |   | (18,500  | )
|Accounts payable                                                            |  |                | (17,000  | ) |                |   | 14,200   |  
|Accrued payroll                                                             |  |                | (115,000 | ) |                |   | 135,200  |  
|Accrued expenses                                                            |  |                | 11,600   |   |                |   | (9,400   | )
|Deferred rent                                                               |  |                | (5,000   | ) |                |   | (3,200   | )
|Other liabilities                                                           |  |                | 346,900  |   |                |   | 181,400  |  
|                                                                            |  |                |          |   |                |   |          |  
|Net cash flows used by operating activities                                 |  |                | (97,700  | ) |                |   | (191,800 | )
|                                                                            |  |                |          |   |                |   |          |  
|Investing activities                                                        |  |                |          |   |                |   |          |  
|Acquisition of property and equipment                                       |  |                | (19,200  | ) |                |   | (22,600  | )
|                                                                            |  |                |          |   |                |   |          |  
|Cash flows used by investing activities                                     |  |                | (19,200  | ) |                |   | (22,600  | )
|                                                                            |  |                |          |   |                |   |          |  
|Financing activities                                                        |  |                |          |   |                |   |          |  
|Net proceeds and payments on bank credit line                               |  |                |          |   |                |   | (25,000  | )
|Proceeds from related party notes payable                                   |  |                |          |   |                |   | 150,000  |  
|Payments on notes payable                                                   |  |                |          |   |                |   | (66,700  | )
|Issuance of common stock, net                                               |  |                | 600      |   |                |   | 209,000  |  
|                                                                            |  |                |          |   |                |   |          |  
|Cash flows provided by financing activities                                 |  |                | 600      |   |                |   | 267,300  |  
|                                                                            |  |                |          |   |                |   |          |  
|Net (decrease) increase in cash                                             |  |                | (116,300 | ) |                |   | 52,900   |  
|Cash, beginning of period                                                   |  |                | 947,200  |   |                |   | 20,500   |  
|                                                                            |  |                |          |   |                |   |          |  
|Cash, end of period                                                         |  | $              | 830,900  |   |                | $ | 73,400   |  
|                                                                            |  |                |          |   |                |   |          |  
|Supplemental disclosure of cash flow information                            |  |                |          |   |                |   |          |  
|Cash paid during the period for interest                                    |  | $              | 49,100   |   |                | $ | 34,300   |  

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 30, 2007 and March 31, 2006



|1. | General Background Information
|-- | ------------------------------

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

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. 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 also offers its clients third party fulfillment services that are typically bundled with its software and sold as a turnkey
web-to-ship solution.

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 30, 2007 and March 31, 2006 consists 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 financial
position at March 30, 2007, (b) the results of operations for the 13-weeks ended March 30, 2007 and March 31, 2006, (c) the statement of changes in stockholders equity ended March 30, 2007 and (d) cash flows
for the 13-weeks ended March 30, 2007 and March 31, 2006, 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 29, 2006.

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



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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.

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 30, 2007 or during the 13-week period ended March 31, 2006. Amortization expenses related to capitalized software and charged to operations for the 13-week
period ended March 30, 2007 and March 31, 2006 were approximately $71,300 and approximately $96,700, respectively.

Cash and Cash Equivalents

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

Fiduciary
Relationship

The Company has control of funds collected on behalf of customers and funds established by our customers, for the payment of our customers
incentive programs. These accounts total approximately $27,800 and $15,300 at March 30, 2007 and March 31, 2006, respectively. 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.



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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 30, 2007 and March 31, 2006, sales to one customer amounted to approximately
$1,887,200 and $1,096,100, respectively, or 58% and 37% of total revenues, respectively. Accounts receivable from the one customer at March 30, 2007 amounted to approximately $401,100 or approximately 28% of the balance. The risk of this is
mitigated as the deferred revenue and customer deposits from this customer at March 30, 2007 amounted to approximately $250,000.

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 $90,000 is considered necessary as of March 30, 2007. 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 30, 2007 by approximately $10,000. 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 30, 2007 and March 31, 2006, 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.



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



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

Estimated Fair Value of Financial Instruments

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

Income Taxes

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 30, 2007.

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.



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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.

The value of each grant under FAS 123R is estimated at the grant date using
the Black-Scholes option model with the following weighted average assumptions for options granted in 2006: the historical dividend rate of 0%; the risk-free interest rate of 3.6% for periods within the contractual life of the option is based on the
U.S. Treasury yield curve in effect at the time of grant; the expected term of 5 years which was calculated based on the companys historical pattern of options granted are expected to be outstanding; and expected volatility of 75% which was
calculated by review of the Companys historical activity as well as comparable peer companies.

There were no options granted during the 13-week
period ended March 30, 2007 and approximately 25,000 options granted during the 13-week period ended March 31, 2006. As of March 30, 2007, there was approximately $104,500 of unrecognized stock-based compensation expense related to
nonvested stock options. This expense will be recognized over a weighted average period of approximately two years.

The following table represents our
nonvested stock option activity for the 13-week period ended March 30, 2007:



|                                      |  |                   |   |  |                                        |     
|------------------------------------- |  | ----------------- | - |  | -------------------------------------- | ----
|                                      |  | Number of Options |   |  | Weighted Average Grant Date Fair
Value
|Nonvested options - December 31, 2006 |  | 295,000           |   |  | $                                      | 0.50
|Granted                               |  | 0                 |   |  | $                                      | 0.00
|Vested                                |  | (12,500           | ) |  | $                                      | 0.44
|Forfeited                             |  | (35,000           | ) |  | $                                      | 0.57
|                                      |  |                   |   |  |                                        |     
|Nonvested options  March 30, 2007    |  | 247,500           |   |  | $                                      | 0.49
|                                      |  |                   |   |  |                                        |     

There was no aggregate intrinsic value of options outstanding at March 30, 2007, based on the Companys
closing stock price of $0.18 as of the last business day of the period ended March 30, 2007, which would have been received by the optionees had all options been exercised on that date. There was no aggregate intrinsic value of options
exercisable at March 30, 2007, based on the Companys closing stock price of $0.18 as of the last business day of the period ended March 30, 2007, which would have been received by the optionees had all options exercisable been
exercised on that date. There were no options exercised during the 13-weeks ended March 30, 2007 and March 31, 2006.



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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 13,886,588 and 13,784,266 for the 13-week periods ended March 30, 2007 and March 31, 2006, respectively. The diluted weighted average
number of shares was approximately 14,929,940 and 14,810,566 for the 13-week period ended March 30, 2007 and March 31, 2006, respectively.

Common stock equivalents for the 13-week periods ended March 30, 2007 and March 31, 2006 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 30, 2007 and March 31, 2006 excludes approximately 1,043,352 shares and 1,026,300 shares that could dilute earnings per share in future periods,
respectively.



|3. | Other Assets
|-- | ------------

Other assets consist of:



|                                                  |  |                |        
|------------------------------------------------- |  | -------------- | -------
|                                                  |  | March 30, 2007
|Capitalized debt cost                             |  | $              | 870,500
|                                                  |  |                |        
|                                                  |  |                | 870,500
|Current portion classified as other current asset |  |                | 321,400
|                                                  |  |                |        
|                                                  |  | $              | 549,100
|                                                  |  |                |        



|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.

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.



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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 30, 2005               |  | 1,650,987 |   |  | $                        | 0.01-2.13 |                                 | $ | 0.80
|Warrants, Convertible Debt and options granted |  | 4,176,600 |   |  | $                        | 0.01-2.50 |                                 | $ | 0.69
|Warrants and options cancelled or expired      |  | (233,343  | ) |  | $                        | 0.01      |                                 | $ | 0.01
|                                               |  |           |   |  |                          |           |                                 |   |     
|Outstanding at December 29, 2006               |  | 5,594,244 |   |  | $                        | 0.01-2.50 |                                 | $ | 0.75
|Warrants options granted                       |  |          |   |  | $                        |          |                                 | $ |    
|Warrants exercised                             |  | (63,540   | ) |  | $                        | 0.01      |                                 | $ | 0.01
|Warrants and options cancelled or expired      |  | (358,528  | ) |  | $                        | 0.55-2.00 |                                 | $ | 1.25
|                                               |  |           |   |  |                          |           |                                 |   |     
|Outstanding at March 30, 2007                  |  | 5,172,176 |   |  | $                        | 0.01-2.50 |                                 | $ | 0.72
|                                               |  |           |  
|Exercisable at March 30, 2007                  |  | 4,924,676 |   |  | $                        | 0.01-2.50 |                                 | $ | 0.70
|Exercisable at December 29, 2006               |  | 5,274,244 |   |  | $                        | 0.01-2.13 |                                 | $ | 0.73

The following table summarizes information about options and warrants outstanding and exercisable
as of March 30, 2007:



|                        |  |                                  |  |                                  |  |                        |      |                                 |            |                    |           |                        |   |     
|----------------------- |  | -------------------------------- |  | -------------------------------- |  | ---------------------- | ---- | ------------------------------- | ---------- | ------------------ | --------- | ---------------------- | - | ----
|                        |  | Outstanding Warrants and Options |  | Exercisable Warrants and Options
|Range of Exercise Price |  | Number Outstanding               |  | Weighted Average Remaining Life  |  | Weighted Average Price |      | Weighted Average Remaining Life |            | Number Exercisable |           | Weighted Average Price
|$0.01                   |  | 1,037,177                        |  | 31.1 years                       |  | $                      | 0.01 |                                 | 31.1 years |                    | 1,037,177 |                        | $ | 0.01
|$0.55-0.77              |  | 1,528,529                        |  | 4.6 years                        |  | $                      | 0.62 |                                 | 4.5 years  |                    | 1,373,529 |                        | $ | 0.63
|$1.00-2.50              |  | 2,606,470                        |  | 3.2 years                        |  | $                      | 1.07 |                                 | 3.2 years  |                    | 2,513,970 |                        | $ | 1.04

As of March 30, 2007 and December 29, 2006, there were approximately 4,924,676 and
5,274,244 options exercisable at a weighted average exercise price of $0.70 and $0.73, respectively. There were no options granted in 2007 and the weighted average fair value of options at the date of grant of the options was $0.47 for 2006.

Equity Funding

In March of 2007, the Company issued
63,540 restricted common stock shares, $0.001 par value per share. The stock was issued based on the exercise of common stock warrants. The exercise price of the stock was approximately $600 or $0.01 per share and was used for working capital.



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|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 30, 2007 there was no amounts owed
to officers of the Company for loans. 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 did not use the services for the 13-week period ended March 30, 2007 and 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 an e-business
software and services company headquartered in Clearwater, Florida, providing Demand and Supply Chain management, CRM execution and e-Fulfillment solutions and services. The Companys flagship product, EDGE (E-Business Dynamic Global Engine),
is a web-based software application that enables companies to control and coordinate multi-channel orders, catalogs, multi-warehouse inventories, and fulfillment across multiple customers, suppliers, employees, and partners in real-time. The
Companys clients are able to build and operate custom branded portals such as e-commerce, incentive and rebate programs, customer service, repair and reverse logistics and automate other business processes through the use of the EDGE
application and its related tools.

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. 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 also offers its clients third party fulfillment services that are typically bundled with its software and sold as a turnkey web-to-ship solution.

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,



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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 29, 2006 annual report filed with the SEC under Item 1 entitled Risks Particular to The Companys Business.

For the 13-week period ended March 30, 2007 compared to the 13-week period ended March 31, 2006

Net
revenues increased approximately $299,200, or 10%, to approximately $3,268,000 for the 13-week period ended March 30, 2007, as compared to approximately $2,968,800 for the 13-week period ended March 31, 2006. The increases in revenue
primarily related to (i) significant increase in order / transaction volume, and (ii) the continued expansion of services to existing customers.

Costs of sales, which consist primarily of labor, software amortization, technology, facilities, postage, freight, and packing supplies increased by approximately $349,600, or 16%, to approximately $2,583,000 for the 13-week period ended
March 30, 2007, as compared to approximately $2,233,400 for the 13-week period ended March 31, 2006. As a percentage of revenues cost of sales amounted to approximately 79% of related revenues for the 13-week period ended March 30,
2007, as compared with approximately 75% for the 13-week period ended March 31, 2006. Increase in costs of service and the increase as a percentage of revenue resulted primarily from (i) increased order / transaction volume,
(ii) increase of technology staff to accommodate new contracts (iii) increased lower margined revenue and (iv) costs related to significant increased shipping 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.
Management expects the percentage of cost of sales to revenue to decrease as sales increases and we are able to capitalize on the additional capacity.

General and administrative expense increased by approximately $32,200 or 4% to approximately $787,500 for the 13-week period ended March 30, 2007 as compared to approximately $755,300 for the 13-week period ended March 31, 2006.
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, and (iii) employee
benefits and bonus accruals. 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.
Management has budgeted for significant increases in general and administrative expenses in the second and third quarter of 2007 as the Company builds the sales organization.

The Company realized a loss from continuing operations before provisions for income taxes of approximately $231,900 for the 13-week period ended March 30, 2007, compared with the loss from continuing operations
before provisions for income taxes of approximately $59,800 for the 13-week period ended March 31, 2006.

The income tax benefit was approximately
$75,900 for the 13-week period ended March 30, 2007 compared to an income tax benefit of approximately $18,500 for the 13-week period ended March 31, 2006. Differences between the effective tax rate used for 2007 and 2006, as compared to
the U.S. federal statutory rate, are primarily due to permanent differences. As of March 30, 2007 the Company had federal and state net operating loss carry-forwards totaling approximately $2,700,000, which begin to expire in 2021.

Basic loss per share from continuing operations for the 13-week period ended March 30, 2007 was $0.01 per weighted average share, compared with basic loss of
$0.00 per weighted average share for the 13-week period ended March 31, 2006.



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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 30, 2007
and March 31, 2006, sales to one customer amounted to approximately $1,887,200 and $1,096,100, respectively, or 58% and 37% of total revenues, respectively. Accounts receivable from the one customer at March 30, 2007 amounted to
approximately $401,100 or approximately 28% of the balance. The risk of this is mitigated as the deferred revenue and customer deposits from this customer at March 30, 2007 amounted to approximately $250,000.

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



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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 $90,000 is considered necessary as of
March 30, 2007. 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 30, 2007
by approximately $10,000. 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 30, 2007 was
approximately $5,300 compared to approximately $113,200 in the comparable period of the prior year. The decrease in the EBITDA directly relates to the decrease of margin 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 30, 2007         |          |   | March 31, 2006 |  
|Net loss as reported          |  | $                      | (156,000 | ) |                | $ | (41,300 | )
|Income tax benefit            |  |                        | (75,900  | ) |                |   | (18,500 | )
|Interest expense              |  |                        | 129,400  |   |                |   | 39,900  |  
|Depreciation and amortization |  |                        | 107,800  |   |                |   | 133,100 |  
|                              |  |                        |          |   |                |   |         |  
|EBITDA                        |  | $                      | 5,300    |   |                | $ | 113,200 |  
|                              |  |                        |          |   |                |   |         |  

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.



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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 30, 2007 the Company has approximately $418,800 of working capital and has cash and cash equivalents of approximately $830,900, compared with
approximately $947,200 of cash and cash equivalents at December 29, 2006.

During the 13-week period ended March 30, 2007 cash has decreased by
approximately $116,300. During the 13-week period ended March 30, 2007 the change was primarily caused by (i) losses from operations, (ii) the significant increase in the accounts receivable; (iii) non-cash expenses, including
but not limited to depreciation and amortization, (iv) decrease in accrued salaries, (v) increases in deferred revenue and customer deposits, and (vi) other changes in assets and liabilities. Management expects to have negative cash
flow from operations, 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 has the
full $1,000,000 line of credit available at March 30, 2007 for any short term cash needs.

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 30, 2007. 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



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Companys internal control over financial reporting during the fiscal quarter ended March 30, 2007 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
|------- | -------------------------------

None.



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

During the
13-week period ended March 30, 2007, the Company did not submit any matters to a vote of its security holders.



|Item 5. | Other Matters
|------- | -------------

None.



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

(a) Exhibits included herewith are:



|     |  |                                                                                                                                                                                                                                                                                     
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of the Chief Executive Officer dated May 10, 2007 (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, 2007 (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, 2007 (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, 2007 (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.)



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##### Table of Contents

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, 2007 |  | 
|Paul B. Demirdjian      |  | Date         |  | 
|Chief Executive Officer |  |              |  | 
|                        |  |             
|/s/ Andrew J. Norstrud  |  | May 10, 2007 |  | 
|Andrew J. Norstrud      |  | Date         |  | 
|Chief Financial Officer |  |              |  | 



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