**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB**





**|X|
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
      SECURITIES**


**EXCHANGE
      ACT OF 1934**





**For
      the quarterly period ended March 31, 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: 000-28515**





**FP
      TECHNOLOGY, INC.**


--------------------------------------------------------------------------------


**(Exact
      name of small business issuer as specified in its charter)**


**Delaware                                                           20-3446646**


**------------------------------------------------------------------------------------------------------------------**


**(State
      or other jurisdiction
      of                                            
(IRS Employer Identification Number)**


**incorporation or organization)**





**181
      Wells Avenue, Newton, MA 02459**


**--------------------------------------------------------------------------------**


**(Address
      of principal executive offices)**


**(617)
      928-6001**


--------------------------------------------------------------------------


**(Issuer's
      telephone number)**





--------------------------------------------------------------


**(Former
      name, former address and former fiscal year,**


**if
      changed since last report)**





**__________________________**


Check
      whether the issuer (1) has filed all reports required to be filed by Section
      13
      or 15 (d) of the 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: Yes |X| No
      | |





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





Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) after distribution of securities under a plan confirmed
      by a court: Yes |X| No |_|





The
      number of shares outstanding of the issuer's common stock, par value $.001
      per
      share, as of May
      15,
      2007 is 8,164,239 shares.





Transitional
      Small Business Disclosure Format (Check one): Yes |_| No |X|





**FP
      TECHNOLOGY, INC.**


**INDEX**






********


**PART I. FINANCIAL INFORMATION**ITEM
                1. CONSOLIDATED FINANCIAL STATEMENTS
                (UNAUDITED)Consolidated
              Balance Sheet - at March 31, 2007
            2Consolidated Statement
              of Operations - for the Three
              and Nine Months Ended March 31, 2007 and 2006
            3-4Consolidated
              Statement of Stockholders' Equity - for the Nine
              Months Ended March 31, 2007
            5Consolidated
              Statement of Cash Flows - for the Nine Months
              Ended March 31, 2007 and 2006
            6Notes
              to Consolidated Financial Statements
            7ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
                OR PLAN
                OF OPERATION
            13ITEM
              3. CONTROLS AND PROCEDURES
            20**PART II. OTHER
              INFORMATION**
            21ITEM
              1.LEGAL
              PROCEEDINGS
            21ITEM
              2. UNREGISTERED
              SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
            21ITEM
              3. DEFAULTS
              UPON SENIOR SECURITIES
            22ITEM
              4.SUBMISSION
              OF MATTERS TO A VOTE OF SECURITY
              HOLDERS
            22ITEM
              5. OTHER
              INFORMATION
            22ITEM 6.
              EXHIBITS
            23









TOC


**FP
      TECHNOLOGY, INC.**


**CONSOLIDATED
      BALANCE SHEET**


**March
      31, 2007**


**(Unaudited)**





**ASSETS**Current
                assetsCash
                and cash equivalents
            
            $
            2,455,728Restricted
                cash
            
            
            1,315,152Accounts
                receivable, net of allowance for doubtfulaccounts
                of $10,000
            
            
            1,037,823Debt
                issuance costs
            
            
            1,084,069Other
                current assets
            
            
            75,785Total
                current assets
            
            
            5,968,557Property
                and equipment, net
            
            
            109,749Goodwill
            
            
            4,772,413Deposits
            
            
            13,449**Total
                assets**
            
            **$**
            **10,864,168****LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilitiesCurrent
                portion of long-term notes payable
            
            
            1,099,433Accounts
                payable
            
            
            201,090Accrued
                liabilities
            
            
            1,673,573Deferred
                revenue
            
            
            1,802,739Total
                current liabilities
            
            
            4,776,835Long-term
                notes payable net of unamortized discount of $5,133,333
            
            
            944,161Commitments
                and contingenciesStockholders'
                equityFP
                Technology, Inc. preferred stock, $0.001 par valueAuthorized
                - 5,000,000 sharesIssued
                and outstanding - none
            
            
            -FP
                Technology, Inc. common stock, $0.001 par valueAuthorized
                - 100,000,000 sharesIssued
                and outstanding - 8,164,239 shares
            
            
            8,164Additional
                paid-in capital
            
            
            29,348,243Retained
                earnings
            
            
            (23,133,407)Deferred
                compensation
            
            
            (1,079,828)Total
                stockholders' equity
            
            
            5,143,172**Total
                liabilities and stockholders' equity**
            
            **$**
            **10,864,168**






-2-
 TOC




FP
      TECHNOLOGY, INC.


CONSOLIDATED
      STATEMENT OF OPERATIONS


For
      Three Months Ended March 31, 2006 and
      2007


(Unaudited)


2006
              
              2007RevenuesOnDemand
                  revenues
              
              $
              108,262
              
              $
              692,280Enterprise
                  revenues
              
              
              989,250
              
              
              780,608Total
                  revenues
              
              
              1,097,512
              
              
              1,472,888Cost
                  of revenuesOnDemand
                  costs
              
              
              51,350
              
              
              169,719Enterprises
                  costs
              
              
              368,846
              
              
              384,255Total
                  cost of revenues
              
              
              420,196
              
              
              553,974Gross
                  profit
              
              
              677,316
              
              
              918,914Operating
                  expensesSales,
                  general and administrative
              
              
              865,411
              
              
              1,478,715Research
                  and development
              
              
              445,715
              
              
              574,859Restructuring
                  and other special charges
              
              
              (20,787)
              
              
              -Total
                  operating expenses
              
              
              1,290,339
              
              
              2,053,574Loss
                  from operations
              
              
              (613,023)
              
              
              (1,134,660)Other
                  income (expense), netInterest
                  expense
              
              
              (275,272)
              
              
              (778,827)Extinguishment
                  of debt
              
              
              -
              
              
              (13,705,000)Other
                  income expense
              
              
              (14,862)
              
              
              67,658Total
                  other income (expense), net
              
              
              (290,134)
              
              
              (14,416,169)Net
                  loss from continuing operations
              
              
              (903,157)
              
              
              (15,550,829)Loss
                  from discontinued operations
              
              
              (146,548)
              
              
              -Net
                  Loss
              
              $
              (1,049,705)
              
              $
              (15,550,829)Net
                  loss per share - basic and dilutedNet
                  loss per share from continuingoperations
              
              $
              (0.38)
              
              $
              (2.65)Net
                  loss per share from discontinuedoperations
              
              $
              (0.06)
              
              $
              -Net
                  loss per share
              
              $
              (0.44)
              
              $
              (2.65)Basic
                  and diluted weighted averagecommon
                  shares outstanding
              
              
              2,362,164
              
              
              5,867,815




-3-
 TOC




FP
      TECHNOLOGY, INC.


CONSOLIDATED
      STATEMENT OF OPERATIONS


For
      Nine Months Ended March 31, 2006 and 2007


(Unaudited)


2006
              
              2007RevenuesOnDemand
                  revenues
              
              $
              190,501
              
              $
              1,628,919Enterprise
                  revenues
              
              
              2,744,810
              
              
              2,016,695Total
                  revenues
              
              
              2,935,311
              
              
              3,645,614Cost
                  of revenuesOnDemand
                  costs
              
              
              234,703
              
              
              474,916Enterprises
                  costs
              
              
              1,157,185
              
              
              1,109,505Total
                  cost of revenues
              
              
              1,391,888
              
              
              1,584,421Gross
                  profit
              
              
              1,543,423
              
              
              2,061,193Operating
                  expensesSales,
                  general and administrative
              
              
              1,815,042
              
              
              4,527,492Research
                  and development
              
              
              1,341,813
              
              
              1,609,076Restructuring
                  and other special charges
              
              
              (16,170)
              
              
              (14,285)Settlement
                  of claim
              
              
              (1,712,500)
              
              
              (147,500)Total
                  operating expenses
              
              
              1,428,185
              
              
              5,974,783Income
                  (loss) from operations
              
              
              115,238
              
              
              (3,913,590)Other
                  income (expense), netInterest
                  expense
              
              
              (581,497)
              
              
              (3,977,001)Extinguishment
                  of debt expense
              
              
              -
              
              
              (13,705,000)Other
                  income expense
              
              
              (45,055)
              
              
              1,273,376Total
                  other income (expense), net
              
              
              (626,552)
              
              
              (16,408,625)Net
                  loss from continuing operations
              
              
              (511,314)
              
              
              (20,322,215)Loss
                  from discontinued operations
              
              
              (763,252)
              
              
              -Net
                  Loss
              
              $
              (1,274,566)
              
              $
              (20,322,215)Net
                  loss per share - basic and dilutedNet
                  loss per share from continuingoperations
              
              $
              (0.23
              )
              $
              (4.37
              )Net
                  loss per share from discontinuedoperations
              
              $
              (0.34
              )
              $
              -Net
                  loss per share
              
              $
              (0.57
              )
              $
              (4.37
              )Basic
                  and diluted weighted averagecommon
                  shares outstanding
              
              
              2,238,997
              
              
              4,646,549






-4-
 TOC




FP
TECHNOLOGY,
      INC.


CONSOLIDATED
      STATEMENT OF STOCKHOLDERS'
      EQUITY


For
      Nine Months Ended March 31, 2007


(Unaudited)


Common
                  Stock
              
              $0.001
              
              Additional
                  Paid
              
              Accumulated
              
              Deferred
              
              Stockholders'Shares
              
              Par
                  Value
              
              In
                  Capital
              
              Deficit
              
              Compensation
              
              Equity
                  (Deficit)Balance,
                  June 30, 2006
              
              
              5,100,441
              
              $
              5,100
              
              $
              2,182,237
              
              $
              (2,811,192)
              
              $
              (487,291)
              
              $
              (1,111,146)Sale
                  of common stock
              
              
              1,000,000
              
              
              1,000
              
              
              6,999,000
              
              
              
              
              
              
              
              
              7,000,000Expenses
                  recorded in connection withstock
                  sale
              
              
              
              
              
              
              
              
              (999,924)
              
              
              
              
              
              
              
              
              (999,924)Issuance
                  of convertible debt with warrants
              
              
              
              
              
              
              
              
              5,000,000
              
              
              
              
              
              
              
              
              5,000,000Issuance
                  of warrants to purchase commonstock
                  in exchange for services
              
              
              
              
              
              
              
              
              670,000
              
              
              
              
              
              
              
              
              670,000Issuance
                  of common stock in connectionwith
                  debt retirement
              
              
              1,650,000
              
              
              1,650
              
              
              13,703,350
              
              
              
              
              
              
              
              
              13,705,000Issuance
                  of common stock in exchangefor
                  services and retirement of previouslyoutstanding
                  warrants
              
              
              413,798
              
              
              414
              
              
              1,793,580
              
              
              
              
              
              (1,255,255)
              
              
              538,739Net
                  loss for the nine months endedMarch
                  31, 2007
              
              
              -
              
              
              -
              
              
              -
              
              
              (20,322,215)
              
              
              662,718
              
              
              (19,659,497)Balance,
                  March 31, 2007
              
              
              8,164,239
              
              $
              8,164
              
              $
              29,348,243
              
              $
              (23,133,407)
              
              $
              (1,079,828)
              
              $
              5,143,172




ntegra


-5-
 TOC




FPTECHNOLOGY, INC.


CONSOLIDATED
      STATEMENT OF CASH FLOWS


For
      the Nine Months Ended March 31, 2006 and
      2007


(Unaudited)








2006
            
            2007**Cash
                flows from operating activities**Net
                loss
            
            $
            (1,274,566)
            
            $
            (20,322,215)Adjustments
                to reconcile net loss to net cash used in operating
                activitiesGain/(loss)
                on sale of fixed assets
            
            
            (66,855)
            
            
            -Extinguishment
                of debt
            
            
            -
            
            
            13,705,000Settlement
                of claim
            
            
            (1,712,500)
            
            
            -Depreciation
                and amortization
            
            
            550,760
            
            
            3,166,178Loss
                from discontinued operations
            
            
            669,845
            
            
            -Changes
                in assets and liabilitiesAccounts
                receivables
            
            
            199,874
            
            
            (922,617)Unbilled
                services
            
            
            2,748
            
            
            -Assets
                to be sold
            
            
            106,374
            
            
            -Other
                current assets
            
            
            (124,366)
            
            
            508,484Accounts
                payable
            
            
            (42,892)
            
            
            (323,081)Accrued
                liabilities
            
            
            1,101,787
            
            
            129,853Deferred
                revenue
            
            
            318,903
            
            
            193,082Net
                cash used in operating activities
            
            
            (270,888)
            
            
            (3,865,316)**Cash
                flows from investing activities**Purchase
                of property and equipment
            
            
            (15,761)
            
            
            (26,164)Restricted
                cash investment
            
            
            (47,500,000)
            
            
            (3,815,152)Restricted
                cash to retire debt
            
            
            -
            
            
            50,000,000Other
                assets
            
            
            20,802
            
            
            41,767Net
                cash provided by (used in) investing activities
            
            
            (47,494,959)
            
            
            46,200,451**Cash
                flows from financing activities**Borrowings
                payments on notes payable
            
            
            52,500,000
            
            
            5,000,000Debt
                issuance costs
            
            
            (1,109,917)
            
            
            (537,594)Proceeds
                from sale of stock net of expenses
            
            
            -
            
            
            6,000,076Payments
                on notes payable
            
            
            (1,250,000)
            
            
            (51,173,073)Net
                cash provided by (used in) financing activities
            
            
            50,140,083
            
            
            (40,710,591)Net
                increase in cash and cash equivalents
            
            
            2,374,236
            
            
            1,624,544**Cash
                and cash equivalents, on June 30, 2005 and 2006**
            
            
            24,379
            
            
            831,184**Cash
                and cash equivalents, on March 31, 2006 and 2007**
            
            **$**
            **2,398,615**
            
            **$**
            **2,455,728****Supplemental
                cash flow information:****Interest
                paid**
            
            **$**
            **167,667**
            
            **$**
            **1,581,037****Non
                Cash Financing and Investing Activities:**During
                the nine months ended March 31, 2006, the Company issuedconvertible
                notes and warrants and valued the conversion rights and thewarrants
                at $670,000. The Company also issued warrants to the
                noteholdersand
                the underwriters valued at $1,970,000 for debt issuance
                costs.During
                the nine months ended March 31, 2007, the Company issued stock
                inretirement
                of certain debt and outstanding warrants resulting in the recordingof
                $670,000 in debt issuance costs. Additionally, the Company
                issuedconvertible
                debt with warrants that resulted in a debt discount of
                $5,600,000.




The
      accompanying notes are an integral part of theses consolidated
      financial statements.




-6-


TOC


**FP
        Technology, Inc.**
 **Notes
        to Consolidated Financial Statements (Unaudited)**
 **March
        31, 2007**
 
  **NOTE
        1.** **Organization,
        Basis of Presentation and Significant Accounting
        Policies**
  **Organization**
  FP
        Technology, Inc. (“FP Technology” or “the Company”) is a leading provider of
        CPQ, or “Configure, Price, Quote”, on-demand, multi-tenant software that
        automates and simplifies product pricing and configuration for companies
        and
        helps these enterprises improve order accuracy and reduce their total cost
        of
        sales.  FP Technology’s suite of products help companies configure,
        price and quote complex products during the sales process, such as machinery,
        high technology products or insurance services.  The Company’s sales
        solutions help companies optimize their sales processes, whether their need
        is
        to solve complex product or pricing configuration, create product catalogs
        or
        provide an interactive selling system, and dramatically improves response
        time.
        The Company’s corporate headquarters are located at 181 Wells Avenue, Newton,
        Massachusetts 02459.
  From
        the
        inception, in 1983, of FP Technology’s predecessor company, Firepond, Inc.
        (“Firepond”), through 1997, the Company generated revenue primarily through
        providing custom software development services. These services consisted
        of the
        development of highly customized applications utilizing core software
        technology, and related software maintenance and data maintenance services.
        In
        early fiscal 1997, Firepond undertook a plan to change its strategic focus
        from
        a custom development services company to a software product company providing
        more standardized solutions. Firepond’s first packaged software product was
        introduced in May 1997. Firepond released the Firepond Application Suite
        in
        October 1999, and renamed and repackaged the Firepond Application Suite as
        the
        SalesPerformer Suite in December 2000.
  In
        February 2000, Firepond completed its initial public offering. Soon thereafter,
        as a result of a global slowdown in information technology spending, including
        in the Customer Relationship Management market, Firepond undertook a
        comprehensive restructuring of its operations. Firepond incurred substantial
        losses from 2000 through 2003, during which period Firepond invested heavily
        in
        research and development.
  On
        December 2, 2003, Jaguar Technology Holdings, LLC acquired Firepond in exchange
        for cash equal to $3.16 per share, and Firepond became a private company.
        On
        September 13, 2005, FP Technology Holdings, Inc. (“FPT Holdings”) acquired all
        of the operating assets, certain liabilities, and all of the employees of
        Firepond as part of a restructuring and new financing transaction. Before
        and
        after this transaction, both Firepond and FPT Holdings were 100% owned by
        the
        same entity. On January 17, 2006, Firepond was liquidated, and a liquidating
        trust was created to liquidate the remaining assets of Firepond, enforce
        and
        pursue the causes of action of Firepond, provide for a reserve against the
        payment of any contingent liabilities, and distribute the net proceeds to
        its
        stockholder.
  On
        March
        29, 2006, AFG Enterprises USA, Inc. (“AFG”), a public shell company, acquired
        FPT Holdings pursuant to an Agreement and Plan of Merger. In connection with
        this transaction, AFG changed its fiscal year from December 31 to June 30
        to
        conform to FPT Holdings’ fiscal year end. AFG issued an aggregate of 3,991,939
        shares of its common stock to the stockholders of FPT Holdings in this
        transaction.
 -7-
 TOC
 On
        June
        29, 2006, AFG, the 100% owner of FPT Holdings, merged with and into FPT
        Holdings, with FPT Holdings as the surviving corporation. On the same date,
        FPT
        Holdings changed its name to FP Technology, Inc.
  For
        the
        period ended March 31, 2006, the financial statements presented herein are
        the
        combined financial statements of Firepond, Inc. and FPT Holdings, Inc. For
        the
        period ended March 31, 2007, the financial statements presented herein are
        the
        consolidated financial statements of the Firepond liquidating trust and FP
        Technology, Inc.
  **Basis
        of Presentation and Continuance of Operations**
  The
        accompanying unaudited, consolidated financial statements have been pre-pared
        by
        the Company in accordance with accounting
        principles generally accepted in the United States of America for interim
        financial information and pursuant to Article 10 of Regulation S-X of the
        Securities and Exchange Commission . Accordingly,
        they do not include all of the information and footnotes required by generally
        accepted accounting principles for complete financial statements. In the
        opinion
        of management, all adjustments (consisting only of normal recurring adjustments)
        considered necessary for a fair presentation have been included. The results
        for
        the nine month period ended March 31, 2007 are not necessarily indicative
        of the
        results that may be expected for the year ending June 30, 2007, or for any
        future period. These unaudited consolidated financial statements and notes
        should be read in conjunction with the consolidated financial statements
        included in the Company's Form 10-KSB for the fiscal year ended June 30,
        2006.
  Furthermore,
        these unaudited, consolidated financial statements have been prepared by
        the
        Company on a going concern basis. As such, the statements anticipate the
        realization of assets and the liquidation of liabilities in the normal course
        of
        business. Notwithstanding this fact, the Company has, for some time, been
        incurring losses and negative cash flow from operations. For the nine month
        period ended March 31, 2007, the Company incurred a net loss of approximately
        $20.3 million due principally to the $13.7 million extinguishment cost of
        the
        CAP indebtedness. In the event the Company is not successful in generating
        profits and positive cash flow from operations in future periods, it will
        be
        dependent upon additional financing to support its continuing operations.
        While
        the Company has been successful in completing numerous rounds of financing,
        including the $7,000,000 PIPE Financing in August 2006 and the January 2007
        restructuring of the CAP financing providing $3.5 million net proceeds to
        the
        Company, no assurances can be given that additional financing will be available,
        in which case, the Company’s ability to achieve its business objectives will be
        adversely affected. The accompanying consolidated financial statements do
        not
        include any adjustments that might result from such adverse
        outcomes.
  **Significant
        Accounting Policies**
  The
        Company’s significant accounting policies are disclosed in its Annual Report on
        Form 10-KSB for the year ended June 30, 2006 and have not changed materially
        as
        of March 31, 2007.
  **Net
        Income (Loss) Per Share**
  Net
        income (loss) per share is computed based on the guidance of SFAS No. 128,
        “Earnings per Share” (“SFAS No. 128”). SFAS No. 128 requires companies to report
        both basic income (loss) per share, which is computed by dividing the net
        income
        (loss) by the weighted average number of common shares outstanding, and diluted
        income (loss) per share, which is computed by dividing the net income (loss)
        by
        the weighted average number of common shares outstanding plus the weighted
        average dilutive potential common shares outstanding using the treasury stock
        method. In periods of losses, diluted loss per share is computed on the same
        basis as basic loss per share as the inclusion of any other potential shares
        outstanding would be anti-dilutive.  -8-
 TOC
 **NOTE** **2.** **Income
        Taxes**
 
 No
        provision for income taxes is required at March 31, 2007, because, in
        management’s estimation the Company will not recognize any taxable income
        through the fiscal year ended June 30, 2007.
 
 **NOTE** **3.** **Recent
        Financings**
  On
        January 24, 2007, the
        Company entered into a Master Exchange Agreement (the “Exchange Agreement”) with
        the Buyers involved in the Company’s CAP Financing dated March 29, 2006. Under
        the Exchange Agreement, we issued, in exchange for the Nonconvertible Notes
        in
        an aggregate principal amount of $50,000,000 and warrants to purchase an
        aggregate of 6,250,000 shares of Common Stock originally issued in the CAP
        Financing, the following aggregate consideration:
  ·
            $45,000,000
                in principal repayment of the Nonconvertible Notes, plus accrued
                interest
                thereon; ·
            A
                new issue of Senior Secured Convertible Notes Due 2009 in the aggregate
                principal amount of $5,600,000 (the “New Convertible Notes”), issued under
                an indenture with The Bank of New York (the “New Indenture”); ·
            Warrants
                (the “New Warrants”) to purchase an aggregate of 1,214,285 shares of
                Common Stock at an exercise price of $7.00 per share; and ·
            1,500,000
                fully-paid shares of Common Stock. 
 Pursuant
        to the terms of the New Indenture, the Company also obtained a letter of
        credit
        from Wells Fargo Bank, National Association (“Wells Fargo”), in favor of The
        Bank of New York, as trustee under the New Indenture, in a stated amount
        of
        $1,344,000 in respect of approximately two years of interest payments payable
        under the New Convertible Notes.
 
 The
        $45,000,000 principal repayment on the Nonconvertible Notes and the $5,000,000
        gross proceeds to the Company were from the $50,000,000 CAP escrow account
        as
        was substantially all of the accrued interest on the Nonconvertible Notes.
        After
        payment of associated fees and expenses, plus deposit of $1,344,000 at Wells
        Fargo in support of the aforementioned Wells Fargo letter of credit, net
        proceeds to the Company from the New Convertible Notes were approximately
        $3.5
        million.
 
  **NOTE** **4.** **Notes
        Payable**
  On
        September 13, 2005, Trident Growth Fund, L.P. (“Trident”) loaned FPT $2,000,000
        with interest accruing at 12% per annum (the “September Note”). Interest is
        payable monthly and the principal was due on September 13, 2006 or upon
        consummation of a change in control transaction. The Note was originally
        convertible into shares of common stock based upon a fixed ratio. On or about
        November 25, 2005, FPT closed an additional $500,000 note (the “November Note”)
        with Trident on the same terms and conditions as the September Note. The
        funds
        received pursuant to the September Note
        and
        the November Note have been used for working capital required as the Company
        transitions from its legacy enterprise software business to its OnDemand
        revenue
        model.  -9-
 TOC
 On
        September 13, 2005, Firepond, Inc., FP Technology Holdings, Inc. and General
        Motors entered into a letter agreement whereby General Motors accepted
        $1,250,000 in cash from FP Technology Holdings, received a $250,000 unsecured
        note from FP Technology Holdings, cancelled the note due from Firepond, Inc.
        and
        released its security interest in Firepond, Inc. assets.
  On
        March
        29, 2006, AFG entered into a Securities Purchase Agreement (the “Purchase
        Agreement”) with certain investors (the “Buyers”) to which the Buyers agreed to
        purchase (i) AFG’s Senior Secured Nonconvertible Notes due 2011 (the
“Nonconvertible Notes”) in an aggregate principal amount of $50,000,000 (“CAP
        Financing”), which Nonconvertible Notes may be exchanged for Senior Secured
        Convertible Notes due 2011 (the “Convertible Notes”, and together with the
        Nonconvertible Notes, the “Notes”) or redeemed under certain circumstances, and
        which Convertible Notes are convertible into shares of AFG’s common stock (the
“Conversion Shares”); and (ii) warrants (the “Warrants”) to acquire in the
        aggregate up to 6,875,000 shares of AFG’s common stock (including warrants
        granted to the placement agent to acquire 625,000 shares of common stock)
        exercisable from the earlier of six months after issuance or the Threshold
        Acquisition Date (as such term is defined in the Indenture) until March 29,
        2011
        at an exercise price equal to the lower of $8.00 or 125% of the per share
        price
        of AFG’s common stock to be sold in the PIPE Financing. The purchase and sale of
        the Notes and Warrants was consummated on March 29, 2006. As
        discussed in Note 3, the CAP Financing was terminated as part of the Exchange
        Agreement.
  Also
        on
        March 29, 2006, the Company entered into a Master Amendment (the “Master
        Amendment”), with Trident. The Master Amendment amended the operative documents
        related to the September Note and the November Note, including the Common
        Stock
        Purchase Warrants, dated, September 13, 2005 and November 15, 2005 (the “Trident
        Warrants”) fixing the number of shares underlying the Trident Warrants at
        390,625 and the strike price at $4.00.
  On
        August
        18, 2006 the Company repaid the Trident November Note.
  On
        September 13, 2006, the Company modified the Trident September Note to provide
        for a repayment of the principle balance of $2,000,000 ratably over a 24
        month
        period plus interest at 12% per annum. The principle balance of the Trident
        September Note was $1,416,666 at March 31, 2007.
  On
        October 27, 2006, the Company renegotiated and amended its note with General
        Motors Corporation to provide for a payment of $50,000 and an amortization
        of
        the remaining principle balance of $200,000 over a term of 24 months at a
        rate
        of 6% beginning in November, 2006. The principle balance of the General Motors
        Corporation note was $160,261 at March 31, 2007.
  
 **NOTE
        5.** **Other
        Agreements**
 
 On
        January 24, 2007, the Company agreed to exchange with Rodman & Renshaw LLC
        (“Rodman”) outstanding warrants previously issued to Rodman to purchase an
        aggregate of 625,000 shares of Common Stock at an exercise price of $8.00
        per
        share for (i) new warrants to purchase 71,429 shares of Common Stock at an
        exercise price $7.00 per share and (ii) 150,000 fully-paid shares of Common
        Stock.
 
 The
        Company entered into a consulting agreement, dated as of September 1, 2006
        (the
“Trident Consulting Agreement”), with Trident pursuant to which Trident agreed
        to provide consulting services to the Company. Trident agreed to assist the
        Company in developing its business prospects and marketing materials, advise
        the
        Company with respect to possible financing transactions and provide such
        other
        services as may be agreed from time to time.  -10-
 TOC
 The
        term
        of the Trident Consulting Agreement commenced on September 1, 2006 and continues
        for twelve months, and will automatically renew for additional six month
        periods
        unless either party provides prior written notice of termination to the other.
        Either party may also terminate the Trident Consulting Agreement upon written
        notice to the other, with or without cause.
 
 The
        Company is obligated to pay to Trident $10,000 upon execution of the Trident
        Consulting Agreement and $2,000 per month for the first six months of the
        term
        of the Trident Consulting Agreement. The Company also agreed to reimburse
        Trident for its reasonable out-of-pocket expenses incurred in connection
        with
        the services to be provided under the Trident Consulting Agreement.
 
 The
        Company also agreed to issue to Trident options, exercisable for five years,
        to
        purchase up to 1,000,000 shares of Common Stock of the Company at an exercise
        price of $7.00 per share. The option will be reduced to 600,000 shares in
        the
        event that the 12% Senior Secured Convertible Debenture No. 1, dated September
        13, 2005, previously issued to Trident in the initial principal amount of
        $2,000,000 is repaid in full on or before September 12, 2007.
 
 The
        value
        of the Trident Consulting Agreement has been estimated at $1,613,994 net
        of
        expense previously recorded. The Company has recorded $1,009,460 through
        March
        31, 2007 as consulting expense based on the contract term and will expense
        the
        remainder of the cost through the earlier of the contract term or the
        termination of the Trident Consulting Agreement.
 
 **NOTE
        6.** **Stock
        Transaction**
  In
        February 2007, the Company issued 413,798 shares of common stock to Trident
        pursuant to (1) the cashless exercise of the Trident Warrants and (2) in
        satisfaction of the Company’s agreement to issue to Trident options to purchase
        up to 600,000 shares of the maximum 1,000,000 shares of Common Stock of the
        Company under
        the Trident Consulting Agreement.
 
  **NOTE
        7.** **Litigation**
  In
        August
        2001, our predecessor, Firepond, Inc., was named as a defendant in a securities
        class action filed in United States District Court for the Southern District
        of
        New York related to its initial public offering (“IPO”) in February, 2000. 
The lawsuit also named certain of the underwriters of the IPO, including
        FleetBoston, Dain Rauscher, and SG Cowen, as well as officers and directors
        of
        Firepond, Klaus P. Besier and Paul K. McDermott, as defendants. 
Approximately 300 other issuers and their underwriters have had similar suits
        filed against them, all of which have been included in a single coordinated
        proceeding in the Southern District of New York (the “IPO Litigations”). 
The complaints allege that the prospectus and the registration statement
        for the
        IPO failed to disclose that the underwriters allegedly solicited and received
        “excessive” commissions from investors and that some investors in the IPO
        allegedly agreed with the underwriters to buy additional shares in the
        aftermarket in order to inflate the price of Firepond’s stock.  An amended
        complaint was filed on April 19, 2002.  Firepond, Inc. and the officers and
        directors identified above were named in the suits pursuant to Section 11
        of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934
        (the “Exchange Act”), and other related provisions.  The complaints seek
        unspecified damages, attorney and expert fees, and other unspecified litigation
        costs.  -11-
 TOC
 In
        June
        2003, a proposed settlement of this litigation was structured between the
        plaintiffs, the issuer defendants in the consolidated actions, the issuer
        officers and directors named as defendants, and the issuers’ insurance
        companies.  On or about July 30, 2003, a committee of Firepond’s Board of
        Directors conditionally approved the proposed partial settlement.  The
        settlement would have provided, among other things, a release of Firepond
        and of
        the individual defendants for the alleged wrongful conduct in the amended
        complaint in exchange for a guarantee from Firepond’s insurers regarding
        recovery from the underwriter defendants and other consideration from the
        company regarding its underwriters.  The plaintiffs have continued to
        litigate against the underwriter defendants.  The district court directed
        that the litigation proceed within a number of “focus” cases” rather than in all
        of the 310 cases that have been consolidated.  Firepond’s case is one of
        these focus cases.  On October 13, 2004, the district court certified the
        focus cases as class actions.  The underwriter defendants appealed that
        ruling, and on December 5, 2006, the Court of Appeals for the Second Circuit
        reversed the district court’s class certification decision.  On April 6,
        2007, the Second Circuit denied plaintiff’s petition for rehearing.  In
        light of the Second Circuit opinion, the district court has been informed
        that
        this settlement cannot be approved because the defined settlement class,
        like
        the litigation class, cannot be certified.  We cannot predict whether
        Firepond will be able to renegotiate a settlement that complies with the
        Second
        Circuit’s mandate.  Due to inherent uncertainties of litigation, we cannot
        accurately predict the ultimate outcome of the matter.
 
 We
        may
        from time to time also be subject to various other claims and legal actions
        arising in the ordinary course of business.  In the opinion of management,
        after consultation with legal counsel, the ultimate disposition of these
        matters
        is not expected to have a material effect on our business, financial condition,
        or results of operations.
 -12-
 TOC


**ITEM
      2.**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**





Except
      for historical information, matters discussed in this report are forward-looking
      statements based on management’s estimates, assumptions and projections. In some
      cases, you can identify forward-looking statements by terminology such as “may”,
“will”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”,
“predicts”, “potential” or “continue” or the negative of these terms or other
      comparable terminology. These statements are only predictions and involve known
      and unknown risks, uncertainties and other factors, that may cause our Company’s
      or our industry’s actual results, levels of activity, performance or
      achievements to be materially different from any future results, levels of
      activity, performance or achievements expressed or implied by these
      forward-looking statements. Although we believe that the expectations reflected
      in the forward-looking statements are reasonable, we cannot guarantee future
      results, levels of activity, performance or achievements. Except as required
      by
      applicable law, including the securities laws of the United States, we do not
      intend to update any of the forward-looking statements to conform these
      statements to actual results.




As
      used
      in this report, the terms “we”, “us”, “our”, “the Company” or “FPT” mean FP
      Technology, Inc., after giving effect to the reorganization (as described in
      more detail under “Overview—Corporate History” below).




**Executive
      Summary**




***Corporate
      Overview***




We
      are a
      leading provider of CPQ, or “Configure, Price, Quote”, on-demand, multi-tenant
      software that automates and simplifies product pricing and configuration for
      companies and helps these enterprises improve order accuracy and reduce their
      total cost of sales.  Our predecessor, Firepond, Inc. (“Firepond”), was
      founded in 1983.  Our suite of products help companies configure, price and
      quote complex products during the sales process, such as machinery, high
      technology products or insurance services.  Our sales solutions help
      companies optimize their sales processes, whether their need is to solve complex
      product or pricing configuration, create product catalogs or provide an
      interactive selling system, and dramatically improves response time.  Our
      current customers include Fortune 1000 companies such as Symantec, G.E. Tip
      Trailer, Freightliner, Cummins Power Generation, Deere & Company, Horizon
      Blue Cross Blue Shield, Siemens Building Technologies, Steelcase International
      and Case New Holland.




Our
      corporate headquarters are located at 181 Wells Avenue, Newton, Massachusetts
      02459.  Our common stock, par value $0.001 per share (“Common Stock”),
      trades on the Over-the-Counter Bulletin Board under the symbol
“FPTI.OB.”




We
      market
      our products under the Firepond brand name:




·
            Firepond
                OnDemand is a web-based application that enables a company’s sales force
                and supporting organizations to configure complex products, and accurately
                price those products.  Firepond OnDemand is offered to customers
                independently or as an integrated service within the Salesforce.com
                product called Firepond OnDemand for
                Salesforce.comTM.




·
            The
                Interactive Configurator Suite is a set of data maintenance tools,
                shared
                libraries and application program interfaces (APIs) that supply
                configuration capabilities to an application.  Firepond OnDemand is
                built on the Interactive Configurator Suite (“ICS”) technology
                platform.




We
      have
      offered our OnDemand application service since August 2005.  We execute our
      sales and marketing strategy through direct and indirect channels, and currently
      have sales relationships with several system integrators and resellers. 
The recent increase in interest in CPQ applications, combined with the
      acceptance of the on-demand business model, have opened new opportunities for
      us
      in the form of partnerships with Salesforce.com and other enterprise
      applications providers which we are actively pursuing.


-13-
 TOC


Technological
      feasibility of our software products occurs late in the development cycle and
      close to general release of the products. The development costs incurred between
      the time technological feasibility is established and general release of the
      product are not material. As such, we expense these costs as incurred to
      research and development expense. To enhance our product offering and market
      position, we believe it is essential for us to continue to make significant
      investment in research and development.




***Corporate
      History***




From
      the
      inception, in 1983, of our predecessor company, Firepond, through 1997, we
      generated revenue primarily through providing custom software development
      services. These services consisted of the development of highly customized
      applications utilizing core software technology, and related software
      maintenance and data maintenance services. In early fiscal 1997, Firepond
      undertook a plan to change its strategic focus from a custom development
      services company to a software product company providing more standardized
      solutions. Firepond’s first packaged software product was introduced in May
      1997. Firepond released the Firepond Application Suite in October 1999, and
      renamed and repackaged the Firepond Application Suite as the SalesPerformer
      Suite in December 2000.




In
      February 2000, Firepond completed its initial public offering. Soon thereafter,
      as a result of a global slowdown in information technology spending, including
      in the Customer Relationship Management market, Firepond undertook a
      comprehensive restructuring of its operations. Firepond incurred substantial
      losses from 2000 through 2003, during which period Firepond invested heavily
      in
      research and development.




On
      December 2, 2003, Jaguar Technology Holdings, LLC acquired Firepond in exchange
      for cash equal to $3.16 per share, and Firepond became a private company. On
      September 13, 2005, FP Technology Holdings, Inc. (“FPT Holdings”) acquired all
      of the operating assets, certain liabilities, and all of the employees of
      Firepond as part of a restructuring and new financing transaction. Before and
      after this transaction, both Firepond and FPT Holdings were 100% owned by the
      same entity. On January 17, 2006, Firepond was liquidated, and a liquidating
      trust was created to liquidate the remaining assets of Firepond, enforce and
      pursue the causes of action of Firepond, provide for a reserve against the
      payment of any contingent liabilities, and distribute the net proceeds to its
      stockholder.




On
      March
      29, 2006, AFG Enterprises USA, Inc. (“AFG”), a public shell company, acquired
      FPT Holdings pursuant to an Agreement and Plan of Merger. In connection with
      this transaction, AFG changed its fiscal year from December 31 to June 30 to
      conform to FPT Holdings’ fiscal year end. AFG issued an aggregate of 3,991,939
      shares of its common stock to the stockholders of FPT Holdings in this
      transaction.




On
      June
      29, 2006, AFG, the 100% owner of FPT Holdings, merged with and into FPT
      Holdings, with FPT Holdings as the surviving corporation. On the same date,
      FPT
      Holdings changed its name to “FP Technology, Inc.”




For
      the
      period ended March 31, 2006, the financial statements presented herein are
      the
      combined financial statements of Firepond, Inc and FPT Holdings. For the period
      ended March 31, 2007, the financial statements presented herein are the
      consolidated financial statements of the Firepond liquidating trust and FP
      Technology, Inc.




***Recent
      Financings***




CAP
      Master Exchange Agreement.




On
      January 24, 2007, we entered into a Master Exchange Agreement (the “Exchange
      Agreement”) with the Buyers involved in the Company’s CAP Financing dated March
      29, 2006 (see Note 4 to the unaudited consolidated financial statements included
      elsewhere in this report). Under the Exchange Agreement, we issued, in exchange
      for the Nonconvertible Notes in an aggregate principal amount of $50,000,000
      and
      warrants to purchase an aggregate of 6,250,000 shares of Common Stock originally
      issued in the CAP Financing, the following aggregate consideration:  -14-
 TOC


·
            $45,000,000
                in principal repayment of the Nonconvertible Notes, plus accrued
                interest
                thereon;




·
            A
                new issue of Senior Secured Convertible Notes Due 2009 in the aggregate
                principal amount of $5,600,000 (the “New Convertible Notes”), issued under
                an indenture with The Bank of New York (the “New Indenture”);




·
            Warrants
                to purchase an aggregate of 1,214,285 shares of Common Stock at an
                exercise price of $7.00 per share; and




·
            1,500,000
                fully-paid shares of Common Stock.





Pursuant
      to the terms of the New Indenture, the Company also obtained a letter of credit
      from Wells Fargo Bank, National Association (“Wells Fargo”), in favor of The
      Bank of New York, as trustee under the New Indenture, in a stated amount of
      $1,344,000 in respect of approximately two years of interest payments payable
      under the New Convertible Notes.




The
      $45,000,000 principal repayment on the Nonconvertible Notes and the $5,000,000
      gross proceeds to the Company were from the $50,000,000 CAP escrow account
      as
      was substantially all of the accrued interest on the Nonconvertible Notes.
      After
      payment of associated fees and expenses, plus deposit of $1,344,000 at Wells
      Fargo in support of the aforementioned Wells Fargo letter of credit, net
      proceeds to the Company from the New Convertible Notes were approximately $3.5
      million.




Also
      in
      connection with the Exchange Agreement, the Company agreed to exchange with
      Rodman & Renshaw LLC (“Rodman”) certain outstanding warrants previously
      issued to Rodman to purchase an aggregate of 625,000 shares of Common Stock
      at
      an exercise price of $8.00 per share for (i) new warrants to purchase 71,429
      shares of Common Stock at an exercise price $7.00 per share and (ii) 150,000
      fully-paid shares of Common Stock.




**Financial
      Condition ($000)**




At
        March
        31, 2007, the Company had net assets of $5,143 as compared to $2,333 at March
        31, 2006, respectively. Such increase was due principally to the Exchange
        Agreement occurring in January, 2007 wherein the accounting for the new debt
        issuance resulted in a debt discount of $5,600. Over the course of the new
        note
        period, the discount will be recognized as interest expense and the indebtedness
        will accrete to become the amount of the obligation due of $5,600 on the
        due
        date of the new note.


-15-
 TOC


**Results
      of Operations**




***Three
      Months Ended March 31, 2007 and March 31, 2006***




Three
                Months Ended March 312006
            
            2007Amount
            
            %
                of Revenues
            
            Amount
            
            %
                of RevenuesRevenues
            
            $
            1,097,512
            
            
            
            
            $
            1,472,888Cost
                of revenues
            
            
            420,196
            
            
            38.3
            
            
            553,974
            
            
            37.6Gross
                profit
            
            
            677,316
            
            
            61.7
            
            
            918,914
            
            
            62.4Operating
                expensesSales,
                general and administrative
            
            
            865,411
            
            
            78.9
            
            
            1,478,715
            
            
            100.4


Research
                and development
            
            
            445,715
            
            
            40.6
            
            
            574,859
            
            
            39.0Restructuring
            
            
            (20,787)
            
            
            (1.9)
            
            
            -
            
            
            -Total
                operating expenses
            
            
            1,290,339
            
            
            117.6
            
            
            2,053,574
            
            
            139.4Loss
                from operations
            
            
            (613,023)
            
            
            (55.9)
            
            
            (1,134,660)
            
            
            (77.0)Other
                income (expense), netInterest
                expense
            
            
            (275,272)
            
            
            (25.0)
            
            
            (778,827)
            
            
            (52.9)Extinguishment
                of debt
            
            
            -
            
            
            -
            
            
            (13,705,000)
            
            
            (930.5)Other
                income (expense)
            
            
            (14,862)
            
            
            (1.4)
            
            
            67,658
            
            
            4.6Total
                other income (expense), net
            
            
            (290,134)
            
            
            (26.4)
            
            
            (14,416,169)
            
            
            (978.8)Net
                loss from continuing operations
            
            
            (903,157)
            
            
            (82.3)
            
            
            (15,550,829)
            
            
            (1,055.8)Loss
                from discontinued operations
            
            
            (146,548)
            
            
            (13.3)
            
            
            -
            
            
            -Net
                loss
            
            $
            (1,049,705)
            
            
            (95.6)
            
            $
            (15,550,829)
            
            
            (1,055.8)







***Three
      Months ended March 31, 2007 compared to March 31, 2006
      ($000)***


**Revenues**




Revenues
      for the three months ended March 31, 2007 were $1,473 as compared to revenues
      of
      $1,098 for the three months ended March 31, 2006, an increase of $375 or 34.2%.
      This increase in revenues resulted primarily from new sales of OnDemand
      subscriptions.




**Cost
      of Revenues**




Cost
      of
      revenues consists of license costs, maintenance costs and service costs. Cost
      of
      revenues were $554 in the three months ended March 31, 2007 as compared to
      $420
      for the three months ended March 31, 2006, an increase of $134 or 31.8%. This
      increase was due primarily to the increase in new subscriptions.




**Operating
      Expenses**




Operating
      expenses were $2,054 in the three months ended March 31, 2007 as compared to
      $1,290 for the three months ended March 31, 2006, an increase of $763 or 59.2%.
      This increase was primarily the result of an increase in sales, general and
      administrative expenses and other costs and expenses associated with the shift
      in business focus to OnDemand software. Sales, general and administrative
      expenses increased by $613 or 70.9% primarily as a result of salaries and other
      personnel-related costs for executive, financial, human resource, information
      services, and other administrative functions, as well as the amortization of
      legal and accounting costs associated with the Exchange Agreement transaction
      and certain consulting costs. Included in operating expenses for the quarter
      ended March 31, 2007 is $567 of non-cash expenses related to amortization and
      depreciation. The sales expense component increase was the result of adding
      a
      senior marketing executive along with a marketing support staff to pursue sales
      and marketing efforts associated with our OnDemand business strategy.




**Other
      Income (Expense)** ****


Other
        income (expense) was ($14,416) for the three months ended March 31, 2007
        as
        compared to ($290) for the three months ended March 31, 2006, an increase
        of
        ($14,126) due primarily to debt extinguishment expense associated with the
        Exchange Agreement transaction which occurred on January 24, 2007. Pursuant
        to
        the Exchange Agreement, in addition to repaying $50,000 in debt, the Company
        issued new stock and warrants the cost of which after deducting previously
        recorded expenses was deemed for accounting purposes to be a debt extinguishment
        expense.  Included in the current period increase is this net $13,705
        non-cash debt extinguishment expense. Included in interest expense is $565
        resulting from amortization of debt issuance costs associated with the Trident
        and CAP Financing loans.


-16-
 TOC


***Nine
      Months Ended March 31, 2007 and March 31, 2006***




Nine
                  Months Ended March 312006
              
              2007Amount
              
              %
                  of Revenues
              
              Amount
              
              %
                  of RevenuesRevenues
              
              $
              2,935,311
              
              
              
              
              $
              3,645,614Cost
                  of revenues
              
              
              1,391,888
              
              
              47.4
              
              
              1,584,421
              
              
              43.5Gross
                  profit
              
              
              1,543,423
              
              
              52.6
              
              
              2,061,193
              
              
              56.5Operating
                  expensesSales,
                  general and administrative
              
              
              1,815,042
              
              
              61.8
              
              
              4,527,492
              
              
              124.2Research
                  and development
              
              
              1,341,813
              
              
              45.7
              
              
              1,609,076
              
              
              44.1Restructuring
              
              
              (16,170)
              
              
              (.5)
              
              
              (14,285)
              
              
              (.4)Settlement
                  of claim
              
              
              (1,712,500)
              
              
              (58.3)
              
              
              (147,500)
              
              
              (4.1)Total
                  operating expenses
              
              
              1,428,185
              
              
              48.7
              
              
              5,974,783
              
              
              163.8Income/(loss)
                  from operations
              
              
              115,238
              
              
              3.9
              
              
              (3,913,590)
              
              
              (107.3)Other
                  income (expense), netInterest
                  expense
              
              
              (581,497)
              
              
              (19.8)
              
              
              (3,977,001)
              
              
              (109.1)Extinguishment
                  of debt
              
              
              -
              
              
              -
              
              
              (13,705,000)
              
              
              (375.9)Other
                  income (expense)
              
              
              (45,055)
              
              
              (1.5)
              
              
              1,273,376
              
              
              34.9Total
                  other income (expense), net
              
              
              (626,552)
              
              
              (21.3)
              
              
              (16,408,625)
              
              
              (450.1)Net
                  income (loss) from continuing operations
              
              
              (511,314)
              
              
              (17.4)
              
              
              (20,322,215)
              
              
              (557.4)Loss
                  from discontinued operations
              
              
              (763,252)
              
              
              (26.0)
              
              
              -
              
              
              -Net
                  loss
              
              
              (1,274,566)
              
              
              (43.4)
              
              
              (20,322,215)
              
              
              (557.4)




***Nine
      Months Ended March 31, 2007 compared to March 31, 2006 ($000)***




For
      the
      nine month period ended March 31, 2007, the Company sustained a net loss from
      continuing operations of $20,322 as compared to a net loss from continuing
      operations of $511 for the nine month period ended March 31, 2006.




**Revenues**




Revenues
      for the nine month period ended March 31, 2007 were $3,645 as compared to
      revenues of $2,935 for the March 31, 2006 nine month period or an increase
      of
      24.2%. This increase in revenues resulted primarily from continuing new sales
      of
      OnDemand subscriptions.




**Cost
      of Revenues**




Cost
      of
      revenues was $1,584 in the nine month period ended March 31, 2007 as compared
      to
      $1,392 in the prior year period an increase of $193 or 13.8%. The increase
      was a
      result of additional costs associated with the incremental revenues over the
      period.




**Operating
      Expenses**




Operating
      expenses were $5,975 for the March 31, 2007 nine month period as compared to
      $1,428 for the nine month period ended March 31, 2006. Such current period
      increase was primarily the result of an increase in sales, general and
      administrative expenses and other costs and expenses associated with the shift
      in business focus to OnDemand software, the addition of two senior management
      positions (Vice President of Operations and Vice President of Marketing) reduced
      by a legal settlement of $148 in the 2007 period as compared to a favorable
      settlement of a claim of $1,713 which reduced expenses recorded in the 2006
      period. Sales, general and administrative expenses increased by $2,712 or 149.4%
      primarily for salaries and other personnel-related costs for executive,
      financial, human resource, information services, and other administrative
      functions, as well as $770 of amortization of legal and accounting costs
      associated with the closing of the CAP Financing and the PIPE Financing and
      certain consulting costs. The sales component increase was the result of adding
      a senior marketing executive along with a marketing support staff to pursue
      sales and marketing efforts associated with our OnDemand business strategy.  -17-
 TOC


**Other
      Income (Expense)**






Other
      income and expenses increased from $627 to $16,409 from the March 31, 2006
      period to the March 31, 2007 period, an increase of $15,782 or 2,518.9% due
      to
      the increase in interest expense associated with the CAP Financing and the
      $13,705 non-cash debt extinguishment of debt expense previously discussed.
      Included in interest expense is $2,396 resulting from amortization of debt
      issuance costs associated with the Trident and CAP Financing loans.




**Liquidity
      and Capital Resources ($000)**







At
      March
      31, 2007, the Company had cash and cash equivalents of $2,456 and working
      capital of $1,194 as compared with cash and cash equivalents of $2,399 and
      a
      working capital deficit of $2,654 at March 31, 2006. Restricted cash totaled
      $1,315 as of March 31, 2007 as compared to $47,500 at March 31, 2006, a decrease
      of $46,185 resulting from the Exchange Agreement transaction as previously
      discussed.




*Cash
      Used in Operating Activities*




Cash
      used
      in operating activities for the nine month period ended March 31, 2007 was
      $3,865 as compared to $271 for the nine month period ended March 31, 2006.
      The
      cash used in operating activities for the nine months ended March 31, 2007
      period was primarily attributable to a net loss of $20,322 offset by non-cash
      charges of $13,705 related to the extinguishment of debt, and depreciation
      and
      amortization expense of $3,166. The cash used in operating activities for the
      nine months ended March 31, 2006 period of $271 was primarily attributable
      to a
      net loss of $1,275 adjusted for non-cash settlement claims of $1,713 and offset
      by non-cash charges for depreciation and amortization expense of $551 and a
      loss
      from discontinued operations of $670.




Cash
      used
      in operating activities in both periods was further impacted by changes in
      elements of working capital.





*Cash
      Provided by (Used In) Investing Activities*





For
      the
      nine month period ended March 31, 2007, the Company generated $46,200 from
      investing activities. This arose principally as a result of liquidating $50,000
      in restricted cash pursuant to the terms of the Exchange Agreement., liquidating
      certain other assets and purchasing certain property and equipment resulting
      in
      a net source of cash of $16, the investing of $2,500 in restricted cash pursuant
      to the terms of the CAP Financing, and the investing of a net of $1,314 in
      restricted cash pursuant to the terms of the Exchange Agreement to cover
      approximately 24 month of interest payments. For the nine month period ended
      March 31, 2006, the cash used in investing activities was a result of investing
      $47,500 in restricted cash pursuant to the terms of the CAP Financing and the
      liquidating of certain other assets and the purchase of certain property and
      equipment resulting in a net source of $5.





*Cash
      Provided by (Used In) Financing Activities*





For
      the
      nine months ended March 31, 2007, the Company used $40,711 in cash from
      financing activities comprised of net proceeds from the sale of stock of $6,000,
      the issuance of new convertible debt of $5,000, less debt issuance costs of
      $538, less payment of $50,000 under the terms of the Exchange Agreement and
      $1,173 in other debt payments. For the nine months ended March 31, 2006, the
      Company generated $50,140 in cash from the proceeds from the CAP Financing
      of
      $50,000 and from the Trident loans of $2,500, less debt issuance costs of $1,110
      and repayments of debt of $1,250.


-18-
 TOC


*Summary*




The
      Company continues to incur losses from operations. Challenges associated with
      our strategic transition from an enterprise based software delivery model to
      one
      based on an OnDemand subscription model have proven difficult. While the number
      of OnDemand subscribers has met our initial expectations and continues to grow,
      the rate and pattern of subscription payments has resulted in less cash being
      generated than originally forecast. As a result, we continue to believe that
      based upon current cash balances and forecasts of probable cash flows from
      future operations, the Company will likely require additional working capital
      in
      order to continue as a going concern for the next twelve months. In order to
      address this issue, we are endeavoring to reduce costs, increase OnDemand
      revenues and secure additional sources of debt and equity financing. However,
      there can be no assurance that such reductions in costs will be achievable,
      that
      increases in revenues will be realized or that additional sources of equity
      and
      debt financing will be available in a timeframe sufficient to enable the Company
      to continue its operations in the normal course.





Our
      consolidated financial statements are prepared in accordance with accounting
      principles generally accepted in the United States. The preparation of these
      consolidated financial statements requires us to make estimates and assumptions
      that affect the reported amounts of assets, liabilities, revenues, costs and
      expenses, and related disclosures. On an ongoing basis, we evaluate our
      estimates and assumptions. Our actual results may differ from these estimates
      under different assumptions or conditions.




-19-
 TOC


**ITEM
      3.**  **CONTROLS
      AND PROCEDURES**





(a)  Evaluation
      of Disclosure Controls and Procedures.




We
      conducted an evaluation under the supervision and with the participation of
      our
      management, including our Chief Executive Officer and Chief Financial Officer,
      of the effectiveness of the design and operation of our disclosure controls
      and
      procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act
      of
      1934 (“Exchange Act”) as of March 31, 2007. Based upon that evaluation, our
      Chief Executive Officer and Chief Financial Officer have determined that our
      disclosure controls and procedures have been designed and are being operated
      in
      a manner that provides reasonable assurance that the information required to
      be
      disclosed in our Exchange Act reports is recorded, processed, summarized and
      reported within the time periods specified in the Securities and Exchange
      Commission’s rules and forms, and that such information is accumulated and
      communicated to our management, including our Chief Executive Officer and Chief
      Financial Officer, as appropriate, to allow timely decisions regarding required
      disclosure. In designing and evaluating the disclosure controls and procedures,
      our management recognizes that any controls and procedures, no matter how well
      designed and operated, can provide only reasonable assurance of achieving the
      desired control objectives, and our management necessarily is required to apply
      its judgment in evaluating the cost-benefit relationship of possible controls
      and procedures.





(b)
      Management’s responsibility for financial statements





Our
      management is responsible for the integrity and objectivity of all information
      presented in this report. The consolidated financial statements were prepared
      in
      conformity with accounting principles generally accepted in the United States
      of
      America and include amounts based on management’s best estimates and
      judgments.


Management
      believes the consolidated financial statements fairly reflect the form and
      substance of transactions and that the financial statements fairly represent
      the
      Company’s financial position and results of operations for the periods and as of
      the dates stated therein.





(c)
      Changes in internal control over financial reporting





There
      have been no changes in our internal control over financial reporting during
      the
      quarter ended March 31, 2007 that have materially affected, or are reasonably
      likely to materially affect, our internal control over financial
      reporting.  -20-
 TOC


**PART
      II - OTHER INFORMATION**





**ITEM
      1.**  **LEGAL
      PROCEEDINGS**




In
      August
      2001, our predecessor, Firepond, Inc., was named as a defendant in a securities
      class action filed in United States District Court for the Southern District
      of
      New York related to its initial public offering (“IPO”) in February, 2000. 
The lawsuit also named certain of the underwriters of the IPO, including
      FleetBoston, Dain Rauscher, and SG Cowen, as well as officers and directors
      of
      Firepond, Klaus P. Besier and Paul K. McDermott, as defendants. 
Approximately 300 other issuers and their underwriters have had similar suits
      filed against them, all of which have been included in a single coordinated
      proceeding in the Southern District of New York (the “IPO Litigations”). 
The complaints allege that the prospectus and the registration statement for
      the
      IPO failed to disclose that the underwriters allegedly solicited and received
      “excessive” commissions from investors and that some investors in the IPO
      allegedly agreed with the underwriters to buy additional shares in the
      aftermarket in order to inflate the price of Firepond’s stock.  An amended
      complaint was filed on April 19, 2002.  Firepond, Inc. and the officers and
      directors identified above were named in the suits pursuant to Section 11
      of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934
      (the “Exchange Act”), and other related provisions.  The complaints seek
      unspecified damages, attorney and expert fees, and other unspecified litigation
      costs.




In
      June
      2003, a proposed settlement of this litigation was structured between the
      plaintiffs, the issuer defendants in the consolidated actions, the issuer
      officers and directors named as defendants, and the issuers’ insurance
      companies.  On or about July 30, 2003, a committee of Firepond’s Board of
      Directors conditionally approved the proposed partial settlement.  The
      settlement would have provided, among other things, a release of Firepond and
      of
      the individual defendants for the alleged wrongful conduct in the amended
      complaint in exchange for a guarantee from Firepond’s insurers regarding
      recovery from the underwriter defendants and other consideration from the
      company regarding its underwriters.  The plaintiffs have continued to
      litigate against the underwriter defendants.  The district court directed
      that the litigation proceed within a number of “focus” cases” rather than in all
      of the 310 cases that have been consolidated.  Firepond’s case is one of
      these focus cases.  On October 13, 2004, the district court certified the
      focus cases as class actions.  The underwriter defendants appealed that
      ruling, and on December 5, 2006, the Court of Appeals for the Second Circuit
      reversed the district court’s class certification decision.  On April 6,
      2007, the Second Circuit denied plaintiff’s petition for rehearing.  In
      light of the Second Circuit opinion, the district court has been informed that
      this settlement cannot be approved because the defined settlement class, like
      the litigation class, cannot be certified.  We cannot predict whether
      Firepond will be able to renegotiate a settlement that complies with the Second
      Circuit’s mandate.  Due to inherent uncertainties of litigation, we cannot
      accurately predict the ultimate outcome of the matter.




We
      may
      from time to time also be subject to various other claims and legal actions
      arising in the ordinary course of business.  In the opinion of management,
      after consultation with legal counsel, the ultimate disposition of these matters
      is not expected to have a material effect on our business, financial condition,
      or results of operations.




**ITEM
      2.**  **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**




On
      January 24, 2007, the Company entered into a Master Exchange Agreement (the
      “Exchange Agreement”) with certain institutional investors (the “Purchasers”).
      Pursuant to the Exchange Agreement, effective January 24, 2007 the Company
      exchanged with the Purchasers all of its outstanding (i) Senior Secured
      Nonconvertible Notes Due 2011, in the aggregate principal amount of $50,000,000,
      issued under an Indenture with The Bank of New York dated March 29, 2006 and
      (ii) Warrants to purchase an aggregate of 6,250,000 shares
      of
      common stock, par value $0.001 per share, of the Company (the “Common Stock”) at
      an exercise price of $8.00 per share, for the following aggregate consideration:




-21-
 TOC




§
            $45,000,000
                in cash plus accrued interest on the Senior Secured Nonconvertible
                Notes
                Due 2011;





§
            A
                new issue of Senior Secured Convertible Notes Due 2009 in the aggregate
                principal amount of $5,600,000 (the “New Notes”), issued under an
                indenture with The Bank of New York (the “New Indenture”);





§
            Warrants
                to purchase an aggregate of 1,214,285 shares of Common Stock at an
                exercise price of $7.00 per share (the “New Warrants”); and





§
            1,500,000
                fully-paid shares of Common Stock (the “New Shares”).





On
      January 24, 2007, the Company also exchanged with Rodman & Renshaw LLC
      (“Rodman”) outstanding warrants previously issued to Rodman to purchase an
      aggregate of 625,000 shares of Common Stock at an exercise price of $8.00 per
      share for (i) new warrants to purchase 71,429 shares of Common Stock at an
      exercise price $7.00 per share (the “Rodman Warrants”) and (ii) 150,000
      fully-paid shares of Common Stock (the “Rodman Shares”).




On
      February 21, 2007, the Company issued 413,798 shares of common stock to Trident
      Growth Fund LP (“Trident”) upon the cashless exercise of certain warrants and
      other rights that Trident was previously granted by the Company.




The
      securities issued under the Exchange Agreement and the securities issued to
      Rodman and Trident were not registered under the Securities Act of 1933, as
      amended (the “Securities Act”), in reliance upon Section 3(a)(9) of the
      Securities Act, Section 4(2) of the Securities Act, and Regulation D promulgated
      thereunder.






**ITEM
      3.**  **DEFAULTS
      UPON SENIOR SECURITIES**





None.





**ITEM
      4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
      HOLDERS**





None.





**ITEM
      5.**  **OTHER
      INFORMATION**





We
      recently established a Nominating Committee of the Board of Directors to
      recommend to monitor the size and composition of the Board of Directors of
      the
      Company and recommend to the full Board nominations for election to the Board
      of
      Directors. The Nominating Committee has adopted a charter which sets forth
      the
      procedures by which stockholders may recommend nominees to the Board of
      Directors, and a current copy of this charter will be available on our website
      at www.firepond.com at the time we file our proxy statement for the 2007 Annual
      Meeting of Stockholders. Prior to adoption of the Nominating Committee charter,
      we did not have formal procedures in place for nomination of directors.  -22-
 TOC


**ITEM
      6.**  **EXHIBITS**





31.1
      Certification of Principal Executive Officer pursuant to
      Rule 13a-14(a)


or
      Rule 15d-14(a)





31.2
      Certification of Principal Financial Officer pursuant to
      Rule


13a-14(a)
      or Rule 15d-14(a)





32.1
      Certifications pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant


To
      Section 906 of the Sarbanes-Oxley Act Of
      2002




-23-
 TOC


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 thereunto
      duly authorized.





Date:
      May
      15, 2007  FP
      Technology, Inc. (Registrant)





/s/ William
              Santo
            
            
            /s/ Stephen
              PearyWilliam
              Santo, CEO
            
            
            Stephen
              PearyCFO


-24-
 TOC