ODMO Odimo Inc (CE)

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008
OR

o		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 000-51161

Odimo Incorporated

(Exact name of registrant as specified in its charter)

Delaware		22-3607813
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9858 Clint Moore Road, Boca Raton, Fl		33496
(Address of principal executive offices)		(Zip Code)

(954) 993 -4703
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ      No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer  o		Accelerated filer  o		Non-accelerated filer  o		Smaller reporting company  þ
			(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes þ      No o

As of August 13, 2008, the registrant had 7,753,242 shares of common stock outstanding.

 

 

ODIMO, INCORPORATED
TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION			3
ITEM 1. Financial Statements			3
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			10
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk			15
ITEM 4T. Controls and Procedures			15
PART II. OTHER INFORMATION			16
ITEM 6. Exhibits			16
SIGNATURES			19
EX-31.1 Section 302 Certification of CEO
EX-31.2 Section 302 Certification of CFO
EX-32.1 Section 906 Certification of CEO
EX-32.2 Section 906 Certification of CFO

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

ODIMO, INCORPORATED


BALANCE SHEETS
(in thousands, except par value)

		June 30,				December 31,
		2008				2007
		(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	12			$	1
Prepaid expense and other current assets			17				17
Total		$	29			$	18
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
Current Liabilities:
Accounts payable		$	283			$	304
Accrued interest to related party			—				38
Accrued liabilities			10				25
Total current liabilities			293				367
Note Payable to Related Party			—				515
Commitments, Contingencies and Subsequent Events
Stockholders’ Equity (Deficiency):
Preferred stock, $0.001 par value, 50 million shares authorized, none issued and outstanding			—				—
Common stock, $0.001 par value, 300 million shares authorized, 7,753 and 7,039 shares issued and outstanding			7				7
Additional paid-in capital			104,382				103,705
Accumulated deficit			(104,653	)			(104,576	)
Total stockholders’ equity (deficiency)			(264	)			(864	)
Total		$	29			$	18

See notes to unaudited condensed financial statements.

ODIMO, INCORPORATED

STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Unaudited)

		Three Months Ended								Six Months Ended
		June 30, 2008				June 30, 2007				June 30, 2008				June 30, 2007
Commissions		$	—			$	1			$	1			$	14
Total Revenue			—				1				1				14
Operating Expenses:
General and administrative			27				212				77				768
Depreciation and amortization			—				2				—				6
Total operating expenses			27				214				77				774
Loss from Operations			(27	)			(213	)			(76	)			(760	)
Other Income (Expense):
Gain on sale of assets			—				424				0				424
Interest expense, net			—				(9	)			—				(17	)
			—				415				—				407
Net Income (Loss)		$	(27	)		$	202			$	(76	)		$	(353	)
Net Income (Loss) per Common Share
Basic and diluted		$	(0.00	)		$	0.03			$	(0.01	)		$	(0.05	)
Weighted Average Number of Shares:
Basic and diluted			7,753				7,039				7,620				7,039

See notes to unaudited condensed financial statements.

ODIMO, INCORPORATED


STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

		Six Months Ended
		June 30,
		2008				2007
Cash Flows from Operating Activities:
Net loss		$	(76	)		$	(353	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			—				6
Gain on sale of assets			—				(424	)
Compensation contributed by officer			14				—
Changes in operating assets and liabilities:
(Increase) decrease in:
Deposits with credit card processing company			—				79
Escrow deposit			—				30
Prepaid expenses and other current assets			(1	)			(3	)
Increase (decrease) in:
Accounts payable			(21	)			(287	)
Accrued liabilities			(15	)			149
Net cash used in operating activities			(99	)			(803	)
Cash Flows from Investing Activities:
Proceeds from sale of assets, net of expenses			—				674
Net cash provided by investing activities			—				674
Cash Flows from Financing Activities:
Proceeds from notes payable to related party, net of repayments			10				248
Payments on note payable related party			—				(30	)
Proceeds from sale of common stock			100				—
Net cash provided by financing activities			110				218
Net Increase in Cash and Cash Equivalents			11				89
Cash and Cash Equivalents, Beginning			1				75
Cash and Cash Equivalents, Ending		$	12			$	164
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest		$	—			$	17
Forgiveness of note payable to related party		$	563			$	—

See notes to unaudited condensed financial statements.

ODIMO, INCORPORATED


STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
Six Months Ended June 30, 2008
(in thousands, except per share data)
(Unaudited)

										Additional								Total
		Common Stock								Paid-In				Accumulated				Stockholders’
		Shares				Par Value				Capital				Deficit				Equity (Deficiency)
BALANCE-December 31, 2007			7,039			$	7			$	103,705			$	(104,576	)		$	(864	)
Sale of common stock			714				—				100				—				100
Forgiveness of note payable and accrued interest to related party											563								563
Compensation contributed by officer			—				—				14				—				14
Net loss			—				—				—				(77	)			(77	)
BALANCE-June 30, 2008			7,753			$	7			$	104,382			$	(104,653	)		$	(264	)

ODIMO, INCORPORATED
Notes to Unaudited Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business — The Company is a non-operating public shell company. The Company is seeking suitable candidates for a business combination with a private company. The Company previously was an online retailer of watches, luxury goods, diamonds and jewelry through three websites, www.diamond.com, www.ashford.com and www.worldofwatches.com. The Company’s operating results disclosed in this Quarterly Report on Form 10 Q are not meaningful to its future results.

Basis of Presentation — The accompanying unaudited condensed financial statements as of June 30, 2008 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information on Form 10-Q and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position as of June 30, 2008 and the results of operations and the cash flows for the six months ended June 30, 2008 and 2007. All such adjustments are of a normal recurring nature.

Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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.

Recently Issued Accounting Standards — In March 2008, the FASB issued Statement No. 161 “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”) to enhance disclosures about an entity’s derivative and hedging activities. SFAS 161 is effective for all financial statements issued in fiscal years and interim periods beginning after November 15, 2008 and early application is encouraged. SFAS 161 also encourages but does not require comparative disclosures for earlier periods at initial adoption. As the Company does not currently engage in derivative transactions or hedging activities, the Company does not anticipate any significant financial statement disclosure impact as a result of our evaluation of SFAS 161.

In December 2007 the FASB issued 141R, “Business Combinations” (“SFAS 141R”) which requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair value as of the date. SFAS 141R requires, among other things, that in a business combination achieved in stages (sometimes referred to as a “step acquisition”), that the acquirer recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of their fair values (or other amounts determined in accordance with this Statement).

SFAS 141R also requires the acquirer to recognize goodwill as of the acquisition date, measured as a residual, which in most types of business combinations will result in measuring goodwill as the excess of the consideration transferred plus the fair value of any non-controlling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We do not expect that the adoption of SFAS 141R will have a material impact on our financial statements.

In December 2007, the FASB issues SFAS 160, “Non-controlling Interests in Consolidated Financial Statements” (“SFAS 160”), This Statement changes the way the consolidated income statement is presented. SFAS 160 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. Currently, net income attributable to the non-controlling interest generally is reported as an expense or other deduction in arriving at consolidated net income. It also is often presented in combination with other financial statement amounts. SFAS 160 results in more transparent reporting of the net income attributable to the non-controlling interest. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We do not believe SFAS 160 will have a material impact on our financial statements.

In February 2007, the Financial Accounting Standards Board (the “FASB”) issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities Including an amendment of FASB Statement No. 115 (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company adopted SFAS No. 159 on January 1, 2008 and the adoption did not have a material effect on our financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under SFAS No. 157, fair value measurements would be separately disclosed by level within the fair value hierarchy. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. The adoption of this pronouncement on January 1, 2008 did not have a material impact on our financial statements.

2. GOING CONCERN CONSIDERATIONS

The Company’s independent registered public accounting firm’s report on its financial statements for the fiscal year ended December 31, 2007 includes an explanatory paragraph regarding the Company’s ability to continue as a going concern. As shown in its historical financial statements, the Company has incurred significant recurring net losses for the past several years and as of December 31, 2007, its financial statements reflected negative working capital and a stockholders’ equity deficiency. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Further, the registered public accounting firm’s report states that the financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As of December 31, 2007 the Company had borrowed from Alan Lipton, its Chairman of the Board of Directors the sum of $545,000. The Company issued to Mr. Lipton two separate 8% promissory notes in exchange for the funds (the “Notes”). Under one of the Notes (the “First Note”), $515,000 plus all interest under the First Note was repayable by the Company upon the earlier to occur of (a) January 16, 2010; or (ii) the occurrence of a change in control of the Company. Under the other note, (the “Second Note”), $30,000 plus accrued interest was payable by the Company to Mr. Lipton on demand. The Company’s repayment obligation under the Second Note was unsecured. The Company used the proceeds of the loans from Mr. Lipton for working capital purposes, including payment of its existing liabilities. The Company used $30,000 of the proceeds from the sale of www.ashford.com to repay certain of the amounts owing to Mr. Lipton and as of December 31, 2007, the Company owed to Mr. Lipton the sum of $553,000, including accrued interest. In January 2008, Mr. Lipton loaned an additional $10,000 to the Company. As of April 14, 2008, the Company was informed by Alan Lipton that the Company was released from repaying all amounts owed to him under the Note effective as of December 31, 2007 (See Note 5).

The Company is a non-operating public shell company and is seeking suitable candidates for a business combination with a private company. The Company may seek to raise additional capital through the issuance of equity or debt, including loans from related parties, to acquire sufficient liquidity to satisfy its future liabilities. Such additional capital may not be available timely or on terms acceptable to the Company, if at all. The Company’s plans to repay its liabilities as they become due may be impacted adversely by its inability to have sufficient liquid assets to satisfy its liabilities. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

3. STOCK OPTION PLAN

The stock option transactions related to the Plan are summarized as follows (in thousands, except weighted average exercise price) for six months ended June 30, 2008:

		June 30, 2008
						Weighted
						Average
						Exercise
		Options				Price
Outstanding at beginning of year			131			$	24.43
Granted			—				—
Exercised			—				—
Canceled			(105	)			(8.99	)
Outstanding at June 30, 2008			26			$	24.48
Options exercisable at June 30, 2008			26 $				24.48

4. INCOME TAXES

Section 382 of the Internal Revenue Code generally imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in its stock ownership. The Company has reviewed the applicability of the annual limitations imposed by Section 382 caused by changes that occurred prior to, as well as, during the six months ended June 30, 2008 in its stock ownership and believes that the availability of the net operating loss carryforwards is substantially limited. There can be no assurance that the Company will be able to utilize any net operating loss carryforwards in the future.

5. RELATED PARTY TRANSACTIONS

Note Payable to Related Party —The Company had previously borrowed from Alan Lipton, its Chairman of the Board of Directors, the sum of $555,000, of which $30,000 has been repaid. The Company issued to Mr. Lipton an 8% promissory note in exchange for the funds (the “Note”). Under the Note, $525,000 plus all interest was repayable by the Company upon the earlier to occur of (a) January 16, 2010; or (ii) the occurrence of a change in control of the Company. The Company used the proceeds of the loans from Mr. Lipton for working capital purposes, including payment of its existing liabilities. As of April 14, 2008, the Company was informed by Alan Lipton that the Company was released from repaying all amounts owed to him under the Note effective as of December 31, 2007. As a result of the forgiveness of this liability, the note payable of $525,000 plus accrued interest of approximately $38,000 was removed from the books and recorded as a credit to additional paid in capital.

The following condensed pro-forma Balance Sheet as of December 31, 2007 has been adjusted to reflect the cancellation of the note payable assuming that the Company had been notified of the release of these obligations as of that date.

		December 31, 2007
						Pro-Forma
		Historical				Adjustments				Pro-Forma
Total Assets		$	18							$	18
Total Current Liabilities		$	367			$	(38	)		$	329
Note Payable to Related Party		$	515			$	(515	)		$	—
Stockholders’ Deficiency		$	(864	)		$	(553	)		$	(311	)

Sale of Common Stock —On February 4, 2008, the Company sold 714,284 newly issued shares of its common stock, par value $.001, to three investors for a gross purchase price of $100,000. An entity controlled by Alan Lipton, the Company’s Chairman of the Board, and Amerisa Kornblum, its President and Chief Financial Officer each purchased 178,571 of these shares. There were no underwriting discounts or commissions paid in the sale.

Compensation to Officer —During 2008, Amerisa Kornblum serves the Company for no compensation. For accounting purposes the Company has recorded compensation expense of $14,000 as a capital contribution for the six months ended June 30, 2008.

ITEM 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

      The following discussion should be read in conjunction with Odimo Incorporated’s (“Odimo,” the “Company,” “we,” “our,” “us,”) Condensed Consolidated Financial Statements and the related Notes contained elsewhere in this quarterly report on Form 10-Q . All statements in the following discussion that are not reports of historical information or descriptions of current accounting policy are forward-looking statements. Please consider our forward-looking statements in light of the factors that may affect operating results set forth herein.

Non-Operating Shell Company

     We are a non operating shell corporation. We intend to effect a merger, acquisition or other business combination with an operating company by using a combination of capital stock, cash on hand, or other funding sources, if available. We intend to devote substantially all of our time to identifying potential merger or acquisition candidates. We have reviewed very few merger candidates to date and there can be no assurances that we will enter into such a transaction in the near future or on terms favorable to us, or that other funding sources will be available.

Cessation of Online Retailing Business of the Company

     Prior to May 2006, we were an online retailer of high quality diamonds and fine jewelry, current season brand name watches and luxury goods through three websites, www.diamond.com, www.worldofwatches.com and www.ashford.com. In May 2006, we sold assets related to our online diamond and jewelry business operations, including our domain name www.diamond.com. In December 2006, we sold assets related to our online watch business operations, including our domain name www.worldofwatches.com. In April 2007, we sold our domain name www.ashford.com and related intellectual property rights, product images and other intangibles.

     Other than Amerisa Kornblum, our President and Chief Financial Officer, who, commencing in 2008, serves the Company for no compensation, we have no full time employees.

Going Concern

     Our independent registered public accounting firm’s report on our financial statements for the fiscal year ended December 31, 2007 includes an explanatory paragraph regarding our ability to continue as a going concern. As shown in our historical financial statements, we have incurred significant recurring net losses and negative cash flows from operations for the past several years and as of December 31, 2007, our financial statements reflect negative working capital and a stockholders’ equity deficiency.

     These conditions raise substantial doubt about our ability to continue as a going concern. Further, the registered public accounting firm’s report states that the financial statements do not include any adjustments that might result from the outcome of this uncertainty.

     We had previously borrowed from Alan Lipton, our Chairman of the Board of Directors the net sum of $525,000. We issued to Mr. Lipton an 8% promissory note in exchange for the funds (the “Note”). Under the Note, $525,000 plus all interest was repayable by the Company upon the earlier to occur of (a) January 16, 2010; or (ii) the occurrence of a change in control of the Company. Our repayment obligation under the Note was secured by all of the Company’s assets. We used the proceeds of the loans from Mr. Lipton for working capital purposes, including payment of our existing liabilities. As of April 14, 2008, we were informed by Alan Lipton that he had released us from repaying all amounts we owed to him under the Note.

     On February 4, 2008 we sold 714,284 newly issued shares of our common stock, par value $.001, to four investors for a gross purchase price of $100,000. An entity controlled by Alan Lipton, our Chairman of the Board and Amerisa Kornblum, our President and Chief Financial Officer each purchased 178,571 of these shares. There were no underwriting discounts or commissions paid in connection with the sale of these shares.

     We may seek to raise additional capital through the issuance of equity or debt, including loans from related parties, to acquire sufficient liquidity to satisfy our future liabilities. Such additional capital may not be available timely or on terms acceptable to us, if at all. Our plans to repay our liabilities as they become due may be impacted adversely by our inability to have sufficient liquid assets to satisfy our liabilities.

Comparison of Quarter Ended June 30, 2008 to Quarter Ended June 30, 2007

      Total Revenue for the quarters ended June 30, 2008 and 2007 was $0 and $1,000 (consisting solely of commissions based on a percentage of gross sales made to visitors to our www.ashford.com homepage who were redirected to websites owned and operated by others).

      General and Administrative Expenses. General and administrative expenses for the quarters ended June 30, 2008 and 2007 were $ 27,000 and $212,000. We believe that while we are a non-operating shell company, our operating expenses will include rent, insurance, accounting and other general and administrative expenses as well as costs associated with seeking to locate and consummate a business combination.

      Interest Expense, Net. Interest expense, net, for the quarters ended June 30, 2008 and 2007 was $0 and $9,000.

      Net Loss. Net loss for the quarter ended June 30, 2008 was $ 27,000 compared to $ 202,000 for the quarter ended June 30, 2007. The net loss for the quarter ended June 30, 2007 includes a $424,000 gain on the sale of the ashford.com assets. Without this $424,000 gain, our net loss for the quarter ended June 30, 2007 would have been $626,000.

Comparison of Six Months Ended June 30, 2008 to Six Months Ended June 30, 2007

      Total Revenue for the six months ended June 30, 2008 and 2007 was $1,000 and $14,000 (consisting solely of commissions).

      General and Administrative Expenses. General and administrative expenses for the six months ended June 30, 2008 were $ 77,000 compared to $768,000 for the six months ended June 30, 2007. We believe that while we are a non-operating shell company, our operating expenses will include rent, insurance, salaries, accounting and other general and administrative expenses as well as costs associated with seeking to locate and consummate a business combination.

      Depreciation and Amortization. Depreciation and amortization expense for the six months ended June 30, 2008 was $ 0 compared to $6,000 for the six months ended June 30, 2007.

      Interest Expense, Net. Interest expense, net, for the six months ended June 30, 2008 was $0 compared to $17,000 for the six months ended June 30, 2007.

      Net Loss. Net loss for the six months ended June 30, 2008 was $ 77,000 compared to a net loss of $353,000 for the six months ended June 30, 2007. The net loss for the six months ended June 30, 2007 includes a $424,000 gain on the sale of the ashford.com assets. Without this $424,000 gain, our net loss for the six months ended June 30, 2007 would have been $777,000.

Liquidity and Capital Resources

     As of June 30, 2008, we had cash of approximately $12,000 compared to cash of $ 1,000 as of December 31, 2007. On February 4, 2008, we sold 714,284 newly issued shares of common stock, par value $.001, to four investors for a gross purchase price of $100,000, which we are using for working capital.

     We intend to continue devoting substantially all of our time to identifying merger or acquisition candidates. In the event we locate an acceptable operating business, we intend to effect the transaction utilizing any combination of our Common Stock, cash on hand, or other funding sources that we reasonably believe are available. However, there can be no assurances that we will be able to consummate a merger or acquisition of an operating business on terms favorable to us, if at all, or that other funding sources will be available.

Discussion of Cash Flows

     Net cash used in operating activities for the six months ended June 30, 2008 was $ 99,000 compared to $803,000 for the six months ended June 30, 2007. Included in the net cash used in operating activities for the six months ended June 30, 2007 is a $287,000 decrease in accounts payable and a $424,000 gain on sale of assets related to the sale of the ashford.com assets.

     Net cash provided by financing activities for the six months ended June 30, 2008 was $110,000 from the sale of common stock and proceeds from the issuance of a note payable to an affiliated party. Net cash provided by financing activities for the six months ended June 30, 2007 consisted of our issuance of a note payable to an affiliated party in the amount of $248,000, inclusive of accrued interest, offset by a payment on a note payable to related party of $30,000.

     Net cash provided by investing activities for the six months ended June 30, 2008 was $ 0. Net cash provided by investing activities for the six months ended June 30, 2007 was $674,000, which consisted of our sale of computers and equipment of $250,000 and the sale of the ashford.com assets for $424,000.

Outstanding Stock Options

     As of June 30, 2008, we had outstanding vested options to purchase approximately 26,618 shares of common stock, at a weighted average exercise price of $24.48 per share. We have no outstanding unvested options. The per share value of each share of common stock underlying the vested options, based on the difference between the weighted average exercise price per option and the estimated fair market value of the shares at the dates of the grant of the options (also referred to as intrinsic value), ranges from $0 to $16.25 per share.

Liquidity Sources

     Our current sources of liquidity consist of cash on hand. As of June 30, 2008, we had $12,000 of cash compared to $1,000 of cash as of December 31, 2007.

     Until required for other purposes, our cash and cash equivalents are maintained in deposit accounts or highly liquid investments with original maturities of 90 days or less at the time of purchase.

     We may seek to raise additional capital through the issuance of equity or debt, including loans from related parties, to acquire sufficient liquidity to satisfy our future liabilities. Such additional capital may not be available timely or on terms acceptable to us, if at all. Our plans to repay our liabilities as they become due may be impacted adversely by our inability to have sufficient liquid assets to satisfy our liabilities.

     Our independent registered public accounting firm’s report on our financial statements for the fiscal year ended December 31, 2007 includes an explanatory paragraph regarding our ability to continue as a going concern. As shown in our historical financial statements, we have incurred significant recurring net losses and negative cash flows from operations for the past several years and as of December 31, 2007, our financial statements reflect negative working capital and a stockholders’ equity deficiency. These conditions raise substantial doubt about our ability to continue as a going concern. Further, the registered public accounting firm’s report states that the financial statements do not include any adjustments that might result from the outcome of this uncertainty.

     During the six months ended June 30, 2008, we funded our operations primarily with cash on hand and from the net proceeds from the sale of shares.

Off Balance Sheet Arrangements

     We do not have any off balance sheet arrangements.

Critical Accounting Policies and Estimates

     Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to income taxes, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

     While our significant accounting policies are described in more detail in Note 1 to our financial statements included in this report, we believe the policies discussed below are the most critical to understanding our financial position and results of operations.

Income Taxes

     We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized by applying statutory tax rates in effect in the years in which the differences between the financial reporting and tax filing bases of existing assets and liabilities are expected to reverse. We have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance against our deferred tax assets. We have recorded a full valuation allowance against our deferred tax assets since we have determined that it is more likely than not that we may not be able to realize our deferred tax asset in the future.

Recently Issued Accounting Standards

     In March 2008, the FASB issued Statement No. 161 “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”) to enhance disclosures about an entity’s derivative and hedging activities. SFAS 161 is effective for all financial statements issued in fiscal years and interim periods beginning after November 15, 2008 and early application is encouraged. SFAS 161 also encourages but does not require comparative disclosures for earlier periods at initial adoption. As we do not currently engage in derivative transactions or hedging activities, we do not anticipate any significant financial statement disclosure impact as a result of our evaluation of SFAS 161.

     In December 2007 the FASB issued 141R, “Business Combinations” (“SFAS 141R”) which requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair value as of the date. SFAS 141R requires, among other things, that in a business combination achieved in stages (sometimes referred to as a “step acquisition”), that the acquirer recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of their fair values (or other amounts determined in accordance with this Statement).

     SFAS 141R also requires the acquirer to recognize goodwill as of the acquisition date, measured as a residual, which in most types of business combinations will result in measuring goodwill as the excess of the consideration transferred plus the fair value of any non-controlling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We do not expect that the adoption of SFAS 141R will have a material impact on our financial statements.

     In December 2007, the FASB issues SFAS 160, “Non-controlling Interests in Consolidated Financial Statements” (“SFAS 160”), This Statement changes the way the consolidated income statement is presented. SFAS 160 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. Currently, net income attributable to the non-controlling interest generally is reported as an expense or other deduction in arriving at consolidated net income. It also is often presented in combination with other financial statement amounts. SFAS 160 results in more transparent reporting of the net income attributable to the non-controlling interest. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We do not believe SFAS 160 will have a material impact on our financial statements.

     In February 2007, the Financial Accounting Standards Board (the “FASB”) issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities Including an amendment of FASB Statement No. 115 (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. We adopted SFAS No. 159 on January 1, 2008, the adoption of which did not have an impact on the financial statements.

     In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under SFAS No. 157, fair value measurements would be separately disclosed by level within the fair value hierarchy. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. The adoption of this pronouncement on January 1, 2008 did not have a material impact on our financial statements.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

     Our exposure to market risk due to changes in interest rates relates primarily to the increase or decrease in the amount of interest income we can earn on our cash equivalents. Our risk associated with fluctuating interest rates is limited to our investments in interest rate sensitive financial instruments. Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes. We attempt to increase the safety and preservation of our invested principal funds by limiting default risk, market risk and reinvestment risk. We mitigate default risk by investing in investment grade securities. A hypothetical 100 basis point adverse move in interest rates along the entire interest rate yield curve would not materially affect the fair value of our interest sensitive financial instruments due to their relatively short term nature. Declines in interest rates over time will, however, reduce our interest income while increases in interest rates over time will increase our interest income.

ITEM 4T. Controls and Procedures

a. Evaluation of Disclosure Controls and Procedures.

     We maintain disclosure controls and procedures that are designed to ensure that 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 for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

     Since January 2007, Amerisa Kornblum began to serve as both our Chief Executive Officer and Chief Financial Officer whereas prior to that date, Ms. Kornblum was the Chief Financial Officer. Commencing January 1, 2007, we have observed that, although our operations subsequent to the year ended December 31, 2006 have been and continue to be limited, we have a material weakness in our internal controls over financial reporting in that we create, review and process financial data without internal independent review due to our not having sufficient personnel. Due to this material weakness, there is more than a remote likelihood that a material misstatement of our financial statements could occur and not be detected, prevented or corrected. Notwithstanding this material weakness, we believe that the financial statements included in this Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods and dates presented.

b. Changes in Internal Control Over Financial Reporting.

     Other than as set forth above, our management has determined that there have been no changes in the Company’s internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 6. Exhibits

      (a) Exhibits

Exhibit		Description
2.1 (1)		Asset Purchase Agreement among registrant and Ashford.com, Inc. dated December 6, 2002
3.1 (1)		Amended and Restated Certificate of Incorporation
3.2 (1)		Amended and Restated Bylaws
4.1 (1)		Form of Specimen Stock Certificate
4.2.1 (1)		Investors’ Rights Agreement dated November 18, 1999 by and between the registrant and certain holders of the registrant’s capital stock
4.2.2 (1)		Amended and Restated Registration Rights Agreement dated March 30, 2004 by and between the registrant and certain holders of the registrant’s capital stock
10.1.1 (1)		Odimo Incorporated Amended and Restated Stock Incentive Plan
10.1.2 (1)		Form of Stock Option Agreement pursuant to the Odimo Incorporated Stock Incentive Plan
10.2 (1)		Amended and Restated Series C Convertible Preferred Stock Purchase Agreement dated as of March 30, 2004 between the registrant and SDG Marketing, Inc.
10.3.1 (1)		Promissory Note dated December 6, 2002 by the registrant in favor of GSI Commerce Solutions, Inc.
10.3.2 (1)		Security Agreement dated December 6, 2002 between the registrant and GSI Commerce Solutions, Inc., as assignee
10.3.3 (1)		Patents, Trademarks, Copyrights and Licenses Security Agreement dated December 6, 2002 between the registrant and GSI Commerce Solutions, Inc., as assignee
10.4.1 (1)		Lease Agreement dated December 14, 1999 between the registrant and MDR Fitness Corp.
10.4.2 (1)		Lease Amendment and Extension Agreement dated January 8, 2003 between the registrant and MDR Fitness Corp.
10.5.1 (1)		Employment Agreement dated July 12, 2004 between the registrant and Alan Lipton
10.5.2 (1)		Employment Agreement dated July 12, 2004 between the registrant and Jeff Kornblum
10.5.3 (1)		Employment Agreement dated July 12, 2004 between the registrant and Amerisa Kornblum
10.5.4 (1)		Employment Agreement dated July 12, 2004 between the registrant and George Grous
10.5.5 (1)		Lock-up Agreement dated July 12, 2004, between the registrant and Alan Lipton
10.5.6 (1)		Lock-up Agreement dated July 12, 2004, between the registrant and Jeff Kornblum
10.5.7 (1)		Lock-up Agreement dated July 12, 2004, between the registrant and Amerisa Kornblum
10.5.8 (1)		Lock-up Agreement dated July 12, 2004, between the registrant and George Grous
10.5.9 (1)		Lock-up Agreement dated July 12, 2004, between the registrant and Michael Dell’Arciprete
10.5.10 (1)		Amended and Restated Employment Agreement dated August 27, 2004 between the registrant and Alan Lipton
10.6 (1)		Form of Indemnification Agreement between the registrant and each of its directors and executive officers
10.7 (1)		Supply Agreement dated March 30, 2004 between the registrant and SDG Marketing, Inc.
10.8.1 (1)		Loan and Security Agreement dated as of July 31, 2004 by and among Silicon Valley Bank, the registrant and its subsidiaries Ashford.com, Inc. and D.I.A. Marketing, Inc.
10.8.2 (1)		Revolving Promissory Note dated as of July 31, 2004 in favor of Silicon Valley Bank, by the registrant and its subsidiaries Ashford.com, Inc. and D.I.A. Marketing, Inc.
10.8.3 (1)		Intellectual Property Security Agreements dated as of July 31, 2004 in favor of Silicon Valley Bank, by each of the registrant and Ashford.com, Inc.

Exhibit		Description
10.8.4 (1)		Unconditional Guaranties dated as of July 31, 2004 of Softbank Capital LP, Softbank Capital Partners LP and Softbank Capital Advisors Fund LP
10.9 (1)		Commercial Lease dated as of January 1, 2006 between the registrant and IBB Realty, LLC
10.10 (1)		First Loan Modification Agreement dated as of November 13, 2004 by and among Silicon Valley Bank, the registrant and its subsidiaries Ashford.com, Inc. and D.I.A. Marketing, Inc.
10.11 (1)		First Amended and Restated Note dated as of November 13, 2004 in favor of Silicon Valley Bank by the registrant and its subsidiaries Ashford.com, Inc. and D.I.A. Marketing, Inc.
10.12 (1)		Amendment and Reaffirmation of Guaranty dated as of November 13, 2004 of Softbank Capital, LP, Softbank Capital Partners, LP and Softbank Capital Advisors Fund LP
10.13 (1)		Second Loan Modification Agreement dated as of January 7, 2005 by and among Silicon Valley Bank, the registrant and its subsidiaries Ashford.com, Inc. and D.I.A. Marketing, Inc.
10.14 (1)		Second Amended and Restated Note dated as of January 7, 2005 in favor of Silicon Valley Bank, by the registrant and its subsidiaries Ashford.com, Inc. and D.I.A. Marketing, Inc.
10.15 (1)		Second Amendment and Reaffirmation of Guaranty dated as of January 7, 2005 of Softbank Capital, L.P., Softbank Capital Partners, LP and Softbank Capital Advisors Fund LP
10.16 (1)		Confirmation letter dated January 7, 2005 from Softbank Capital Partners LP, regarding financial support.
10.17 (5)		Termination Agreement dated March 29, 2006 by and between Odimo Incorporated and SDG Marketing, Inc.
10.18 (5)		Third Amendment to Loan and Security Agreement dated March 30, 2006, by and among Silicon Valley Bank, Odimo Incorporated, Ashford.com, Inc. and D.I.A. Marketing, Inc.
10.19 (6)		Asset Purchase Agreement dated as of May 11, 2006 by and among Ice.com, Inc., Ice Diamond, LLC, and Odimo Incorporated.
10.20 (6)		Transition Services Agreement dated as of this May 11, 2006, by and between Ice Diamond, LLC, Ice.com, Inc., and Odimo Incorporated.
10.21 (6)		Separation Agreement dated May 11, 2006 by Odimo Incorporated and Alan Lipton.
10.22 (6)		Amendment No. 1 to Employment Contract dated as of May 11, 2006, by and among Odimo Incorporated and Jeffrey Kornblum.
10.23 (7)		Modification and Settlement Agreement dated November 6, 2006 by and between IBB Realty, LLC and Odimo Incorporated.
10.24 (8)		Asset Purchase Agreement dated as of December 1, 2006 by and among Odimo Incorporated, Worldofwatches.com, Inc. and ILS Holdings, LLC.
10.25 (9)		Separation Agreement dated as of January 16, 2007 by and among Odimo Incorporated and Jeff Kornblum.
10.26 (9)		Separation Agreement dated as of January 16, 2007 by and among Odimo Incorporated and George Grous.
10.27 (9)		Termination Agreement dated as of January 15, 2007 by and among Odimo Incorporated and Amerisa Kornblum.
10.30 (11)		8% Secured Promissory Note in the Principal Amount of $300,000
10.31 (11)		Amended and Restated 8% Promissory Note in the Principal Amount of $500,000
10.32 (11)		8% Demand Promissory Note in the Principal Amount of $30,000
10.33 (10)		Asset Purchase Agreement dated as of April 6, 2007 by and among Odimo Incorporated, Ashford.com, Inc. and Luxi Group, LLC.
10.34 (12)		Amended and Restated 8% Promissory Note in the Principal Amount of $525,000
14.1 (2)		Code of Business Conduct and Ethics

Exhibit		Description
16.1 (3)		Letter of Deloitte & Touche LLP dated September 2, 2005
16.2 (3)		Letter of Rachlin Cohen & Holtz LLP dated September 2, 2005
21.1 (1)		Subsidiaries of Odimo Incorporated
23.1 (12)		Consent of Rachlin LLP
31.1 (4)		Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated pursuant to the Securities Exchange Act of 1934, as amended
31.2 (4)		Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated pursuant to the Securities Exchange Act of 1934, as amended
32.1 (4)		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 (4)		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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.

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