**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**









**FORM
      10-Q**





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




For
      the
      period ended **March
      31, 2008**





o
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**





**Commission
      file Number: 000-50995**





**uBid.com
      Holdings, Inc.**


*(Exact
      name of registrant as specified in its charter)*





**Delaware**
            **52-2372260***(State
                or Other Jurisdiction of*
            *(IRS
                Employer**Incorporation
                or Organization)*
            *Identification
                No.)*





**8725
      W. Higgins Road, Suite 900, Chicago, Illinois 60631**


*(Address
      of principal executive offices and zip code)*





**Registrant’s
      telephone number including area code:**


**(773)
      272-5000**





Indicate
      by check mark whether the registrant (1) has filed all reports 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 filing requirements for the past
      90
      days. Yes x No o





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


Large
      accelerated filer o Accelerated
      filer o Non-accelerated
      filer o Smaller
      reporting company x





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





The
      number of shares outstanding of the registrant’s Common Stock, par value $0.001,
      as of May 14, 2008 was 18,197,783





**TABLE
      OF CONTENTS**





**Page**PART
                I
            Financial
                InformationItem
                1.
            Consolidated
                Condensed Financial Statements (Unaudited)Consolidated
                Condensed Balance Sheets (Unaudited) March 31, 2008 and December
                31,
                2007
            3Consolidated
                Condensed Statements of Operations (Unaudited) Three months ended
                March
                31, 2008 and 2007
            4Consolidated
                Condensed Statement of Shareholders' Equity (Unaudited) Three months
                ended
                March 31, 2008
            5Consolidated
                Condensed Statements of Cash Flows (Unaudited) Three months ended
                March
                31, 2008 and 2007
            6Notes
                to Consolidated Condensed Financial Statements
            7-14Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Resultsof
                Operations
            15-22Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            22Item
                4.
            Controls
                and Procedures
            22PART
                II
            
            Other
                InformationItem
                1.
            Legal
                Proceedings
            22Item
                1A.
            Risk
                Factors
            23Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            23Item
                3.
            Default
                Upon Senior Securities
            23Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            23Item
                5.
            Other
                Information
            23Signatures
            25-29


2





**uBid.com
      Holdings, Inc and Subsidiaries**


**Consolidated
      Condensed Balance Sheets**


**(Dollars
      in Thousands, except par value data)**


**(Unaudited)**





**March 31, 2008**
            
            **December 31, 2007****Assets****Current
                Assets**Cash
                and cash equivalents
            
            $
            6,901
            
            $
            7,724Restricted
                investments
            
            
            212
            
            
            212Accounts
                receivable, less allowance for doubtful accounts of $467 and $467,
                respectively
            
            
            933
            
            
            648Merchandise
                inventories, net
            
            
            5,272
            
            
            5,156Prepaid
                expenses and other current assets
            
            
            774
            
            
            759**Total
                Current Assets**
            
            
            14,092
            
            
            14,499**Property
                and Equipment, net**
            
            
            871
            
            
            725**Purchased
                Intangible Assets, net**
            
            
            -
            
            
            107**Total
                Assets**
            
            $
            14,963
            
            $
            15,331**Liabilities
                and Shareholders' Equity****Current
                Liabilities**Flooring
                facility
            
            $
            413
            
            $
            314Accounts
                payable
            
            
            3,138
            
            
            2,766Accrued
                expenses:Advertising
            
            
            212
            
            
            205Other
            
            
            1,007
            
            
            1,194Due
                on credit line
            
            
            1,617
            
            
            -**Total
                Current Liabilities**
            
            
            6,387
            
            
            4,479**Shareholders'
                Equity**Common
                stock, $.001 par value (200,000,000 shares authorized;18,197,783
                issued and outstanding for both periods.
            
            
            20
            
            
            20Treasury
                stock, 2,135,550 shares of common stock and 580,937 warrants at
                cost
            
            
            (2,242
            )
            
            (2,242
            )Stock
                warrants
            
            
            8,086
            
            
            8,086Additional
                paid-in-capital
            
            
            37,357
            
            
            37,248Accumulated
                deficit
            
            
            (34,645
            )
            
            (32,260
            )**Total
                Shareholders' Equity**
            
            
            8,576
            
            
            10,852**Total
                Liabilities and Shareholders' Equity**
            
            $
            14,963
            
            $
            15,331





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


3


**uBid.com
      Holdings, Inc. and Subsidiaries**


**Consolidated
      Condensed Statements of Operations**


**(Dollars
      in Thousands, except for per share data)**


**(Unaudited)**





**Three Months Ended March 31,**2008
            
            2007Net
                Revenues
            
            $
            7,141
            
            $
            9,607Cost
                of Revenues
            
            
            5,269
            
            
            7,055Gross
                Profit
            
            
            1,872
            
            
            2,552Operating
                ExpensesGeneral
                and administrative
            
            
            3,753
            
            
            3,022Sales
                and marketing
            
            
            495
            
            
            1,069Total
                operating expenses
            
            
            4,248
            
            
            4,091Loss
                From Operations
            
            
            (2,376
            )
            
            (1,539
            )Interest
                Expense
            
            
            (63
            )
            
            (112
            )Interest
                Income
            
            
            54
            
            
            176Other
                Income, net
            
            
            -
            
            
            60Net
                Loss
            
            $
            (2,385
            )
            $
            (1,415
            )Net
                Loss per share - Basic and Diluted
            
            $
            (0.13
            )
            $
            (0.07
            )Weighted
                Average Shares - Basic and Diluted
            
            
            18,197,783
            
            
            20,333,333





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


4


**uBid.com
      Holdings, Inc.**


**Consolidated
      Statements of Shareholders' Equity**


**(Dollars
      in Thousands)**





**Treasury Stock****Common Stock**
            
            **Stock**
            
            **Paid-in**
            
            
            
            
            
            **Accumulated****Shares**
            
            **Dollars**
            
            **Warrants**
            
            **Capital**
            
            **Shares**
            
            **Dollars**
            
            **Deficit**
            
            **Total**Balance,
                December 31, 2007
            
            
            18,197,783
            
            $
            20
            
            $
            8,086
            
            $
            37,248
            
            
            2,135,550
            
            $
            (2,242
            )
            $
            (32,260
            )
            $
            10,852Stock
                compensation expense
            
            
            —
            
            
            —
            
            
            —
            
            
            109
            
            
            —
            
            
            —
            
            
            —
            
            
            109Common
                stock and warrants repurchase (10)
            
            
            
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Net
                Loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (2,385
            )
            
            (2,385
            )Balance,
                March 31, 2008
            
            
            18,197,783
            
            $
            20
            
            $
            8,086
            
            $
            37,357
            
            
            2,135,550
            
            $
            (2,242
            )
            $
            (34,645
            )
            $
            8,576





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


5


**** **uBid.com
      Holdings, Inc and Subsidiaries**


**Consolidated
      Condensed Statements of Cash Flows**


**(Dollars
      in Thousands)**


**(Unaudited)**





**Three Months Ended March 31,****2008**
            
            **2007****Cash
                Flows From Operating Activities**Net
                loss
            
            $
            (2,385
            )
            $
            (1,415
            )Adjustments
                to reconcile net loss to net cash used in Operating
                activitiesDepreciation
                and amortization
            
            
            206
            
            
            182Non-cash
                stock compensation expense
            
            
            109
            
            
            238Changes
                in assets and liabilities:Accounts
                receivable
            
            
            (285
            )
            
            587Merchandise
                inventories
            
            
            (116
            )
            
            (2,073
            )Prepaid
                expenses and other current assets
            
            
            (15
            )
            
            279Accounts
                payable
            
            
            370
            
            
            1,132Accrued
                expenses
            
            
            (181
            )
            
            (257
            )**Net
                cash used in operating activities**
            
            
            (2,297
            )
            
            (1,327
            )**Cash
                Flows From Investing Activities**Capital
                expenditures
            
            
            (245
            )
            
            (26
            )Change
                in restricted investments
            
            
            -
            
            
            (2
            )**Net
                cash (used in) provided by investing activities**
            
            
            (245
            )
            
            (28
            )**Cash
                Flows From financing Activities**Change
                in flooring facility
            
            
            102
            
            
            349Credit
                line borrowings
            
            
            1,617
            
            
            -**Net
                cash provided by financing activities**
            
            
            1,719
            
            
            349**Net
                Decrease in Cash and Cash Equivalents**
            
            
            (823
            )
            
            (1,006
            )**Cash
                and Cash Equivalents, beginning of period**
            
            
            7,724
            
            
            14,785**Cash
                and Cash Equivalents, end of period**
            
            $
            6,901
            
            $
            13,779**Supplemented
                Cash Flow Disclosure**Cash
                paid for interest
            
            $
            31
            
            $
            75





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


6


**1.**  **Basis
      of Presentation**





uBid.com
      Holdings, Inc. and subsidiaries (the “Company”) operate a leading on-line
      business to consumer and business to business marketplace that enables itself,
      certified merchants, manufacturers, retailers, distributors and small businesses
      to offer high quality excess, new, overstock, close-out, refurbished and limited
      supply brand name merchandise to consumer and business customers primarily
      located in the United States. Through the Company’s website, located at www.ubid.com ,
      the
      Company offers merchandise across a wide range of product categories including
      but not limited to computer products, consumer electronics, apparel, house
      wares, watches, jewelry, travel, sporting goods, home improvement products
      and
      collectibles. The Company’s marketplace employs a combination of auction style
      and fixed price formats.





The
      Company’s unaudited consolidated condensed financial statements reflect normal
      recurring adjustments that are necessary to present fairly the Company’s
      financial position and results of operations on a basis consistent with that
      of
      the prior audited consolidated financial statements. As permitted by rules
      and
      regulations of the Securities and Exchange Commission applicable to quarterly
      reports on Form 10-Q, the Company has condensed or omitted certain information
      and disclosures normally included in financial statements prepared in accordance
      with accounting principles generally accepted in the United States of America
      (“GAAP”). Results for interim periods are not necessarily indicative of the
      results that may be expected for a full year. These interim financial statements
      should be read along with the audited consolidated financial statements included
      in our Form 10-K for the year ended December 31, 2007. The consolidated
      condensed financial statements include the accounts of the Company and its
      wholly owned subsidiaries. All material intercompany accounts and transactions
      have been eliminated in the consolidated financial statements.





The
      preparation of financial statements in accordance with GAAP requires management
      to make estimates and assumptions that affect the amounts reported in the
      Company’s Consolidated Condensed Financial Statements and accompanying notes.
      Actual results could differ materially from those estimates.





**2.**  **Summary
      of Significant Accounting Policies**




Since
      December 31, 2007, none of the critical accounting policies, or the Company’s
      application thereof, as more fully described in the Company’s 2007 Annual
      Report, has significantly changed. Certain critical accounting policies have
      been presented below due to the significance of related transactions during
      the
      three months ended March 31, 2008.





***Revenue
      Recognition***





The
      Company sells merchandise under two types of arrangements: direct purchase
      sales
      and revenue sharing arrangements.





For
      direct purchase sales to consumer and business customers, the Company is
      responsible for conducting the auction or listing the fixed sale price for
      merchandise owned by the Company, billing the customer, shipping the merchandise
      to the customer, processing merchandise returns and collecting accounts
      receivable. In accordance with the provisions of Staff Accounting Bulletin
      104,
      the Company recognizes revenue when the following revenue recognition criteria
      are met: (1) persuasive evidence of an arrangement exists; (2) the product
      has
      been shipped (FOB Shipping Point) and the customer takes ownership and assumes
      the risk of loss; (3) the selling price is fixed or determinable; and (4)
      collection of the resulting receivable is reasonably assured.





For
      sales
      of merchandise under revenue-sharing agreements, the Company is responsible
      for
      conducting the auction for merchandise owned by third parties, billing the
      customer, arranging for a third party to complete delivery to the customer,
      processing merchandise returns and collecting accounts receivable. The Company
      bears no physical inventory loss or return risk related to these sales. The
      Company records commission revenue at the time of shipment.


7


***Shipping
      and Handling Costs***





Shipping
      costs that are billable to the customer are included in revenue and all shipping
      costs that are payable to vendors are included in the cost of revenues in the
      accompanying consolidated statements of operations. Handling costs consisting
      primarily of the third party logistics warehouse costs are included in general
      and administrative expenses and for the quarters ended March 31, 2008 and 2007,
      were $126 and $121, respectively.





***Stock
      Based Compensation***





Effective
      January 1, 2006, the Company adopted Statement of Financial Accounting Standards
      No. 123(R) (“SFAS 123R”). This pronouncement requires companies to measure the
      cost of employee service received in exchange for a share based award (typically
      stock options) based on the fair value of the award. The Company has elected
      to
      use the “modified prospective” transition method for stock options granted prior
      to January 1, 2006, but for which the vesting period is not complete. Under
      this
      transition method, the Company accounts for such awards on a prospective basis,
      with expense being recognized in its statement of operations beginning in the
      first quarter of 2006 and continuing over the remaining requisite service period
      based on the grant date fair value estimated in accordance with Statement of
      Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
      (“SFAS 123”). The Company recognizes these compensation costs on a straight-line
      basis over the requisite service period of the award which is generally the
      option vesting term of four years. The total compensation expense related to
      the
      stock option plan for the three months ended March 31, 2008 and 2007 was
      approximately $109 and $238, respectively.




On
      February 19, 2008 the Company offered eligible employees the opportunity to
      exchange on a grant by grant basis, their outstanding eligible options for
      restricted stock rights.





Options
      eligible for the exchange in this offer were granted under the Company’s 2005
      Equity Incentive Plan that were granted in 2005 and 2006 and had an exercise
      price per share that is greater than $2.00. Individuals that held 500 or fewer
      eligible options were cashed out.





The
      number of restricted stock rights to be granted in exchange for each eligible
      option surrendered was based upon an exchange ratio of 3 to 1. The 3 to 1
      exchange ratio was determined based on the fair value of the eligible options
      which approximated the share price at a 3 to 1 conversion rate. The incremental
      stock compensation expense resulting from the offer is $109 to be amortized
      over
      the remaining life of the original options granted of approximately 2.5 years.





Pursuant
      to the offer, 16,000 options were canceled and cashed out by individuals who
      had
      500 or fewer options. There were an additional 20 individuals that tendered
      765,000 options for an aggregate of 255,000 restricted stock
      rights.





At
      March
      31, 2008 and 2007 the Company had options to purchase 1,402,000 and 1,863,700
      shares, respectively of common stock outstanding to certain officers and other
      employees.





At
      March
      31, 2008 the Company had restricted stock rights outstanding of 255,000. There
      were no restricted stock rights outstanding at March 31, 2007.





The
      compensation costs charged against income was $109 and $238 for the three months
      ended March 31, 2008 and 2007, respectively. Compensation costs are included
      in
      general and administrative expenses in the consolidated Condensed Statement
      of
      Operations.





***Recent
      Pronouncements***





Updates
      to recent accounting standards as disclosed in the Company’s Annual Report on
      Form 10-K for the year ended December 31, 2007 are as follows:


8


In
      September 2006, the FASB issued SFAS No. 157, “ *Fair
      Value Measures* ”
      (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for
      measuring fair value and enhances disclosures about fair value measures required
      under other accounting pronouncements, but does not change existing guidance
      as
      to whether or not an instrument is carried at fair value. SFAS 157 is effective
      for fiscal years beginning after November 15, 2007. In February 2008, the FASB
      issue FSP 157-2, “ *Effective
      Date of FASB Statement No.157”* which
      permits a one-year deferral for the implementation of SFAS 157 with regards
      to
      non-financial assets and liabilities that are not recognized or disclosed at
      fair value in the financial statements on a recurring basis (at least annually).
      We have adopted the provisions of SFAS 157 related to financial assets and
      liabilities as of January 1, 2008. The application of this standard did not
      have
      a material impact on our results of operations or financial condition. We
      elected to defer adoption of SFAS 157 for non-financial assets and liabilities
      and we do not anticipate that full adoption in fiscal 2009 will have a material
      impact on our results of operations or financial condition.





On
      February 15, 2007, the FASB issued Statement of Financial Accounting Standards
      No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities
      -
      Including an Amendment of FASB Statement No. 115" ("SFAS 159"). This standard
      permits an entity to measure financial instruments and certain other items
      at
      estimated fair value. Most of the provisions of SFAS No. 159 are elective;
      however, the amendment to FASB No. 115, "Accounting for Certain Investments
      in
      Debt and Equity Securities," applies to all entities that own trading and
      available-for-sale securities. The fair value option created by SFAS 159 permits
      an entity to measure eligible items at fair value as of specified election
      dates. The fair value option (a) may generally be applied instrument by
      instrument, (b) is irrevocable unless a new election date occurs, and (c) must
      be applied to the entire instrument and not to only a portion of the instrument.
      SFAS 159 was effective as of the beginning of the first fiscal year that begins
      after November 15, 2007. We reviewed the impact of SFAS 159 on our consolidated
      condensed financial statements and have determined we do not have material
      investments in trading or available-for-sale securities and there is no material
      impact on our financial position, results of operations or cash
      flows.





**3.
      Net Loss Per Share (“EPS”)**





The
      Company computes loss per share under Statement of Financial Accounting
      Standards (“SFAS”) No. 128, “Earnings Per Share.” The statement requires
      presentation of two amounts: basic and diluted loss per share. Basic loss per
      share is computed by dividing the loss available to common shareholders by
      the
      weighted average common shares outstanding. Dilutive earnings per share would
      include all common stock equivalents unless anti-dilutive.





Due
      to
      losses in each period presented, the Company has not included the following
      common stock equivalents in its computation of diluted loss per share as their
      input would have been anti-dilutive.




**March
                31,**
            
            **2008**
            
            **2007**Shares
                subject to stock warrants
            
            
            3,232,939
            
            
            3,903,336Shares
                subject to stock options
            
            
            1,402,000
            
            
            1,678,9004,634,939
            
            
            5,582,236





**4.
      Merger and Private Offerings**





On
      December 29, 2005 (the “Closing Date”), Cape Coastal Trading Corporation (or
“Cape Coastal”), uBid Acquisition Co., Inc. (“Acquisition Sub”) and uBid, Inc.
      entered into a Merger Agreement and Plan of Reorganization (the “Merger
      Agreement”). Under the Merger Agreement, Acquisition Sub merged with and into
      uBid, Inc., with uBid, Inc. remaining as the surviving corporation and a 100%
      owned subsidiary of Cape Coastal Trading Corporation. Just prior to the
      Closing Date, all outstanding convertible preferred shares and warrants to
      acquire shares of uBid, Inc. before the merger were converted and exercised
      such
      that, just prior to the merger, 3,793 shares of common stock were outstanding
      which were exchanged on a 2,320 to 1 basis on the closing date
      into 8,800,000 shares of common stock of Cape Coastal, with up to 444,444
      shares of such common stock subject to redemption at a redemption price of
      $4.50. The stockholders of Cape Coastal before the merger retained 599,331
      shares of common stock of Cape Coastal after the merger. Before the merger,
      Cape
      Coastal was a public shell company.  Concurrent with the merger, the
      Company amended its Certificate of Incorporation to change its name
      from Cape Coastal Trading Corporation to “uBid.com Holdings,
      Inc.”


9


The
      merger was treated as a recapitalization of uBid, Inc. for financial accounting
      purposes. Accordingly, the historical financial statements of Cape Coastal
      before the merger were replaced with the historical financial statements of
      uBid, Inc. before the merger. All share and per share data has been
      retroactively restated to reflect the implicit conversion ratio related to
      the
      exchange of shares in the merger.





Concurrent
      with the merger, the Company completed the first part of a private offering
      to accredited investors. The Company sold 10,000,003 shares of 
its common stock (of which 2,222,224 shares were subject to redemption) and
      warrants to purchase 2,500,003 shares of its common stock at $5.85 for a period
      of 5 years (the shares and warrants are collectively referred to as “Units”),
      for aggregate consideration of approximately $45.0 million. These warrants
      were valued at $2.08 per warrant for an aggregate of $5.2
      million using a Black-Scholes option-pricing model using a 5 year
      expected life, a risk free interest rate of 5.0%, no expected dividends and
      68.0% volatility. Some of the investors participating in the first part of
      the
      private offering held notes that were issued by uBid before the merger,
      including $10.5 million of debt held by the Petters Group, a holder greater
      than
      5% of our voting common stock, (“Petters Group”) and $5.0 million of debt held
      by the bridge loan holders. Rather than accepting cash consideration for the
      Units acquired by these investors, the Company agreed to issue Units at a
      rate of one Unit for each $4.50 of debt for consideration of the note holders’
cancellation of the existing notes. Therefore, the consideration the
      Company received on the Closing Date consisted of approximately $29.5 million
      in
      cash and $15.5 million in cancelled debt. In addition, on the Closing
      Date, the Company issued warrants to purchase 333,333 shares of our common
      stock to the bridge note holders as a financing fee, which warrants are
      exercisable for three years at an exercise price of $4.50 and the value of
      which, $0.6 million, was recorded as interest expense. The Company also issued
      warrants to purchase 230,000 shares of its common stock to its
      placement agents in the offering, which warrants are exercisable for five years
      at an exercise price of $4.50 and the value of which, $0.5 million, was recorded
      as a cost of the equity issuance. These warrants were valued at $1.80 and $2.27
      respectively per warrant for an aggregate of $1.1 million using a
      Black-Scholes option-pricing model using the warrants respective life, a risk
      free interest rate of 5.0%, no expected dividends and 68.0% volatility. Issuance
      costs, including the value of the warrants, were $4.7 million.





On
      February 3, 2006, the Company completed the second part of the
      private offering of Units to accredited investors. In this offering, the
      Company sold 3,000,000 shares of its common stock and warrants to
      purchase 750,002 shares of its common stock on the same terms as
      described above for an aggregate of $13.5 million. The Company also
      redeemed the 2,666,668 shares of common stock issued in connection with the
      merger and the first private offering that were subject to
      redemption at a price of $4.50 per share and issued 600,667 shares of common
      stock (valued at $4.50 per share) to Cape Coastal and uBid’s financial advisor,
      Calico Capital Group. In addition, the Company issued additional
      warrants to purchase 90,000 shares of its common stock to its
      placement agents on the same terms as described above. The second part of the
      private offering resulted in no net cash proceeds being retained by the Company.
      Issuance costs, including the value of the warrants and the shares issued to
      Calico Capital Group, were $4.4 million.





On
      July
      26, 2006, Dibu Trading Corporation (“Dibu”) was formed. Dibu is our business to
      business trading arm which deals primarily with retailers and other
      distributors.





On
      April
      25, 2007, The Company entered into a stock repurchase agreement with a group
      of
      private investors under common management to repurchase 2,135,550 shares of
      the
      Company’s common stock and warrants to purchase 580,937 shares of the Company’s
      common stock held by such private investors at a combined price of $1.05 for
      the
      company stock and for the warrants for an aggregate purchase price of $2,242.
      These shares and warrants repurchased in this privately negotiated transaction
      were originally acquired by the private investors in the Company’s private
      placement that initially closed on December 29, 2005. The repurchase represented
      11% of the common stock and warrants outstanding.


10




**5.****2005
      Equity Incentive Plan**





The
      2005
      Equity Incentive Plan is an equity-based compensation plan to provide incentives
      to, and to attract, motivate and retain the highest qualified employees,
      directors, consultants and other third party service providers. The 2005 Equity
      Incentive Plan enables the board to provide equity-based incentives through
      grants or awards of stock options and restricted stock (collectively, “Incentive
      Awards”) to present and future employees, consultants, directors, and other
      third party service providers.





A
      total
      of 2,500,000 shares of common stock have been reserved for issuance under the
      2005 Equity Incentive Plan. If an Incentive Award granted pursuant to the 2005
      Equity Incentive Plan expires, terminates, is unexercised or is forfeited,
      or if
      any shares are surrendered to the Company in connection with an
      Incentive Award, the shares subject to such award and the surrendered shares
      will become available for future awards under the 2005 Equity Incentive Plan.
      Options generally vest over a period of four years and have a ten year
      contractual life.





On
      February 19, 2008 the Company offered eligible employees the opportunity to
      exchange on a grant by grant basis, their outstanding eligible options for
      restricted stock rights.





Options
      eligible for the exchange in this offer were granted under the Company’s 2005
      Equity Incentive Plan that were granted in 2005 and 2006 and had an exercise
      price per share that is greater than $2.00. Individuals that held 500 or fewer
      eligible options were cashed out.





The
      number of restricted stock rights to be granted in exchange for each eligible
      option surrendered was based upon an exchange ratio of 3 to 1. The 3 to 1
      exchange ratio was determined based on the fair value of the eligible options
      which approximated the share price at a 3 to 1 conversion rate. The incremental
      stock compensation expense resulting from the offer is $109 to be amortized
      over
      the remaining life of the original options granted of approximately 2.5
      years.





Pursuant
      to the offer, 16,000 options were canceled and cashed out by individuals who
      had
      500 or fewer options. There were an additional 20 individuals that tendered
      765,000 options for an aggregate of 255,000 restricted stock
      rights.





At
      March
      31, 2008 and 2007 the Company had options to purchase 1,402,000 and 1,863,700
      shares, respectively of common stock outstanding to certain officers and other
      employees.





At
      March
      31, 2008 the Company had restricted stock rights outstanding of 255,000. There
      were no restricted stock rights outstanding at March 31, 2007.





The
      compensation costs charged against income was $109 and $238 for the three months
      ended March 31, 2008 and 2007, respectively. Compensation costs are included
      in
      general and administrative expenses in the consolidated Condensed Statement
      of
      Operations.





None
      of
      the Incentive Awards granted under the 2005 Equity Incentive Plan were issued
      for cash consideration collected from the participants. The Incentive Awards
      were granted to participants in the 2005 Equity Incentive Plan on the basis
      of
      services to be provided to the Company by the participants.





The
      fair
      value of the options awarded for the three months ended March 31, 2008 and
      2007,
      were estimated using the Black-Scholes option pricing model with the following
      weighted average assumptions:


11




**Three
                months ended****March
                31,****2008**
            
            **2007**Risk
                -free interest rate
            
            
            5.0
            %
            
            5.0
            %Dividend
                yield
            
            
            0.0
            %
            
            0.0
            %Expected
                volatility
            
            
            68.0
            %
            
            68.0
            %Expected
                life (years)
            
            
            6.0
            
            
            6.0Weighted
                average grant date fair value
            
            $
            1.36
            
            $
            2.15Estimated
                forfeiture rate
            
            
            5.0
            %
            
            5.0
            %





The
      risk-free interest rate is based on the U.S. Treasury Bill rates. The dividend
      reflects the fact that the Company has never paid a dividend on its common
      stock
      and does not expect to in the future. Expected volatility was based on a
      market-based implied volatility. The expected term of the options is based
      on
      what the Company believes will be representative of future behavior. In
      addition, the Company is required to estimate the expected forfeiture rate
      and
      recognize expense only for those shares expected to vest. If the Company’s
      actual forfeiture rate is materially different from its estimate, the
      stock-based compensation expense could be significantly different from what
      the
      Company has recorded in the current period.





The
      following is a summary of all of the Company’s stock option
      activity:




**Weighted-****average****Shares under**
            
            **exercise price per****Option**
            
            **share**Outstanding at December 31, 2007
            
            
            1,984,100
            
            $
            2.68Granted
            
            
            214,000
            
            
            0.74Exercised
            
            
            -
            
            
            -Surrendered
            
            
            (31,100
            )
            
            4.38Converted
            
            
            (765,000
            )
            
            4.60Outstanding
                at March 31, 2008
            
            
            1,402,000
            
            $
            1.30Exercisable
                at March 31, 2008
            
            
            104,000
            
            $
            2.06








**Weighted-****average****Shares**
            
            **price per share**Converted Options
            
            
            765,000
            
            
            4.60Granted
                Restricted Share Rights (3 to 1 Ratio)
            
            
            255,000
            
            
            0.59Canceled
                Restricted Share Rights
            
            
            -
            
            
            0.00Vested
                Restricted Shares
            
            
            98,333
            
            
            0.59Remaining
                Restricted Share Rights
            
            
            156,667
            
            
            0.59





As
      of
      March 31, 2008 there was $1,856 of total unrecognized compensation cost related
      to the nonvested option awards under the 2005 Equity Incentive Plan. That cost
      is expected to be recognized over the 3.0 year remaining vesting period of
      the
      nonvested option awards. The total fair value of the option awards that vested
      during the three months ended March 31, 2008 and 2007 was $72 and $74,
      respectively.


12





The
      following summarizes information about stock options at March 31,
      2008:




**Outstanding**
            
            **Exercisable****Weighted****Average**
            
            **Weighted**
            
            
            
            **Weighted****Number**
            
            **Remaining**
            
            **Average**
            
            **Number**
            
            **Average****Exercise**
            
            **Outstanding at**
            
            **Contractual**
            
            **Exercise**
            
            **Exercisable at**
            
            **Exercise****Price**
            
            **March 31, 2008**
            
            **Life**
            
            **Price**
            
            **March 31, 2008**
            
            **Price**.01
                - 2.00
            
            
            1,323,000
            
            
            9.4
            
            $
            1.17
            
            
            76,875
            
            $
            1.482.01
                - 4.00
            
            
            62,000
            
            
            8.7
            
            $
            3.02
            
            
            18,625
            
            $
            3.004.01
                - 6.00
            
            
            11,000
            
            
            7.7
            
            $
            4.50
            
            
            5,500
            
            $
            4.506.01+
            
            
            6,000
            
            
            7.9
            
            $
            6.64
            
            
            3,000
            
            $
            6.641,402,000
            
            
            
            
            $
            1.30
            
            
            104,000
            
            $
            2.06





The
      aggregate intrinsic value of the outstanding options (the difference between
      the
      closing stock price on the last trading day of the period ended March 31, 2008
      of $0.60 per share and the exercise price, multiplied by the number of
      in-the-money options) was $0. This amount will change based on changes in the
      fair market value of the Company’s common stock.





**6.**  **Note
      Payable - Bank**





On
      May 9, 2006, the Company and its subsidiaries entered into a Credit and
      Security Agreement with Wells Fargo Bank, National Association acting through
      Wells Fargo Business Credit and related security agreements and other agreements
      described in the Credit and Security Agreement (the “Credit Agreement”). The
      Credit Agreement provides for advances to the Company of up to a maximum of
      $25,000. The amount actually available to the Company will vary from time to
      time, depending on, among other factors, the amount of eligible inventory and
      the amount of eligible accounts receivable. The obligations under the Credit
      Agreement and all related agreements are secured by all of the Company assets.
      The initial term of the Agreement is three years, expiring on April 28,
      2009. Up to $7,000 of the maximum amount is available for irrevocable, standby
      and documentary letters of credit. Advances under the Credit Agreement bear
      interest at a base rate (Wells Fargo Bank's prime rate) or LIBOR plus 2.5%.
      The
      Credit Agreement requires a prepayment fee of $125 if the Company terminates
      the
      Credit Agreement during the third year. The Credit Agreement requires the
      Company, among other things, to limit capital expenditures and maintain minimum
      availability on the line. Also, the Company is obligated contractually by a
      restrictive lock box arrangement. The Credit Agreement also requires the Company
      to pay a variety of other fees and expenses, including minimum annual interest
      of $120. The Company, as of March 31, 2008, had $45 in deferred financing fees
      being amortized over the life of the Credit Agreement. As of March 31, 2008,
      the
      effective loan rate was 8.25% and the Company had an outstanding balance of
      $1,617. The Company was in compliance with all loan covenants at March 31,
      2008.





**7.
      Segment Information**





The
      Company is organized into four operating segments: Direct sales channel, uBid
      Certified Merchant (“UCM”) sales channel, Business to Business sales channel and
      Other. In classifying its operational entities into a particular segment, the
      Company segregated its operations with similar economic characteristics,
      products and services, customers and methods of distribution into distinct
      operating groups. Prior to March 31, 2007, all operating segments were
      aggregated into one reportable segment. The Company’s management reviews the
      four operating segments revenue and gross profits to evaluate segment
      performance and allocate resources. Operating expenses are not analyzed by
      segment.


13


For
      the
      Direct sales channel, the Company is responsible for conducting the auction
      or
      listing the fixed sale price for merchandise owned by the Company, billing
      the
      customer, shipping the merchandise to the customer, processing merchandise
      returns and collecting accounts receivable.





For
      the
      UCM sales channel, the Company is responsible for conducting the auction for
      merchandise owned by third parties, billing the customer, arranging for a third
      party to complete delivery to the customer, processing merchandise returns
      and
      collecting accounts receivable. The Company bears no physical inventory loss
      or
      return risk related to these sales. The Company records commission revenue
      at
      the time of shipment.





For
      the
      Business to Business sales channel, the Company sells product purchased directly
      to other businesses. Revenues are recognized upon shipment.





All
      other
      revenues consist primarily of advertising revenue. Advertising revenues are
      derived principally from the sale of online advertisements. Advertising revenues
      on contracts are recognized as “impressions” (i.e., the number of times that an
      advertisement appears in pages viewed by users of our websites). Impressions
      are
      delivered over the term of the agreement where such agreements provide for
      minimum monthly, quarterly or annual advertising commitments.





**(Dollars in Thousands)****Three months Ended March 31,**Net
                Revenue
            
            
            **2008**
            
            
            **2007**Direct
            
            $
            3,495
            
            $
            7,768UCM
            
            
            1,291
            
            
            1,472Business
                to Business
            
            
            2,213
            
            
            62Other
            
            
            142
            
            
            305Total
            
            $
            7,141
            
            $
            9,607Gross
                ProfitDirect
            
            $
            52
            
            $
            761UCM
            
            
            1,291
            
            
            1,472Business
                to Business
            
            
            387
            
            
            14Other
            
            
            142
            
            
            305Total
            
            $
            1,872
            
            $
            2,552Gross
                Profit %Direct
            
            
            1.5
            %
            
            9.8
            %UCM
            
            
            100.0
            %
            
            100.0
            %Business
                to Business
            
            
            17.5
            %
            
            22.6
            %Other
            
            
            100.0
            %
            
            100.0
            %Total
            
            
            26.2
            %
            
            26.6
            %


14





**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.**





The
      following discussion and analysis of our financial condition and results of
      operations should be read in conjunction with our consolidated condensed
      financial statements and related notes included in Item 1 of Part 1 of this
      Quarterly Report and the audited consolidated financial statements and notes
      thereto and Management’s Discussion and Analysis of Financial Condition and
      Results of Operations contained in the Company’s Annual Report on Form 10-K for
      the fiscal year ended December 31, 2007. uBid.com Holdings, Inc. is a holding
      company for uBid, Inc., and Dibu Trading Corp., Inc. our operating businesses.
      For purposes of this Quarterly Report, unless otherwise indicated or the context
      otherwise requires, all references herein to “uBid,” “we,” “us,” and “our” refer
      to uBid.com Holdings, Inc. and our subsidiaries.





Information
      in the following Management's Discussion and Analysis of Financial Condition
      and
      Results of Operations and elsewhere in this quarterly report contains
      forward-looking statements within the meaning of Section 27A of the Securities
      Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
      Forward-looking statements provide current expectations or forecasts of future
      events and can be identified by the use of terminology such as “believe,”
“estimate,” “expect,” “intend,” “may,” “could,” “will,” and similar words or
      expressions. Any statement that is not a historical fact, including statements
      regarding estimates, projections, future trends and the outcome of events that
      have not yet occurred, is a forward-looking statement. Actual results could
      differ materially from those projected in the forward-looking statements as
      a
      result of a number of factors, including but not limited to the risk factors
      detailed in our filings with the SEC, including our Annual Report on Form 10-K
      for the year ended December 31, 2007. We assume no obligation to update such
      forward-looking statements or to update the reasons actual results could differ
      materially from those anticipated in such forward-looking statements.





**Overview**





We
      operate a leading online marketplace located at www.ubid.com offering
      high quality excess, new, overstock, close-out, refurbished and limited supply
      brand name merchandise to both consumers and businesses using auction style
      and
      fixed price formats. We offer consumers a trustworthy buying environment in
      which we continually monitor and certify activity to eliminate the potential
      for
      fraud by certifying all merchants and processing 100% of all transactions
      between buyers and sellers. Our marketplace offers brand-name merchandise from
      over 200 product categories including computer products, consumer electronics,
      apparel, house wares, watches, jewelry, travel, sporting goods, home improvement
      products and collectibles.





Our
      business model provides value for consumers, manufacturers, distributors,
      retailers and other approved third party merchants. Consumers shop in a
      trustworthy and secure online marketplace and have the opportunity to bid their
      own prices on popular, brand-name products realizing product savings of
      generally 20% to 80% off retail prices. Our online marketplace provides
      merchants with an efficient and economical distribution channel for maximizing
      revenue on their merchandise. Merchants can monetize overstock and close-out
      inventory, expand their customer base and increase sales without compromising
      existing distribution channels.




Our
      business model consists of four distinct business channels: uBid Direct, UCM,
      Business to Business and Other.




We
      purchase merchandise outright in the uBid Direct and Business to Business
      channels and sell to consumers and businesses. On this merchandise, we bear
      the
      inventory, return and credit risk. The full sales amount is recorded as revenue
      upon verification of the credit card transaction and shipment of the
      merchandise.




We
      also
      sell merchandise through the UCM Program channel by allowing prescreened third
      party merchants to sell their product through our online marketplace to
      consumers and business. On this merchandise, we do not take title and therefore
      do not bear the related inventory risk. In the UCM Program, we are the primary
      obligor to whom payment is due, but we bear no inventory or returns risk, so
      we
      record only our commission as revenue.


15


In
      all
      instances where the credit card authorization has been received but merchandise
      has not been shipped, we defer revenue recognition until the merchandise is
      shipped.




Our
      online marketplace is available 24 hours a day, seven days a week and we
      currently offer over 200,000 items each day. Since the first offer of product
      in
      December 1997, our marketplace has facilitated over $1 billion in net revenues
      and has registered over five million members.





**Executive
      Commentary**





***Success
      Measures*** **:** Our
      management believes that the most important financial and non-financial measures
      that track our progress include sales, website traffic, total average order
      value, gross margin, customer acquisition costs, advertising expense, personnel
      costs, and fulfillment costs.




***Key
      Business Metrics*** **:** We
      periodically review key business metrics to evaluate the effectiveness of our
      operational strategies and the financial performance of our business. These
      key
      metrics include the following:





***Gross
      Merchandise Sales (GMS):*** Gross
      Merchandise Sales differ from GAAP revenue in that gross bookings represents
      the
      gross sales price of goods sold by us (including sales through our UCM Program)
      before returns, sales discounts, and cancellations.





***Number
      of Orders:*** This
      represents the total number of orders shipped in a specified period. We analyze
      the number of orders by category to evaluate the effectiveness of our
      merchandising and advertising strategies as well as to monitor our inventory
      management.




***Average
      Order Value:*** Average
      order value is the ratio of gross sales divided by the number of orders shipped
      within a given time period. We analyze average order value by category primarily
      to manage costs and other operating expenses.




***Visitors:*** A
      Visitor is a consumer or business that voluntarily clicks through to the website
      (uBid.com) using both online and offline advertising stimulus. Visitors don’t
      include third party site pops, pop unders, or non converting impressions to
      the
      website. Examples of online marketing channels we advertise on are: affiliate
      banner networks, comparison shopping sites, paid and organic search engines,
      and
      email.





***Bidders:*** A Bidder
      is a visitor that places a bid on an item up for auction on the website
      (uBid.com).





***Visitors
      to Bidder Conversion:*** The
      percentage of visitors that bid on an auction item. We use this as a measure
      of
      the effectiveness of advertising.




***Auctions
      Closed:*** A closed
      auction is an auction that has ended because it reached the scheduled closing
      time for that auction. Auctions closed includes both successful auctions and
      auctions with no bids.





***Auction
      Success:*** A
      successful auction is a closed auction that received at least one
      bid.





***Auction
      Success Rate:*** The
      percentage of closed auctions that were successful and received at least one
      bid.





***Approved
      UCM Program Vendors:*** Vendors
      that have gone through the approval process to sell merchandise through our
      website.


16





**(In
                Thousands except Average Order Value and Approved UCM
                Vendors)****Q1**
            
            **Q4**
            
            **Q3**
            
            **Q2**
            
            **Q1**
            
            **Q4**
            
            **Q3**
            
            **Q2**
            
            **Q1****2008**
            
            **2007**
            
            **2007**
            
            **2007**
            
            **2007**
            
            **2006**
            
            **2006**
            
            **2006**
            
            **2006****Measure**
            
            ****
            
            
            
            ****
            
            ****
            
            
            
            ****
            
            ****
            
            ****
            
            ****GMS
                (in thousands)
            
            $
            18,885
            
            $
            22,953
            
            $
            23,704
            
            $
            26,368
            
            $
            23,402
            
            $
            26,276
            
            $
            26,528
            
            $
            30,286
            
            $
            31,167Number
                of orders (in thousands)Direct
            
            
            15
            
            
            21
            
            
            20
            
            
            29
            
            
            21
            
            
            24
            
            
            23
            
            
            37
            
            
            36uBid
                Certified Merchant
            
            
            73
            
            
            86
            
            
            101
            
            
            98
            
            
            104
            
            
            99
            
            
            89
            
            
            88
            
            
            87Total
                orders
            
            
            88
            
            
            107
            
            
            121
            
            
            127
            
            
            125
            
            
            123
            
            
            112
            
            
            125
            
            
            123Average
                Order ValueDirect
            
            $
            242
            
            $
            370
            
            $
            355
            
            $
            336
            
            $
            390
            
            $
            424
            
            $
            424
            
            $
            416
            
            $
            465uBid
                Certified Merchant
            
            $
            160
            
            $
            142
            
            $
            129
            
            $
            119
            
            $
            120
            
            $
            126
            
            $
            128
            
            $
            110
            
            $
            107Visitors
                (in thousands)
            
            
            5,755
            
            
            5,980
            
            
            7,224
            
            
            6,901
            
            
            6,744
            
            
            6,529
            
            
            6,488
            
            
            7,215
            
            
            6,369Bidders
                (in thousands)
            
            
            181
            
            
            173
            
            
            218
            
            
            231
            
            
            235
            
            
            239
            
            
            211
            
            
            255
            
            
            241Bidders
                to Visitors Percentage
            
            
            3.1
            %
            
            2.9
            %
            
            3.0
            %
            
            3.3
            %
            
            3.5
            %
            
            3.7
            %
            
            3.3
            %
            
            3.5
            %
            
            3.8
            %Auctions
                Closed (in thousands)
            
            
            455
            
            
            780
            
            
            715
            
            
            619
            
            
            539
            
            
            579
            
            
            562
            
            
            484
            
            
            216Auction
                Success (in thousands)
            
            
            59
            
            
            67
            
            
            78
            
            
            77
            
            
            76
            
            
            65
            
            
            58
            
            
            62
            
            
            40Auction
                Success rate
            
            
            12.9
            %
            
            8.6
            %
            
            10.9
            %
            
            12.5
            %
            
            14.1
            %
            
            11.2
            %
            
            10.4
            %
            
            12.8
            %
            
            18.3
            %Approved
                UCM Vendors
            
            
            3,737
            
            
            3,588
            
            
            3,321
            
            
            2,873
            
            
            2,513
            
            
            2,049
            
            
            1,716
            
            
            1,307
            
            
            949





***Revenue
      Source*** :
      We
      derive most of our revenue from sales of products to consumers and businesses
      as
      well as commission revenue earned for sales of merchandise under revenue sharing
      agreements with third party sellers. We believe that the principal drivers
      of
      our revenue consist of the average order value placed by our customers, the
      number of orders placed by both existing and new customers, special offers
      we
      make available that result in incremental orders, our ability to attract new
      customers and advertising that impacts our revenue drivers. Sales consist of
      orders placed through our uBid.com website and direct business to business
      sales. We further generate revenue from shipping fees we charge our customers
      and advertising sales. We record our revenue net of returns and other discounts.
      Our revenues may fluctuate from period to period as a result of special offers
      we provide such as free shipping, and other special promotions.





Our
      revenue is dependent in part on sales of products produced by or purchased
      from
      Sony Electronics, Inc. (“Sony”), Hewlett-Packard Company (“HP”), Recoupit,
      Inc.(“Recoupit”) and Always at Market, Inc.(“Always at Market”). The following
      table represents the respective vendors’ percentage of sales for the three
      months ended March 31, 2008 and March 31, 2007. No other supplier represented
      more than 5% of our net revenues for any period presented.





**Three months ended****March 31,****Vendor**
            
            
            **2008**
            
            
            **2007**HP
            
            
            38.7
            %
            
            21.4
            %Always
                at Market
            
            
            6.7
            %
            
            6.4
            %Recoupit
            
            
            4.7
            %
            
            7.3
            %Sony
            
            
            2.8
            %
            
            14.7
            %





***Cost
      of Revenues*** :
      Cost of
      revenues primarily consists of the cost of the product and inbound and outbound
      shipping. There is no cost of revenues for UCM Program revenue. Cost of revenues
      does not include order fulfillment costs, which are included in general and
      administrative expenses.





***Gross
      Profits*** :
      Our
      gross profit margins are impacted by a number of factors including the category
      of merchandise, the introduction of new product categories, the mix of sales
      among our product categories, pricing of products by our vendors, pricing
      strategies, promotional programs, market conditions, packaging, excess and
      obsolete inventory charges and other factors. Gross profits and gross profit
      percentages are not comparable to gross profit and gross profit percentages
      reported by companies that include order fulfillment costs in the cost of
      revenues.





***Expenses*** *:* Sales
      and marketing, general and administrative (“SG&A”) expenses consist
      primarily of sales and marketing expenses, including online marketing
      activities, order fulfillment and other costs, such as personnel, rent,
      warehouse and handling, common area maintenance, depreciation, credit card
      processing charges, insurance, legal and accounting fees. Interest expense
      charges are from our IBM flooring facility at a rate of 1% per month on the
      outstanding balances, interest and amortization of loan origination fees related
      to our credit facility.


17





**Results
      of Operations (Dollars in Thousands, except per share, order and visitor
      data)**





The
      following table sets forth, for the periods presented, certain data from our
      statement of operations as a percentage of net revenues. This information should
      be read in conjunction with our financial statements and notes thereto included
      elsewhere in this report.





**(Dollars
                in Thousands)****Three
                months ended March 31,****2008**
            
            **2007**Net
                Revenues:Direct
            
            $
            3,495
            
            
            48.9
            %
            $
            7,768
            
            
            80.9
            %UCM
            
            
            1,291
            
            
            18.1
            %
            
            1,472
            
            
            15.3
            %Business
                to Business
            
            
            2,213
            
            
            31.0
            %
            
            62
            
            
            0.6
            %Other
            
            
            142
            
            
            2.0
            %
            
            305
            
            
            3.2
            %Total
                Net Revenues
            
            
            7,141
            
            
            100
            %
            
            9,607
            
            
            100
            %Gross
                Profit:Direct
            
            
            52
            
            
            0.7
            %
            
            761
            
            
            7.9
            %UCM
            
            
            1,291
            
            
            18.1
            %
            
            1,472
            
            
            15.3
            %Business
                to Business
            
            
            387
            
            
            5.4
            %
            
            14
            
            
            0.1
            %Other
            
            
            142
            
            
            2.0
            %
            
            305
            
            
            3.2
            %Total
                Gross Profit
            
            
            1,872
            
            
            26.2
            %
            
            2,552
            
            
            26.6
            %General
                and administrative
            
            
            3,753
            
            
            52.6
            %
            
            3,022
            
            
            31.5
            %Sales
                and marketing
            
            
            495
            
            
            6.9
            %
            
            1,069
            
            
            11.1
            %Total
                operating expenses
            
            
            4,248
            
            
            59.5
            %
            
            4,091
            
            
            42.6
            %Loss
                from operations
            
            
            (2,376
            )
            
            (33.3)
            %
            
            (1,539
            )
            
            (16.0)
            %Interest
                Income / (Expense) & Other, Net
            
            
            (9
            )
            
            (0.1)
            %
            
            64
            
            
            0.7
            %Other
                Income / (Expense)
            
            
            -
            
            
            -
            %
            
            60
            
            
            0.6
            %Net
                Loss
            
            $
            (2,385
            )
            
            (33.4)
            %
            $
            (1,415
            )
            
            (14.7)
            %




**Comparison
      of Three Months ended March 31, 2008 and** **March
      31, 2007**





Net
      loss
      for the three months ended March
      31,
      2008 was
      $2,385 or $0.13 basic and diluted loss per share. For the three months ended March
      31,
      2007 ,
      the
      loss was $1,415 or $0.07 basic and diluted loss per share. The loss increased
      by
      $970 or 68.6% from the same period in the prior year.





***Direct
      Channel:*** Direct
      channel sales decreased $4,273 or 55.0% to $3,495 for the three months ended March
      31,
      2008 compared
      to $7,768 in the same period last year. In the current period the number of
      Direct orders decreased 5,656 or 27.0% and the average order value decreased
      $128.00 or 34.6% to $242.00 per order. The
      decline in the number of Direct orders is primarily due to a shift from the
      Direct channel sales to the UCM platform in which only commission revenue is
      recorded. The
      decrease in the average order value was primarily due to decreases in the
      portable computer and desktop computer product categories. The decrease was
      partially offset by increases in the average order value in the video and audio
      product categories.





The
      Direct channel gross profit decreased $709 or 93.2% for the three months ended March
      31,
      2008 compared
      to the same period in the prior year. The Direct channel gross profit percentage
      decreased 84.8% to 1.5% for the three months ended March
      31,
      2008 compared
      to 9.8% for the three months ended March
      31,
      2007 .
      The
      decrease was primarily due to decreased order volume and the sales of aged
      inventory at lower retail prices. The
      decreased order volume resulted in lower distribution and variable operating
      costs which partially offset the margin dollar loss.


18





***UCM
      Channel:*** ** UCM
      revenues and gross profit decreased $181 or 12.3% to $1,291 for the three months
      ended March
      31,
      2008 compared
      to revenue and gross profit of $1,472 in the same period of the prior year.
      In
      the current period the number of UCM orders decreased 13,000 or 15.1% but the
      average order value increased $18.00 or 12.7% to $160.00 per order. The number
      of UCM vendors increased 1,224 or 43.8% to 3,737 vendors compared to 2,513
      at March
      31,
      2007 .





***Business
      to Business:*** Business
      to Business revenues increased $2,151 or 3,469.4% for the three months ended March
      31,
      2008 compared
      to the same period in the prior year. Gross profit increased $373 or 2,664.3%
      to
      $387 for the quarter ended March
      31,
      2008 compared
      to $14 for the quarter ended March
      31,
      2007 .
      The
      gross profit percentage decreased to 17.5% for the three months ended March
      31,
      2008 compared
      to 22.6% in the same period of the prior year. Business to Business channel
      revenue and gross profit increased due to greater availability of opportunistic
      purchases in the current quarter and the restructure of the Dibu Trading sales
      force in the fourth quarter of 2006 which negatively impacted first quarter
      2007
      results. Included in the quarter ended March 31, 2008 Business to Business
      results are revenues of $680 and gross profit of $240 from the live liquidation
      events held in 3 separate physical locations in the state of
      Florida.





***Other
      Revenue:*** Other
      revenue and gross profit primarily comprised of online advertising revenue
      decreased $163 or 53.4% for the three months ended March
      31,
      2008 .
      The
      decrease primarily resulted from the impact of the elimination of a dedicated
      advertising sales force in the quarter ended March 31, 2008. The decision to
      decrease this revenue and not divert visitors to other web sites was made by
      management.


19





***Sales
      and Marketing, General and Administrative Expenses:*** SG&A
      expenses for the quarter ended March 31, 2008 were $4,248, an increase of $157
      or 3.8%, compared to the quarter ended March 31, 2007. Non recurring expenses
      incurred in the quarter ended March 31, 2008 consisted of $328 of operating
      expenses incurred on the live liquidation events, $125 of recruiting fees and
      $84 in severance expense. The recruiting fees were incurred as information
      technology staffing levels were increased to facilitate significant upgrades
      to
      our website and technology infrastructure.





The
      following table is a comparison of SG&A expenses:





**(Dollars
                in Thousands)****Three Month Period Ended****SG&A Expenses:**
            
            **March 31, 2008**
            
            **March 31, 2007**
            
            **Increase
                (Decrease)**Advertising
            
            $
            413
            
            $
            968
            
            $
            (555
            )Salary
                and benefits
            
            
            1,821
            
            
            1,277
            
            
            544Stock-based
                compensation
            
            
            109
            
            
            238
            
            
            (129
            )Facilities
            
            
            119
            
            
            143
            
            
            (24
            )Warehouse
            
            
            199
            
            
            175
            
            
            24Credit
                card fees
            
            
            412
            
            
            512
            
            
            (100
            )Telecommunications,
                hardware and storage
            
            
            174
            
            
            154
            
            
            20Legal,
                audit, insurance, and other regulatory fees
            
            
            343
            
            
            147
            
            
            196Depreciation
                & amortization
            
            
            206
            
            
            182
            
            
            24Consulting
                and outside services
            
            
            249
            
            
            169
            
            
            80Other
                SG&A
            
            
            203
            
            
            126
            
            
            77$
            4,248
            
            $
            4,091
            
            $
            157





Expense
      increases are summarized as follows:





Salary
      and benefits expense increased $544 or 42.6% as the result of increased staff
      levels, primarily in information technology, $84 of severance and $125 in
      recruiting fees incurred in the quarter ended March 31, 2008. Stock compensation
      decreased $129 due to the increased number of forfeited stock options during
      the
      three months ended March 31, 2008.





Warehouse
      expense increased $24 or 13.7% primarily driven by increased Business to
      Business sales volume in the current quarter compared to the same period of
      the
      prior year.





Telecommunications,
      hardware and storage expenses increased $20 as a result of price increases
      on
      maintenance contract renewals.





Depreciation
      and amortization increased by $24 or 13.2% primarily as the result of a $17
      increase in amortization of intangible assets. At March 31, 2008 the intangible
      assets were fully amortized.





Legal,
      audit, insurance and other regulatory fees increased $196 or 133.3%. Legal
      fees
      increased $60 due to legal expense incurred in patent registrations,
      infringement defense and the tender offer made to eligible employees to convert
      eligible options to restricted stock rights. Accounting fees increased $55
      primarily due to consulting costs incurred in the evaluation of a new ERP
      system. Insurance expense increased $69 as a $63 credit was received from prior
      carriers in the quarter ended March 31, 2007 and insurance coverage was
      increased in the current quarter.





Consulting
      and outside services expense increased $80 or 47.3% as new business initiatives
      were launched and outside services were brought in to the advertising department
      to facilitate a customer database segmentation project and to provide increased
      market research and analysis.





The
      increases in expenses were offset by the following decreases:


20





Advertising
      expense decreased $555 or 57.4% and visitor traffic decreased 989,000 or 14.7%
      as we continued to eliminate the least effective marketing efforts and continue
      to analyze and segment our database to optimize all future advertising
      campaigns. The cost per visitor decreased to $0.06 per visitor from $0.16 per
      visitor in the same period of the prior year. The conversion rate declined
      .3%
      to 3.4% in the three months ended March 31, 2008 compared to 3.7% for the three
      months ended March 31, 2007. The decline in the conversion rate was primarily
      due to a Direct TV campaign that ran in the first six months of 2007 whereby
      selected air time slots were purchased which was not repeated during
      2008.





Facilities
      expense decreased $24 or 16.8% primarily due to the sublet of unused office
      space at our corporate office partially offset by physical store location
      rentals.





Credit
      card fees decreased $100 or 19.5%. The decrease is primarily due to lower Direct
      sales volumes.





***Other
      Expense:*** Net
      interest expense was $9 for the quarter ended March 31, 2008 compared to
      interest income of $64 for the quarter ended March 31, 2007. The increase in
      net
      interest expense is attributed to decreased cash equivalent balances and lower
      interest rates received in addition to an increased balance and borrowing costs
      under the terms of the credit facility.





***Net
      Losses:*** The
      Company experienced a net loss of $2,385 or $0.13 per share for the quarter
      ended March 31, 2008 compared to a net loss of $1,415 or $0.07 per share for
      the
      quarter ended March 31, 2007.





***Liquidity
      and Capital Resources***





Historically,
      our primary sources of capital have been cash flow from operations and loans
      from affiliated parties. More recently, our primary sources of cash flow have
      been from operations and the $29.5 million raised in the December 29, 2005
      private offering of our common stock and warrants.





Net
      cash
      used in operating activities for the three months ended March 31, 2008 was
      $2,297 compared to $1,327 used in the three months ended March 31, 2007. The
      net
      cash used in operating activities in 2008 increased primarily due to increases
      in the net loss, and $116 cash used for inventory purchases. Also contributing
      to the increases in cash used was a $285 decrease in accounts receivable, a
      $15
      decrease in prepaid expenses and a $181 decrease in accrued expenses. Partially
      offsetting the increases in cash used was a $370 increase in accounts payable.
      The increase in inventories is intended to increase product available for
      auction. Accounts receivable decreased $285 primarily due to decreased open
      account sales in the Business to Business sales channel. The decrease in accrued
      expenses of $181 was primarily the result of lower payroll accruals and lower
      freight costs due to lower Direct channel sales volumes.





Net
      cash
      used in investing activities was $245 for the three months ended March 31,
      2008
      due primarily to the purchase of property and equipment. Net cash provided
      by
      investing activities was $28 for the period ended March 31, 2007. The increase
      in purchases of property and equipment for the three months ended March 31,
      2008
      related primarily to hardware and software purchases as IT infrastructure
      investment increased.





Net
      cash
      provided by financing activities was $1,719 for the three months ended March
      31,
      2008, compared to $349 for the same period last year. The cash inflow in 2008
      is
      due to advances on the Wells Fargo Credit Agreement of $1,617 and $102 in
      inventory purchases financed through the flooring facility. Net cash provided
      of
      $349 for the three months ended March 31, 2007 was for inventory purchases
      financed through the flooring facility.





On
      May 9, 2006, we entered into a Credit and Security Agreement with Wells
      Fargo Bank, National Association acting through Wells Fargo Business Credit
      and
      related security agreements and other agreements described in the Credit and
      Security Agreement (the “Credit Agreement”). The Credit Agreement provides for
      advances to us of up to a maximum of $25,000. The amount actually available
      to
      the Company will vary from time to time, depending on, among other factors,
      the
      amount of eligible inventory and the amount of eligible accounts receivable.
      The
      obligations under the Credit Agreement and all related agreements are secured
      by
      all of the our assets. The initial term of the Agreement is three years,
      expiring on April 28, 2009. Up to $7,000 of the maximum amount is available
      for
      irrevocable, standby and documentary letters of credit. Advances under the
      Credit Agreement bear interest at a base rate (Wells Fargo Bank's prime rate)
      or
      LIBOR plus 2.5%. The Credit Agreement requires a prepayment fee of $125 if
      we
      terminate the Credit Agreement during the third year. The Credit Agreement
      requires us, among other things, to limit capital expenditures and maintain
      minimum availability on the line. Also, we are obligated contractually by a
      restrictive lock box arrangement. The Credit Agreement also requires us to
      pay a
      variety of other fees and expenses, including minimum annual interest of $120.
      As of March 31, 2008 we had $45 in deferred financing fees being amortized
      over
      the life of the Credit Agreement. As of March 31, 2008, the effective loan
      rate
      was 8.25%, we had an outstanding balance of $1,617 and we were in compliance
      with all the loan covenants.


21





We
      believe that current working capital, together with cash flows from operations
      and availability under our credit facility will be adequate to support our
      current operating plans for at least the next 12 months.





**ITEM
      3.****QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**




The
      Company has little exposure to risks of fluctuating interest rates or
      fluctuating currency exchange rates. Accordingly, the Company does not believe
      that changes in interest or currency rates will have a material effect on our
      liquidity, financial condition or results of operations. It is the Company’s
      policy not to enter into derivative financial instruments.





**ITEM
      4.****CONTROLS
      AND PROCEDURES**





*Disclosure
      Controls and Procedures.* The
      Company maintains disclosure controls and procedures that have been designed
      to
      ensure that information related to the Company is recorded, processed,
      summarized and reported on a timely basis. We review these disclosure controls
      and procedures on a periodic basis. In connection with this review, we have
      established a compliance committee that is responsible for accumulating
      potentially material information regarding its activities and considering the
      materiality of this information. The compliance committee (or a subcommittee)
      is
      also responsible for making recommendations regarding disclosure and
      communicating this information to our Chief Executive Officer and Vice
      President, Finance to allow timely decisions regarding required disclosure.
      Our
      compliance committee is comprised of our principal risk management officer
      and
      other members of our management team.





The
      Company’s Chief Executive Officer and Vice President, Finance, with the
      participation of the compliance committee, evaluated the effectiveness of the
      design and operation of the Company’s disclosure controls and procedures as of
      the end of the period covered by this Quarterly Report, as required by Rule
      13a-15 of the Securities Exchange Act of 1934. Based on their evaluation of
      the
      Company’s disclosure controls and procedures, the Company’s Chief Executive
      Officer and Vice President, Finance believe that, as of the end of the period
      covered by this Quarterly Report, the Company’s disclosure controls and
      procedures are effective to ensure that information required to be disclosed
      by
      the Company in the reports the Company files or submits under the Securities
      Exchange Act of 1934 is recorded, processed, summarized, and reported within
      the
      time periods specified in the rules and forms of the SEC.





***Internal
      Control Over Financial Reporting.*** There
      have been no changes in the Company’s internal control over financial reporting
      identified in the evaluation that occurred during the first quarter of fiscal
      year 2008 that have materially affected, or are reasonably likely to materially
      affect, the Company’s internal control over financial reporting.




**PART
      II OTHER INFORMATION**





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





From
      time
      to time the Company may be named in claims arising in the ordinary course of
      business. Currently, no legal proceedings or claims are pending against the
      Company or involve the Company that, in the opinion of the Company’s management,
      could reasonably be expected to have a material adverse effect on our business
      or financial condition.


22


**ITEM
      1A. RISK FACTORS**





In
      addition to other information set forth in this report, you should carefully
      consider the factors discussed in Part 1, “Item 1A. Risk Factors” in the
      Company’s Annual Report on Form 10-K for the year ended December 31, 2007, which
      could materially affect the Company’s business, financial condition or future
      results. The risks described in the Company’s Annual Report on Form 10-K are not
      the only risks facing the Company. Additional risks and uncertainties not
      currently known to the Company or that are currently deemed to be immaterial
      also may materially adversely affect the Company’s business, financial
      conditions and/or operating results.




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





For
      the
      three months ended March 31, 2008, options to purchase an aggregate of 688,000
      shares of the Company’s common stock were granted to individuals, all employees
      of uBid. Options to purchase an aggregate of 600,000 shares at $1.14 per share
      were granted on September 21, 2007. The options have a term of ten years and
      vest over a three to four year period either quarterly or annually beginning
      on
      the first quarter or year respectively after the date of grant. The option
      grants were exempt from registration under Section 4(2) of the Securities Act
      of
      1933, as amended, which provides an exemption for transactions not involving
      a
      public offering.





**ITEM
      3. DEFAULT UPON SENIOR SECURITIES**





None




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




None





**ITEM
      5. OTHER INFORMATION**





None





**ITEM
      6. EXHIBITS**





See
      Exhibit Index on the following page.


23





**Exhibit**
              **No.**
            **Description**31.1
            Certification
                of the President and Chief Executive Officer pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002.31.2
            Certification
                of the Vice President, Finance pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.32.1
            Certification
                of the President and Chief Executive Officer pursuant to 18 U.S.C.
                Section
                1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of
                2002.32.2
            Certification
                of the Vice President, Finance pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.


24


**SIGNATURES**





Pursuant
      to requirements of Section 13 or 15(d) 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 as of May 14, 2008.


**UBID.COM
                HOLDINGS, INC.**By:
            /s/
                Miguel A. Martinez, Jr.Name:  Miguel
                A. Martinez, Jr.
              Title:
                  Chief Financial Officer
              (Principal
                Financial Officer and Principal Accounting
                Officer)


25