**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 **June
      30, 2008**





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





**Commission
      file Number: 000-50995**









**Enable
      Holdings, Inc.**


(Formerly
      known as 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, a non-accelerated filer or a smaller reporting company.
      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 August 14, 2008 was 18,446,116









**TABLE
      OF CONTENTS**





**Page**PART
                I
            Financial
                InformationItem
                1.
            Consolidated
                Condensed Financial Statements (Unaudited)Consolidated
                Condensed Balance Sheets (Unaudited) June 30, 2008 and December 31,
                2007
            
            3Consolidated
                Condensed Statements of Operations (Unaudited) Three months and Six
                months
                ended June 30, 2008 and 2007
            
            4Consolidated
                Condensed Statement of Shareholders' Equity (Unaudited) Six months
                ended
                June 30, 2008
            
            5Consolidated
                Condensed Statements of Cash Flows (Unaudited) Six months ended June
                30,
                2008 and 2007
            
            6Notes
                to Consolidated Condensed Financial Statements
            
            7-14Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            14-25Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            
            25Item
                4.
            Controls
                and Procedures
            
            25PART
                II
            Other
              InformationItem
                1.
            Legal
                Proceedings
            
            25Item
                1A.
            Risk
                Factors
            
            25Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            26Item
                3.
            Default
                Upon Senior Securities
            
            26Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            
            26Item
                5.
            Other
                Information
            
            26Signatures
            
            
            27-32




2




**Enable
      Holdings, Inc. and Subsidiaries**


**Consolidated
      Condensed Balance Sheets**


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


**(Unaudited)**





**June 30, 2008**
            
            **December 31, 2007****Assets****Current
                Assets**Cash
                and cash equivalents
            
            $
            4,800
            
            $
            7,724Restricted
                investments
            
            
            212
            
            
            212Accounts
                receivable, less allowance for doubtful accounts of $467 and $215,
                respectively
            
            
            1,284
            
            
            648Merchandise
                inventories, less reserve for obsolesence of $837 and $409,
                respectively
            
            
            5,736
            
            
            5,156Prepaid
                expenses and other current assets
            
            
            841
            
            
            759**Total
                Current Assets**
            
            
            12,873
            
            
            14,499**Property
                and Equipment, net**
            
            
            997
            
            
            725**Purchased
                Intangible Assets, net**
            
            
            203
            
            
            107**Total
                Assets**
            
            $
            14,073
            
            $
            15,331**Liabilities
                and Shareholders' Equity****Current
                Liabilities**Due
                on credit line
            
            $
            3,911
            
            $
            -Accounts
                payable
            
            
            2,626
            
            
            2,766Accrued
                expenses:Advertising
            
            
            236
            
            
            205Other
            
            
            1,236
            
            
            1,194Flooring
                facility
            
            
            116
            
            
            314**Total
                Current Liabilities**
            
            $
            8,125
            
            $
            4,479**Shareholders'
                Equity**Common
                  stock, $.001 par value (200,000,000 shares authorized as of June
                  30, 2008
                  and December 31, 2007; 18,446,116 and 18,197,783 shares issued
                  and
                  outstanding, respectively as of June 30, 2008 and December 31,
                  2007)
            
            $
            20
            
            $
            20Treasury
                stock, 2,135,550 shares of common stock and 580,937 warrants at
                cost
            
            
            (2,242
            )
            
            (2,242
            )Stock
                warrants
            
            
            8,274
            
            
            8,086Additional
                paid-in-capital
            
            
            37,518
            
            
            37,248Accumulated
                deficit
            
            
            (37,622
            )
            
            (32,260
            )**Total
                Shareholders' Equity**
            
            $
            5,948
            
            $
            10,852**Total
                Liabilities and Shareholders' Equity**
            
            $
            14,073
            
            $
            15,331





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




3




**Enable
      Holdings, Inc. and Subsidiaries**


**Consolidated
      Condensed Statements of Operations**


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


**(Unaudited)**





**Three Months Ended June 30,**
            
            **Six Months Ended June 30,**2008
            
            2007
            
            2008
            
            2007Net
                Revenues
            
            $
            8,426
            
            $
            13,663
            
            $
            15,567
            
            $
            23,270Cost
                of Revenues
            
            
            7,112
            
            
            10,794
            
            
            12,381
            
            
            17,849Gross
                Profit
            
            
            1,314
            
            
            2,869
            
            
            3,186
            
            
            5,421Operating
                ExpensesGeneral
                and administrative
            
            
            3,418
            
            
            3,326
            
            
            7,171
            
            
            6,348Sales
                and marketing
            
            
            799
            
            
            1,131
            
            
            1,294
            
            
            2,200Total
                operating expenses
            
            
            4,217
            
            
            4,457
            
            
            8,465
            
            
            8,548Loss
                From Operations
            
            
            (2,903
            )
            
            (1,588
            )
            
            (5,279
            )
            
            (3,127
            )Interest
                Expense
            
            
            (95
            )
            
            (98
            )
            
            (158
            )
            
            (210
            )Interest
                Income
            
            
            21
            
            
            149
            
            
            75
            
            
            324Other
                Income, net
            
            
            -
            
            
            -
            
            
            -
            
            
            60Net
                Loss
            
            $
            (2,977
            )
            $
            (1,537
            )
            $
            (5,362
            )
            $
            (2,953
            )Net
                Loss per share - Basic and Diluted
            
            $
            (0.16
            )
            $
            (0.08
            )
            $
            (0.29
            )
            $
            (0.15
            )Weighted
                Average Shares - Basic and Diluted
            
            
            18,325,786
            
            
            18,761,005
            
            
            18,310,951
            
            
            19,542,826





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




4




**Enable
      Holdings, Inc. and Subsidiaries**


**Consolidated
      Statements of Shareholders' Equity**


**(Dollars
      in Thousands)**





**Common Stock**
            
            **Stock**
            
            **Paid-in**
            
            **Treasury Stock**
            
            **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
            
            
            —
            
            
            —
            
            
            —
            
            
            109Net
                Loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (2,385
            )
            
            (2,385
            )Balance,
                March 31, 2008
            
            
            18,197,783
            
            $
            20
            
            $
            8,086
            
            $
            37,357
            
            
            2,135,550
            
            $
            (2,242
            )
            $
            (34,645
            )
            $
            8,576Stock
                compensation expense
            
            
            —
            
            
            —
            
            
            —
            
            
            114
            
            
            —
            
            
            —
            
            
            —
            
            
            114Warrants
                issued for services
            
            
            —
            
            
            —
            
            
            188
            
            
            (156
            )
            
            —
            
            
            —
            
            
            —
            
            
            32Common
                stock issuance
            
            
            150,000
            
            
            —
            
            
            —
            
            
            203
            
            
            —
            
            
            —
            
            
            —
            
            
            203Net
                Loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (2,977
            )
            
            (2,977
            )Balance,
                June 30, 2008
            
            
            18,347,783
            
            $
            20
            
            $
            8,274
            
            $
            37,518
            
            
            2,135,550
            
            $
            (2,242
            )
            $
            (37,622
            )
            $
            5,948





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




5




**Enable
      Holdings, Inc. and Subsidiaries**


**Consolidated
      Condensed Statements of Cash Flows**


**(Dollars
      in Thousands)**


**(Unaudited)**


**Six
                    Months Ended June 30,****2008**
                
                **2007****Cash
                    Flows From Operating Activities**Net
                    loss
                
                $
                (5,362
                )
                $
                (2,953
                )Adjustments
                    to reconcile net loss to net cash used in Operating
                    activitiesDepreciation
                    and amortization
                
                
                309
                
                
                409Non-cash
                    stock compensation expense
                
                
                223
                
                
                365Warrants
                    issued for services
                
                
                32
                
                
                -Changes
                    in assets and liabilities:Accounts receivable
                
                
                (636
                )
                
                (304
                )Merchandise inventories
                
                
                (580
                )
                
                (249
                )Prepaid expenses and other current assets
                
                
                (83
                )
                
                152Accounts payable
                
                
                (140
                )
                
                146Accrued expenses
                
                
                73
                
                
                (479
                )**Net
                    cash used in operating activities**
                
                
                (6,164
                )
                
                (2,913
                )**Cash
                    Flows From Investing Activities**Capital
                    expenditures
                
                
                (473
                )
                
                (100
                )Change
                    in restricted investments
                
                
                -
                
                
                (2
                )**Net
                    cash used in investing activities**
                
                
                (473
                )
                
                (102
                )**Cash
                    Flows From financing Activities**Change
                    in flooring facility
                
                
                (198
                )
                
                827Credit
                    line borrowings
                
                
                3,911
                
                
                -Common
                    stock and warrant repurchase
                
                
                -
                
                
                (2,242
                )**Net
                    cash provided by (used in) financing activities**
                
                
                3,713
                
                
                (1,415
                )**Net
                    Decrease in Cash and Cash Equivalents**
                
                
                (2,924
                )
                
                (4,430
                )**Cash
                    and Cash Equivalents, beginning of period**
                
                
                7,724
                
                
                14,785**Cash
                    and Cash Equivalents, end of period**
                
                $
                4,800
                
                $
                10,355**Supplemented
                    Cash Flow Disclosure**Cash
                    paid for interest
                
                $
                97
                
                $
                95Non-cash
                    Investing Activity - Shares issued for domain name
                    acquisition
                
                
                203
                
                
                -





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




6





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





Enable
      Holdings, Inc. and subsidiaries (the “Company”) has operated a leading online
      business to consumer and business to business auction 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 the 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,
      housewares, watches, jewelry, travel, sporting goods, home improvement products
      and collectibles. The Company’s marketplace employs a combination of auction
      style and fixed price formats.




In
      the
      first quarter of 2008, the Company began transforming its business model to
      an
      asset recovery solution. Asset recovery is a rapidly growing industry with
      revenues of $38.5 billion in 2004 and is expected to climb to over $63.1 billion
      in 2008, according to D.F. Blumberg Associates Inc., a logistics research and
      consulting firm.





For
      manufacturers and retailers, the Company offers excess inventory asset recovery
      solutions. For consumers, the Company is a connection to excess name brand
      inventory. The Company has identified seven proprietary inventory selling
      solutions. These solutions are structured as separate operating divisions and
      include:





·
            uBid.com
                – The Company’s historical auction site which has operated for ten years.
                This division will focus solely on auction format rather than the
                current
                auction and fixed price format.


·
            RedTag.com
                – A fixed price internet site that is currently under development with
                an
                expected launch date in the third quarter of
                2008.


·
            RedTag
                Live – An inventory liquidation company dedicated to physical location
                sales. RedTag Live was launched in the beginning of the third quarter
                of
                2008.


·
            Dibu
                Trading Co. – A wholesale inventory liquidation company dedicated to
                Business-to-Business solutions. This division was formed in the fourth
                quarter of 2007 and dedicated staff was hired in the first quarter
                of
                2008.


·
            Commerce
                Innovations – A software service company which licenses auction software
                to third party companies. The Company is currently developing this
                hosted
                solution which is expected to launch in the middle of the third quarter
                of
                2008.





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
      six months ended June 30, 2008.





***Revenue
      Recognition***





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




7





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.





***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 June 30, 2008 and 2007,
      were $153 and $126, 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 six months ended June 30, 2008 and 2007 was
      approximately $223 and $365, 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 (the “2005 Equity Incentive Plan”) in 2005 and 2006 and
      had an exercise price per share greater than $2.00. Individuals that held 500
      or
      fewer eligible options were cashed out.





The
      number of restricted stock rights 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
      June
      30, 2008 and 2007 the Company had options to purchase 1,693,500 and 1,762,200
      shares, respectively, of common stock outstanding to certain officers and other
      employees.





At
      June
      30, 2008 the Company had restricted stock rights outstanding of 253,333, of
      which 98,333 are vested. There were no restricted stock rights outstanding
      at
      June 30, 2007.





On
      March
      25, 2008, the Company issued warrants to purchase 90,000 shares of its common
      stock to an unrelated investor relations company. The warrants are exercisable
      for 10 years at the exercise price of $0.55, $1.20 and $4.50, for each tranche
      of 30,000 warrants, respectively. These warrants were issued for services to
      be
      provided over a period of time, as indicated in the agreement and the Company
      expensed the entire fair value of these warrants ($32) during the quarter ended
      June 30, 2008. The fair value was determined in accordance with the
      Black-Scholes model using an expected volatility of 68%, risk free interest
      rate
      of 5% and the warrants expiration of approximately 10 years from the date of
      issuance.




8





The
      compensation costs charged against income was $114 and $127 for the three months
      ended June 30, 2008 and 2007, respectively. Compensation costs are included
      in
      general and administrative expenses in the consolidated Condensed Statement
      of
      Operations.





***Intangibles***





On
      June
      13, 2008, the Company agreed with the Petters Group Worldwide, LLC, a holder
      of
      greater than 5% of our voting common stock, for the purchase of an internet
      domain name or Universal Resource Locator or URL, www.redtag.com ,
      in
      exchange for 150,000 shares of our common stock. The URL has an indefinite
      useful life and thus in accordance with the Statement of Financial Accounting
      Standards No. 142, Goodwill and Other Intangible Assets (“SFAS 142”), the
      intangible asset need not be amortized. Each reporting period, the Company
      will
      evaluate the useful life of the intangible asset to determine whether events
      and
      circumstances continue to support an indefinite useful life, and record
      impairment if needed.





**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.


**June
                  30,**
              
              **2008**
              
              **2007**Shares
                  subject to stock warrants
              
              
              3,412,398
              
              
              3,232,939Shares
                  subject to stock options
              
              
              1,693,500
              
              
              1,762,2005,105,898
              
              
              4,995,139





**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.”





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.




9





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
      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
      $2,242,000. 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.





**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, expires and 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 because at the origination of the offer the fair
      value of the eligible options 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.





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, of which
      98,333 are vested.





At
      June
      30, 2008 the Company had restricted stock rights outstanding of 253,333, due
      to
      the forfeiture of 1,667 unvested stock rights during the quarter ended June
      30,
      2008. There were no restricted stock rights outstanding at June 30,
      2007.




10




**Restricted Stock**
              **Rights**Outstanding
                at 3/31/2008
            
            
            255,000Granted
            
            
            -Exercised
            
            
            -Forfeited
            
            
            1,667Outstanding
                at 6/30/2008
            
            
            253,333Vested
                and Exercisable at 6/30/2008
            
            
            98,333





At
      June
      30, 2008 and 2007 the Company had options to purchase 1,693,500 and 1,762,200
      shares, respectively, of common stock outstanding to certain officers and other
      employees.





The
      compensation costs charged against income was $114 and $127 for the three months
      ended June 30, 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 six months ended June 30, 2008 and 2007,
      were estimated using the Black-Scholes option pricing model with the following
      weighted average assumptions:




**Three months ended**
              
              **Six months ended****June 30,**
              
              **June 30,****2008**
              
              **2007**
              
              **2008**
              
              **2007**Risk
                  -free interest rate
              
              
              5.0
              %
              
              5.0
              %
              
              5.0
              %
              
              5.0
              %Dividend
                  yield
              
              
              0.0
              %
              
              0.0
              %
              
              0.0
              %
              
              0.0
              %Expected
                  volatility
              
              
              68.0
              %
              
              68.0
              %
              
              68.0
              %
              
              68.0
              %Expected
                  life (years)
              
              
              6.0
              
              
              6.0
              
              
              6.0
              
              
              6.0Weighted
                  average grant date fair value
              $
              0.56
              
              $
              0.85
              
              $
              0.51
              
              $
              0.92Estimated
                  forfeiture rate
              
              
              5
              %
              
              5
              %
              
              5
              %
              
              5
              %





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
              
              
              0.00
              
              
              0.00Surrendered
              
              
              (31,100
              )
              
              4.38Converted
              
              
              (765,000
              )
              
              4.60Outstanding
                  at March 31, 2008
              
              
              1,402,000
              
              $
              1.30Granted
              
              
              296,500
              
              
              0.92Excercised
              
              
              0.00
              
              
              0.00Surrendered
              
              
              (5,000
              )
              
              6.74Outstanding
                  at June 30, 2008
              
              
              1,693,500
              
              $
              1.22Exercisable
                  at June 30, 2008
              
              
              131,625
              
              $
              1.90




11





As
      of
      June 30, 2008 there was $1,898 of total unrecognized compensation cost related
      to the non-vested option awards and restricted stock under the 2005 Equity
      Incentive Plan. That cost is expected to be recognized over the 3.2 year
      remaining vesting period of the non-vested option awards. The total fair value
      of the option awards and restricted stock that were vested during the three
      months ended June 30, 2008 and 2007 was $145 and $224,
      respectively.





The
      following table summarizes information about stock options at June 30,
      2008:


**Outstanding**
              
              **Exercisable****Weighted****Average**
              
              **Weighted**
              
              
              
              **Weighted****Number**
              
              **Remaining**
              
              **Average**
              
              **Number**
              
              **Average****Exercise**
              
              **Outstanding at**
              
              **Contractual**
              
              **Exercise**
              
              **Exercisable at**
              
              **Exercise****Price**
              
              **June 30, 2008**
              
              **Life**
              
              **Price**
              
              **June 30, 2008**
              
              **Price**.01
                  - 2.00
              
              
              1,619,500
              
              
              9.3
              
              $
              1.13
              
              
              101,875
              
              $
              1.462.01
                  - 4.00
              
              
              62,000
              
              
              8.4
              
              $
              3.02
              
              
              21,750
              
              $
              2.984.01
                  - 6.00
              
              
              11,000
              
              
              7.5
              
              $
              4.50
              
              
              7,500
              
              $
              4.506.01+
              
              
              1,000
              
              
              7.5
              
              $
              6.15
              
              
              500
              
              $
              6.151,693,500
              
              
              
              
              $
              1.22
              
              
              131,625
              
              $
              1.90





The
      aggregate intrinsic value of the outstanding options (the difference between
      the
      closing stock price on the last trading day of the period ended June 30, 2008
      of
      $1.87 per share and the exercise price, multiplied by the number of in-the-money
      options) was $1,204. 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
      $25.0 million. 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 $7.0 million 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 $125,000 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 $120,000. The Company, as of June 30, 2008, had
      $35,000 in deferred financing fees being amortized over the life of the Credit
      Agreement. As of June 30, 2008, the effective loan rate was 8.25% and the
      Company had an outstanding balance of $3,911,000.





On
      July
      25, 2008, Wells Fargo Bank notified the Company of the Company’s failure to meet
      the minimum excess availability requirement of $3.5 million. Since the Company
      did not meet the minimum excess availability requirement as stated in the
      agreement, the financial covenants went into effect which required that we
      demonstrate net earnings at the levels stated in the agreement. Due to the
      recent restructuring, the Company was unable to meet the covenants. Wells Fargo
      Bank has not elected to accelerate or call the loan at this point, but has
      put
      into effect the default interest rate of 11.25% on the outstanding balance
      of
      the loan.





In
      response to the notification of violation from Wells Fargo, the Company is
      currently evaluating several options; including, but not limited to, the payment
      of a waiver fee of $100,000 to Wells Fargo Bank along with resetting the
      covenants, complete the sale of 2.1 million shares of common stock held in
      treasury in a private offering, draw upon the Fusion Capital Equity Line or
      refinance the Wells Fargo credit facility with alternative lenders.




12





**7.
      Segment Information**





The
      Company is currently organized into four operating segments but is changing
      its
      business model as previously discussed in Note 1 (Basis of Presentation): 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.





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 June 30,**
            
            **Six months Ended June 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Net RevenueDirect
            
            $
            4,671
            
            $
            9,002
            
            $
            8,166
            
            $
            16,770UCM
            
            
            1,182
            
            
            1,341
            
            
            2,460
            
            
            2,797Business
                to Business
            
            
            2,537
            
            
            3,035
            
            
            4,750
            
            
            3,096Other
            
            
            36
            
            
            285
            
            
            191
            
            
            607Total
            
            $
            8,426
            
            $
            13,663
            
            $
            15,567
            
            $
            23,270Gross
                ProfitDirect
            
            $
            (190
            )
            $
            873
            
            $
            (138
            )
            $
            1,633UCM
            
            
            1,182
            
            
            1,341
            
            
            2,460
            
            
            2,797Business
                to Business
            
            
            286
            
            
            370
            
            
            673
            
            
            384Other
            
            
            36
            
            
            285
            
            
            191
            
            
            607Total
            
            $
            1,314
            
            $
            2,869
            
            $
            3,186
            
            $
            5,421Gross
                Profit %Direct
            
            
            -4.1
            %
            
            9.7
            %
            
            -1.7
            %
            
            9.7
            %UCM
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Business
                to Business
            
            
            11.3
            %
            
            12.2
            %
            
            14.2
            %
            
            12.4
            %Other
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Total
            
            
            15.6
            %
            
            21.0
            %
            
            20.5
            %
            
            23.3
            %





**8.
      Subsequent Events**





On
      July
      25, 2008, Wells Fargo Bank notified the Company of the Company’s failure to meet
      the minimum excess availability requirement of $3.5 million. Since the Company
      did not meet the minimum excess availability requirement as stated in the
      agreement, the financial covenants went into effect which required that we
      demonstrate net earnings at the levels stated in the agreement. Due to the
      recent restructuring, the Company was unable to meet the covenants. Wells Fargo
      Bank has not elected to accelerate or call the loan at this point, but has
      put
      into effect the default interest rate of 11.25% on the outstanding balance
      of
      the loan.




13





In
      response to the notification of violation from Wells Fargo, the Company is
      currently evaluating several options; including, but not limited to, the payment
      of a waiver fee of $100,000 to Wells Fargo Bank along with resetting the
      covenants, complete the sale of 2.1 million shares of common stock held in
      treasury in a private offering, draw upon the Fusion Capital Equity Line or
      refinance the Wells Fargo credit facility with alternative lenders.





On
      July
      15, 2008 the Company signed a $10.0 million common stock purchase agreement
      with
      Fusion Capital Fund II, LLC, an Illinois limited liability company (“Fusion
      Capital”). Concurrently with entering into the common stock purchase agreement,
      the Company entered into a registration rights agreement with Fusion Capital.
      Under the registration rights agreement, the Company agreed to file a
      registration statement related to the transaction with the U.S. Securities
      and
      Exchange Commission (“SEC”) covering the shares that have been issued or may be
      issued to Fusion Capital under the common stock purchase agreement. After the
      SEC has declared effective the registration statement related to the
      transaction, the Company has the right over a 24-month period to sell shares
      of
      common stock to Fusion Capital from time to time in amounts between $60,000
      to
      $1.0 million, depending on certain conditions set forth in the agreement, up
      to
      an aggregate of $10.0 million.





In
      consideration for entering into the agreement, upon execution of the common
      stock purchase agreement the Company issued to Fusion Capital 230,074 shares
      of
      the Company’s common stock as a commitment fee. Also, the Company will issue to
      Fusion Capital an additional 230,074 shares as a commitment fee pro rata as
      the
      Company receives the $10.0 million of future funding. The purchase price of
      the
      shares related to the $10.0 million of future funding will be based on the
      prevailing market prices of the Company’s common stock at the time of sales
      without any fixed discount, and the Company will control the timing and amount
      of any sales of shares to Fusion Capital. Fusion Capital shall not have the
      right or the obligation to purchase any shares of the Company’s common stock on
      any business day that the price of the Company’s common stock is below $0.75 per
      share. The common stock purchase agreement may be terminated by the Company
      at
      any time at the Company’s discretion without any cost to the Company. There are
      no negative covenants, restrictions on future funding, penalties or liquidated
      damages in the agreement. The proceeds received by the Company under the common
      stock purchase agreement will be used to provide working capital to further
      implement the Company’s recently announced strategic change to focus on
      liquidating excess inventories.




The
      Company issued the initial 230,074 shares at the agreed upon price of $1.52
      per
      share, determined based on the 20-day moving average as of the date the
      agreement was accepted. The Company will record the transaction in the quarter
      ended September 30, 2008.




**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. Enable Holdings, Inc. is a holding
      company for uBid, Inc., Dibu Trading Corp., RedTag, Inc., RedTag Live, Inc.,
      Enable Payment Systems, Inc. and uSaas, Inc., our operating businesses. For
      purposes of this Quarterly Report, unless otherwise indicated or the context
      otherwise requires, all references herein to “Enable,” “we,” “us,” and “our”
refer to Enable 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.




14





Our
      current 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 currently 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.




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.





In
      the
      first quarter of 2008, the Company began transforming its business model from
      a
      seller marketplace to an asset recovery solution. Asset recovery is a rapidly
      growing industry with revenues of $38.5 billion in 2004 and is expected to
      climb
      to over $63.1 billion in 2008, according to D.F. Blumberg Associates Inc.,
      a
      logistics research and consulting firm.





As
      a
      result, the Company changed its business model from a seller marketplace to
      an
      inventory solutions company. The Company began restructuring its business
      operations in the first quarter of 2008 and continued implementing those changes
      in the second quarter of 2008. The Company, in combination with the following
      five restructured operating divisions has identified seven proprietary inventory
      selling solutions. These operating divisions include:





·
            UBid.com
                – The Company’s historical auction site which has operated for ten years.
                This division will focus solely on auction format rather than the
                current
                auction and fixed price format.


·
            RedTag.com
                – A fixed price internet site that is currently under development with
                an
                expected launch date in the third quarter of
                2008.


·
            RedTag
                Live – An inventory liquidation company dedicated to physical location
                sales. RedTag Live was launched in the beginning of the third quarter
                of
                2008.


·
            Dibu
                Trading Co. – A wholesale inventory liquidation company dedicated to
                Business-to-Business solutions. This division was formed in the fourth
                quarter 2007 and dedicated staff was hired in the first quarter of
                2008.


·
            Commerce
                Innovations – A software service company which licenses auction software
                to third party companies. The Company is currently developing this
                hosted
                solution which is expected to launch in the middle of the third quarter
                of
                2008.





The
      Company’s financial results for the six months ended June 30, 2008 have been
      negatively impacted by the planned restructuring. To achieve the objective
      of
      becoming the leading excess inventory provider, the Company has made significant
      investments in increased staffing levels and information technology
      infrastructure. We have also made major changes to our traditional operations
      as
      we transition to the new business model.





As
      part
      of the restructuring efforts, we significantly reduced our marketing spending
      while realigning the marketing and advertising resources to better position
      them
      to each new operating division. The result was a significant decline in the
      visitor traffic to our website and decreased revenue volume. The visitor traffic
      in the quarter ended June 30, 2008 decreased 26.8% compared to the same period
      of the prior year.




15





The
      Company also made the strategic decision to eliminate outside advertisement
      on
      its website. Historically advertisement sales have added a revenue stream but
      have negatively impacted overall sales by redirecting visitor traffic from
      the
      Company’s website to competing websites. As a result of the elimination of
      advertisement sales, outside advertisement revenues decreased $416 or 68.5%
      in
      the six months ended June 30, 2008 compared to the same period in 2007.





The
      transition from an auction marketplace to an asset solutions company also
      required that operationally we improve the efficiency of our platform to enhance
      the user experience. The Company significantly decreased the number of listings,
      eliminating the unprofitable listings, while preparing to migrate fixed price
      listings to the RedTag platform based on the new business model. The number
      of
      listings in the quarter ended June 30, 2008 decreased by 73.2% compared to
      the
      quarter ended June 30, 2007. The reduction in the number of unprofitable
      listings improved our auction success rate and provides efficiencies to both
      buyers and sellers on our platform.





To
      further facilitate the restructuring of the business model we are in the process
      of implementing a new ERP system to enable us to expand both in the U.S. and
      internationally.





In
      line
      with the above changes, we have suffered increased losses compared to the prior
      year. The losses were consistent with management projections as we strategically
      transform the Company to a leading excess inventory solutions company. The
      Company expects all aspects of the new business model will be fully implemented
      by the end of 2008.





**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





**Reconciliation
      of GMS to GAAP**





**Three Months Ended**
              **June 30,**
            
            **Six Months Ended**
              **June 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Direct****
            
            $
            5,523
            
            $
            10,255
            
            $
            9,550
            
            $
            19,303UCM****
            
            
            11,594
            
            
            13,078
            
            
            24,239
            
            
            27,370Business
                to Business
            
            
            2,537
            
            
            3,035
            
            
            4,750
            
            
            3,096**Total
                GMS**(1)
            
            $
            19,654
            
            $
            26,368
            
            $
            38,539
            
            $
            49,769****Cancellations
                (2)
            
            
            (3,240
            )
            
            (3,258
            )
            
            (6,663
            )
            
            (5,935
            )****Backlog
                (3)****
            
            
            (443
            )
            
            (791
            )
            
            (443
            )
            
            (791
            )****GAAP
                Entry (4)
            
            
            6,913
            
            
            7,836
            
            
            13,787
            
            
            11,383****Returns
                (5)****
            
            
            (327
            )
            
            (379
            )
            
            (664
            )
            
            (690
            )******Net
                Sales**
            
            $
            8,426
            
            $
            13,663
            
            $
            15,567
            
            $
            23,270


(1)
              **GMS**
              Total
                  revenue in auctions closed and Business to Business
                  transactions(2)
              **Cancellations**
              Auctions
                  that will not be shipped due to credit and other issues(3)
              **Backlog**
              Auctions
                  & orders pending review in credit & approved orders at warehouse
                  pending shipment(4)
              **GAAP
                  Entry**
              Entry
                  required to eliminate sales under revenue sharing and commission
                  arrangements under accounting principles generally accepted in
                  the United
                  States of America ("GAAP")(5)
              **Returns**
              Credits
                  issued to customers for return products and customer satisfaction
                  and
                  related reserves





In
                    Thousands except Average Order Value and Approved UCM
                    VendorsQ2
                
                Q1
                
                Q4
                
                Q3
                
                Q2
                
                Q1
                
                Q4
                
                Q3
                
                Q22008
                
                2008
                
                2007
                
                2007
                
                2007
                
                2007
                
                2006
                
                2006
                
                2006MeasureGMS
                    (in thousands)Direct
                
                $
                8,061
                
                $
                6,240
                
                $
                9,646
                
                $
                9,296
                
                $
                13,289
                
                $
                9,110
                
                $
                12,477
                
                $
                14,952
                
                $
                19,735uBid
                    Certified Merchant
                
                
                11,593
                
                
                12,645
                
                
                13,307
                
                
                14,408
                
                
                13,079
                
                
                14,292
                
                
                13,799
                
                
                11,576
                
                
                10,551Total
                    GMS
                
                $
                19,654
                
                $
                18,885
                
                $
                22,953
                
                $
                23,704
                
                $
                26,368
                
                $
                23,402
                
                $
                26,276
                
                $
                26,528
                
                $
                30,286Number
                    of orders (in thousands)Direct
                
                
                20
                
                
                15
                
                
                21
                
                
                20
                
                
                29
                
                
                21
                
                
                24
                
                
                23
                
                
                37uBid
                    Certified Merchant
                
                
                71
                
                
                73
                
                
                86
                
                
                101
                
                
                98
                
                
                104
                
                
                99
                
                
                89
                
                
                88Total
                    orders
                
                
                91
                
                
                88
                
                
                107
                
                
                121
                
                
                127
                
                
                125
                
                
                123
                
                
                112
                
                
                125Average
                    Order ValueDirect
                
                $
                242
                
                $
                242
                
                $
                370
                
                $
                355
                
                $
                336
                
                $
                390
                
                $
                424
                
                $
                424
                
                $
                416uBid
                    Certified Merchant
                
                $
                151
                
                $
                160
                
                $
                142
                
                $
                129
                
                $
                119
                
                $
                120
                
                $
                126
                
                $
                128
                
                $
                110Visitors
                    (in thousands)
                
                
                5,050
                
                
                5,755
                
                
                5,980
                
                
                7,224
                
                
                6,901
                
                
                6,744
                
                
                6,529
                
                
                6,488
                
                
                7,215Bidders
                    (in thousands)
                
                
                198
                
                
                181
                
                
                173
                
                
                218
                
                
                231
                
                
                235
                
                
                239
                
                
                211
                
                
                255Bidders
                    to Visitors Percentage
                
                
                3.9
                %
                
                3.1
                %
                
                2.9
                %
                
                3.0
                %
                
                3.3
                %
                
                3.5
                %
                
                3.7
                %
                
                3.3
                %
                
                3.5
                %Auctions
                    Closed (in thousands)
                
                
                181
                
                
                455
                
                
                780
                
                
                715
                
                
                619
                
                
                539
                
                
                579
                
                
                562
                
                
                484Auction
                    Success (in thousands)
                
                
                56
                
                
                59
                
                
                67
                
                
                78
                
                
                77
                
                
                76
                
                
                65
                
                
                58
                
                
                62Auction
                    Success rate
                
                
                30.9
                %
                
                13.0
                %
                
                8.6
                %
                
                10.9
                %
                
                12.4
                %
                
                14.1
                %
                
                11.2
                %
                
                10.3
                %
                
                12.8
                %Approved
                    UCM Vendors
                
                
                3,854
                
                
                3,737
                
                
                3,588
                
                
                3,321
                
                
                2,873
                
                
                2,513
                
                
                2,049
                
                
                1,716
                
                
                1,307





***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.




17





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 and six months ended June 30, 2008 and June 30, 2007. No other supplier
      represented more than 5% of our net revenues for any period
      presented.





**Three months ended**
            
            **Six months ended****June 30,**
            
            **June 30,****Vendor**
            
            **2008**
            
            **2007**
            
            **2008**
            
            **2007**HP
            
            
            40.2
            %
            
            27.1
            %
            
            39.5
            %
            
            22.9
            %Always
                at Market
            
            
            7.1
            %
            
            5.2
            %
            
            6.9
            %
            
            5.8
            %Recoupit
            
            
            3.2
            %
            
            7.9
            %
            
            3.9
            %
            
            7.4
            %Sony
            
            
            3.2
            %
            
            13.6
            %
            
            3.0
            %
            
            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.





18




**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 June 30,**
            
            **Six months ended June 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Net
                Revenues:Direct
            
            $
            4,671
            
            
            55.4
            %
            $
            9,002
            
            
            65.9
            %
            $
            8,166
            
            
            52.5
            %
            $
            16,770
            
            
            72.1
            %UCM
            
            
            1,182
            
            
            14.0
            %
            
            1,341
            
            
            9.8
            %
            
            2,460
            
            
            15.8
            %
            
            2,797
            
            
            12.0
            %Business
                to Business
            
            
            2,537
            
            
            30.1
            %
            
            3,035
            
            
            22.2
            %
            
            4,750
            
            
            30.5
            %
            
            3,096
            
            
            13.3
            %Other
            
            
            36
            
            
            0.4
            %
            
            285
            
            
            2.1
            %
            
            191
            
            
            1.2
            %
            
            607
            
            
            2.6
            %Total
                Net Revenues
            
            
            8,426
            
            
            100
            %
            
            13,663
            
            
            100
            %
            
            15,567
            
            
            100
            %
            
            23,270
            
            
            100
            %Gross
                Profit:Direct
            
            
            (190
            )
            
            (2.3
            )%
            
            873
            
            
            6.4
            %
            
            (138
            )
            
            (0.9
            )%
            
            1,633
            
            
            7.0
            %UCM
            
            
            1,182
            
            
            14.0
            %
            
            1,341
            
            
            9.8
            %
            
            2,460
            
            
            15.8
            %
            
            2,797
            
            
            12.0
            %Business
                to Business
            
            
            286
            
            
            3.4
            %
            
            370
            
            
            2.7
            %
            
            673
            
            
            4.3
            %
            
            384
            
            
            1.7
            %Other
            
            
            36
            
            
            0.4
            %
            
            285
            
            
            2.1
            %
            
            191
            
            
            1.2
            %
            
            607
            
            
            2.6
            %Total
                Gross Profit
            
            
            1,314
            
            
            15.6
            %
            
            2,869
            
            
            21.0
            %
            
            3,186
            
            
            20.5
            %
            
            5,421
            
            
            23.3
            %General
                and administrative
            
            
            3,418
            
            
            40.6
            %
            
            3,326
            
            
            24.3
            %
            
            7,171
            
            
            46.1
            %
            
            6,348
            
            
            27.3
            %Sales
                and marketing
            
            
            799
            
            
            9.5
            %
            
            1,131
            
            
            8.3
            %
            
            1,294
            
            
            8.3
            %
            
            2,200
            
            
            9.5
            %Total
                operating expenses
            
            
            4,217
            
            
            50.0
            %
            
            4,457
            
            
            32.6
            %
            
            8,465
            
            
            54.4
            %
            
            8,548
            
            
            36.7
            %Loss
                from operations
            
            
            (2,903
            )
            
            (34.5
            )%
            
            (1,588
            )
            
            (11.6
            )%
            
            (5,279
            )
            
            (33.9
            )%
            
            (3,127
            )
            
            (13.4
            )%Interest
                Income / (Expense) & Other, Net
            
            
            (74
            )
            
            (0.9
            )%
            
            51
            
            
            0.4
            %
            
            (83
            )
            
            -0.5
            %
            
            114
            
            
            0.5
            %Other
                Income / (Expense)
            
            
            -
            
            
            -
            %
            
            -
            
            
            -
            %
            
            -
            
            
            -
            %
            
            60
            
            
            0.0
            %Net
                Loss
            
            $
            (2,977
            )
            
            (35.3
            )%
            $
            (1,537
            )
            
            (11.2
            )%
            $
            (5,362
            )
            
            (34.4
            )%
            $
            (2,953
            )
            
            (12.7
            )%





**Comparison
      of Three Months ended June 30, 2008 and June 30, 2007**





Net
      loss
      for the three months ended June 30, 2008 was $2,977 or $0.16 basic and diluted
      loss per share. For the three months ended June 30, 2007, the net loss was
      $1,537 or $0.08 basic and diluted loss per share. The net loss increased by
      $1,440 or 93.7% from the same period in the prior year.





***Direct
      Channel:*** Direct
      channel sales decreased $4,331 or 48.1% to $4,671 for the three months ended
      June 30, 2008 compared to direct sales of $9,002 in the same period last year.
      In the current period the number of direct orders decreased 9,000 or 31.0%
      and
      the average order value decreased $94.00 or 28.0% to $242.00 per order.





The
      Direct channel gross profit decreased $1,063 or 121.8% for the three months
      ended June 30, 2008 compared to the same period in the prior year. The Direct
      channel gross profit percentage decreased 13.8% to a negative margin of 4.1%
      for
      the three months ended June 30, 2008 compared to 9.7% for the three months
      ended
      June 30, 2007.





As
      a
      result of decreased advertising, the number of direct orders decreased as
      compared to the quarter ended June 2007. The Company also eliminated
      unprofitable auctions to eliminate poor performing vendors and unprofitable
      product categories. The result of these changes was a reduction in auctions
      closed (181 in the quarter ended June 2008 compared to 619 in the quarter ended
      June 2007) but due to the realigned marketing and vendor resources, the
      Company’s auction success rate improved significantly to 30.9% from 12.5% in the
      quarters ended June 30, 2008 and June 30, 2007, respectively.




The
      gross
      profit margin was impacted by certain inventory purchases in the quarter ended
      June 2008. The Company purchased portable computers from various manufacturers
      but due to a shift in consumer demand for brand name merchandise, the computers
      were sold at a negative margin. The negative margin attributable to these
      computers totaled $215, for the quarter ended June 30, 2008.





***UCM
      Channel:*** ** UCM
      revenues and gross profit decreased $159 or 11.9% to $1,182 for the three months
      ended June 30, 2008 compared to revenue and gross profit of $1,341 in the same
      period of the prior year. In the current period the number of UCM orders
      decreased 27,000 or 27.6% while the average order value increased $32.00 or
      26.9% to $151.00 per order. The number of UCM vendors increased 981 or 34.1%
      to
      3,854 vendors compared to 2,873 for the three months ended June 30, 2007.





The
      decrease in UCM orders and revenues is attributable to the improvements outlined
      above, where the Company realigned the marketing efforts and eliminated the
      unprofitable auctions and vendors, resulting in an improved auction success
      rate
      and a higher bidder to visitor percentage.




19





***Business
      to Business:*** Business
      to Business revenues decreased $498 or 16.4 % for the three months ended June
      30, 2008 compared to the same period in the prior year. Gross profit decreased
      $84 or 22.7% to $286 for the quarter ended June 30, 2008 compared to $370 for
      the quarter ended June 30, 2007. The gross profit percentage decreased to 11.3%
      for the three months ended June 30, 2008 compared to 12.2% in the same period
      of
      the prior year.





Included
      in the Business to Business results are revenues of $406 and gross profit of
      $137 from the live liquidation events held in two separate physical locations
      in
      the State of Florida.





***Other
      Revenue:*** Other
      revenue and gross profit primarily comprised of online advertising revenue,
      decreased $249 or 87.4% for the three months ended June 30, 2008. The decrease
      was due to the strategic elimination of the advertisement revenue department.
      In
      the past, the Company sold advertising space on its website to various
      companies. Although this strategy added a revenue stream, it impacted sales
      on
      the Company’s website since it directed visitors away to competing websites. As
      a result of the elimination of advertisement revenue, visitors spent more time
      shopping on the Company’s website, as evidenced by the increased bidder to
      visitor percentage; 3.9% compared to 3.3% for the quarters ended June, 30 2008
      and June 30, 2007, respectively.





***Sales
      and Marketing, General and Administrative Expenses:*** SG&A
      expenses for the quarter ended June 30, 2008 were $4,217, a decrease of $240
      or
      5.4%, compared to the quarter ended June 30, 2007. Non recurring expenses
      incurred in the quarter ended June 30, 2008 consisted of $81 of recruiting
      fees,
      $30 in severance expenses and $32 in investor relations expense for which 90,000
      warrants were issued as payment. The recruiting fees were primarily incurred
      as
      marketing staffing levels were increased to facilitate strategic marketing
      initiatives related to the Company’s restructuring plans.





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


**(Dollars in Thousands)****Three Month Period Ended****SG&A Expenses:**
              
              **June 30, 2008**
              
              **June 30, 2007**
              
              **Increase (Decrease)**Advertising
              
              $
              478
              
              $
              993
              
              $
              (515
              )Salary
                  and benefits
              
              
              1,604
              
              
              1,245
              
              
              359Stock-based
                  compensation
              
              
              114
              
              
              127
              
              
              (13
              )Facilities
              
              
              73
              
              
              122
              
              
              (49
              )Warehouse
              
              
              201
              
              
              185
              
              
              16Credit
                  card fees
              
              
              392
              
              
              531
              
              
              (139
              )Telecommunications,
                  hardware and storage
              
              
              177
              
              
              170
              
              
              7Legal,
                  audit, insurance, and other regulatory fees
              
              
              379
              
              
              276
              
              
              103Depreciation
                  & amortization
              
              
              103
              
              
              227
              
              
              (124
              )Bad
                  debt
              
              
              -
              
              
              352
              
              
              (352
              )Consulting
                  and outside services
              
              
              261
              
              
              174
              
              
              87Redtag
                  Live
              
              
              298
              
              
              -
              
              
              298Dues
                  & Subscriptions
              
              
              31
              
              
              3
              
              
              28Travel
              
              
              57
              
              
              48
              
              
              9Other
                  SG&A
              
              
              49
              
              
              4
              
              
              45$
              4,217
              
              $
              4,457
              
              $
              (240
              )




Expense
      increases are summarized as follows:





Salary
      and benefits expense increased $359 or 28.8% as the result of increased staff
      levels, primarily in information technology and marketing, $30 of severance
      and
      $81 in recruiting fees incurred in the quarter ended June 30, 2008. Stock based
      compensation decreased $13 due to the increased number of forfeited stock
      options during the three months ended June 30, 2008.





Warehouse
      expense increased $16 or 8.6% in the current quarter compared to the same period
      of the prior year, primarily due to the purchase of warehouse supplies, special
      warehouse receiving requirements and additional storage costs for the live
      liquidation events.





Telecommunications,
      hardware and storage expenses increased $7 or 4.1% as a result of price
      increases on maintenance contract renewals.





Legal,
      audit, insurance and other regulatory fees increased $103 or 37.3%. Legal fees
      increased $116 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 $62
      primarily due to consulting costs incurred in the evaluation of a new ERP
      system. Insurance expense increased $62 as a $63 credit was received from prior
      carriers in the quarter ended June 30, 2007 and insurance coverage was increased
      in the current quarter.




20





Consulting
      and outside services expense increased $87 or 50.0% as new business initiatives
      were launched and outside services were brought in, including; outside services
      for the advertising department to facilitate a customer database segmentation
      project and to provide increased market research & analysis and, outside
      services for the IT department for software development and
      restructuring.





RedTag
      Live, the physical liquidation unit of the Company, was implemented in the
      first
      and second quarter of 2008 which resulted in an increase in operating expenses
      of $298 compared to the quarter ended June 30, 2007. These expenses related
      to
      the opening of a new facility for the RedTag Live division and consisted
      primarily of facility, payroll and advertising expenses.





The
      increases in expenses were offset by the following decreases:





Depreciation
      and amortization decreased by $124 or 54.6% primarily as the result of a $43
      decrease in amortization of intangible assets. At June 30, 2008 the Bidville
      intangible asset was fully amortized.





As
      part
      of the Company’s restructuring, the Company realigned its marketing and
      advertising efforts to better position the Company to manufacturers, retailers
      and consumers. Advertising expense decreased $515 or 51.9% and visitor traffic decreased
      1,851,000 or 26.8% 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 $0.09 per visitor
      from
      $0.14 per visitor in the same period of the prior year. We have increased our
      advertising in the third quarter of 2008 realigning the resources to better
      fit
      the restructured company.





Facilities
      expense decreased $49 or 40.2% primarily due to the sublet of unused office
      space at our corporate office partially offset by physical store location
      rentals.





Credit
      card fees decreased $139 or 26.2%. The decrease is primarily due to lower sales
      volumes.





***Other
      Expense:*** Net
      interest expense was $47 for the quarter ended June 30, 2008 compared to
      interest income of $91 for the quarter ended June 30, 2007. The increase in
      net
      interest expense is attributed to decreased cash equivalent balances and lower
      interest rates received in addition to an increased loan balance and borrowing
      costs under the terms of the credit facility.





***Net
      Losses:*** The
      Company experienced a net loss of $2,977 or $0.16 per share for the quarter
      ended June 30, 2008 compared to a net loss of $1,537 or $0.08 per share for
      the
      quarter ended June 30, 2007.





**Comparison
      of Six Months ended June 30, 2008 and June 30, 2007**





Net
      loss
      for the six months ended June 30, 2008, was $5,362 or $0.29 basic and diluted
      loss per share. For the six months ended June 30, 2007, the loss was $2,953
      or
      $0.15 basic and diluted loss per share. The loss increased by $2,409 or 81.6%
      from the same period in the prior year.





***Direct
      Channel:*** Direct
      channel sales decreased $8,604 or 51.3% to $8,166 for the six months ended
      June
      30, 2008 compared to Direct channel sales of $16,770 in the same period of
      the
      prior year. In the current period the number of direct orders decreased 15,000
      or 30.0% and the average order value decreased by $242 or 33.3% per order.





The
      Direct channel gross profit decreased by $1,771 or 108.5% for the six months
      ended June 30, 2008 compared to the prior year. The Direct channel gross profit
      percentage decreased 11.4% to a negative margin of 1.7% for the six months
      ended
      June 30, 2008 compared to 9.7% for the six months ended June 30,
      2007.





As
      a
      result of decreased advertising, the number of direct orders decreased as
      compared to the six months ended June 30, 2007. The Company also eliminated
      unprofitable auctions to eliminate unsuccessful vendors but added certified
      vendors to the list. The result of these changes was a reduction in auctions
      closed (636 in six months ended June 2008 compared to 1,158 in six months ended
      June 30, 2007) but due to the realigned marketing and vendor resources, the
      Company’s auction success rate improved to 18.1% from 13.2%, for the six months
      ended June 30, 2008 and June 30, 2007, respectively.





The
      gross
      profit margin was impacted by certain inventory purchases in the six months
      ended June 30, 2008. The Company purchased portable computers from various
      manufacturers but due to a shift in consumer demand for brand name merchandise,
      the computers were sold at a negative margin. The negative margin attributable
      to these computers totaled $215, for the six months quarter ended June 30,
      2008.




21





***UCM
      Channel:*** UCM
      revenues and gross profit decreased $337 or 12% to $2,460 for the six months
      ended June 30, 2008 compared to revenue and gross profit of $2,797 in the same
      period of the prior year. In the current period the number of UCM orders
      decreased 58,000 or 28.7% while the average order value increased by $72.0
      or
      30.1% per order. The number of UCM vendors increased 2,205 or 41.0% to 7,591
      vendors compared to 5,386 for the six months ended June 30, 2007.





The
      decrease in UCM orders and revenues is attributable to the improvements outlined
      above, where the Company realigned the marketing efforts and eliminated the
      unprofitable auctions and vendors, resulting in an improved auction success
      rate
      and a higher bidder to visitor percentage.





***Business
      to Business:*** Business
      to Business revenues increased $1,654 or 53.4% for the six months ended June
      30,
      2008 compared to the same period in the prior year. Gross profit increased
      $289
      or 75.3% to $673 for the six months ended June 30, 2008 compared to $384 for
      the
      six months ended June 30, 2007. The gross profit percentage increased to 14.2%
      for the six months ended June 30, 2008 compared to 12.4% in the same period
      of
      the prior year. Included in the Business to Business results are revenues of
      $1,086 and gross profit of $377 from the live liquidation events held in three
      separate physical locations in State of Florida.





***Other
      Revenue:*** Other
      revenue and gross profit primarily comprised of online advertising revenue
      decreased $416 or 68.5% for the six months ended June 30, 2008. The decrease
      was
      due to the strategic elimination of the advertisement revenue department. In
      the
      past, the Company sold advertising space on its website to various companies.
      Although this strategy added a revenue stream, it impacted sales on the
      Company’s website since it directed visitors away to competing websites. As a
      result of the elimination of advertisement revenue, visitors spent more time
      shopping on the Company’s website, as evidenced by the increased bidder to
      visitor percentage; 3.5% compared to 3.4% for the six months ended June, 30
      2008
      and June 30, 2007, respectively.





***Sales
      and Marketing, General and Administrative Expenses:*** SG&A
      expenses for the six months ended June 30, 2008 were $8,465, a decrease of
      $83
      or 1.0%, compared to the six months ended June 30, 2007. Non recurring expenses
      incurred in the six months ended June 30, 2008 consisted of $206 of recruiting
      fees, $114 in severance expense and $32 in investor relations expense for which
      90,000 warrants were issued as payment. The recruiting fees were primarily
      incurred as marketing staffing levels were increased to facilitate strategic
      marketing initiatives related to the Company’s restructuring plans.





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


**(Dollars
                  in Thousands)****Six
                  Month Period Ended****SG&A
                  Expenses:**
              
              **June
                  30, 2008**
              
              **June
                  30, 2007**
              
              **Increase (Decrease)**Advertising
              
              $
              775
              
              $
              1,961
              
              $
              (1,186
              )Salary
                  and benefits
              
              
              3,336
              
              
              2,522
              
              
              814Stock-based
                  compensation
              
              
              223
              
              
              365
              
              
              (142
              )Facilities
              
              
              147
              
              
              265
              
              
              (118
              )Warehouse
              
              
              391
              
              
              360
              
              
              31Credit
                  card fees
              
              
              793
              
              
              1,043
              
              
              (250
              )Telecommunications,
                  hardware and storage
              
              
              347
              
              
              324
              
              
              23Legal,
                  audit, insurance, and other regulatory fees
              
              
              722
              
              
              423
              
              
              299Depreciation
                  & amortization
              
              
              309
              
              
              409
              
              
              (100
              )Bad
                  debt
              
              
              -
              
              
              352
              
              
              (352
              )Consulting
                  and outside services
              
              
              510
              
              
              343
              
              
              167Redtag
                  Live
              
              
              627
              
              
              -
              
              
              627Dues
                  & Subscriptions
              
              
              56
              
              
              8
              
              
              48Travel
              
              
              131
              
              
              69
              
              
              62Other
                  SG&A
              
              
              98
              
              
              104
              
              
              (6
              )$
              8,465
              
              $
              8,548
              
              $
              (83
              )




Expense
      increases are summarized as follows:





Salary
      and benefits expense increased $814 or 32.3% as a result of increased staff
      levels in information technology and marketing, as overall headcount increased
      to 82 employees from 77 in prior year. The remaining increase in salary and
      benefits is primarily attributable to an increase of $114 of severance and
      $206
      in recruiting fees incurred in the six months ended June 30, 2008.





22





Stock
      based compensation decreased $142 due to the increased number of forfeited
      stock
      options during the six months ended June 30, 2008.





Warehouse
      expense increased $31 or 8.6% primarily driven by increased Business to Business
      sales volume in the current period compared to the same period of the prior
      year.





Telecommunications,
      hardware and storage expenses increased $23 as a result of price increases
      on
      maintenance contract renewals.





Legal,
      audit, insurance and other regulatory fees increased $299 or 70.7%. Legal fees
      increased $115 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 $72
      primarily due to consulting costs incurred in the evaluation of a new ERP
      system. Insurance expense increased $61 as a $63 credit was received from prior
      carriers in the six months ended June 30, 2007 and insurance coverage was
      increased in the current quarter.





Consulting
      and outside services expense increased $167 or 48.7% as new business initiatives
      were launched and outside services were brought in, including; outside services
      for the advertising department to facilitate a customer database segmentation
      project and to provide increased market research & analysis and, outside
      services for the IT department for software development and
      restructuring.





RedTag
      Live, the physical liquidation unit of the Company, was implemented in 2008
      which resulted in an increase of $627 of expenses compared to the six months
      ended June 30 2007. These expenses related to the opening of a new facility
      for
      the RedTag Live division and consisted primarily of facility, payroll and
      advertising expenses.





The
      increases in expenses were offset by the following decreases:





Depreciation
      and amortization decreased by $100 or 24.4% primarily as the result of a $118
      decrease in amortization of intangible assets, offset by an increase in
      depreciation of $18. At June 30, 2008 the Bidville intangible asset was fully
      amortized.





As
      part
      of the Company’s restructuring, we realigned our marketing efforts to better
      position the Company to manufacturers, retailers and the consumers. Advertising
      expense decreased $1,186 or 60.5% and visitor traffic decreased 2,840,000 or
      20.9% 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 $0.07 per visitor from $0.14 per
      visitor in the same period of the prior year. We have increased our advertising
      in the third quarter of 2008 realigning the resources to better fit the
      restructured company.





Facilities
      expense decreased $118 or 44.6% primarily due to the sublet of unused office
      space at our corporate office partially offset by physical store location
      rentals.





Credit
      card fees decreased $250 or 24.0%. The decrease is primarily due to lower sales
      volumes.





***Other
      Expense:*** Net
      interest expense was $35 for the six months ended June 30, 2008 compared to
      interest income of $186 for the six months ended June 30, 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 $5,362 or $0.29 per share for the six months
      ended June 30, 2008 compared to a net loss of $2,953 or $0. 15 per share for
      the
      six months ended June 30, 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 six months ended June 30, 2008 was $6,164
      compared to $2,913 used in the six months ended June 30, 2007. The net cash
      used
      in operating activities in 2008 increased primarily due to the increase in
      net
      loss, increase in cash used of $580 for inventory purchases and a $636 increase
      in accounts receivable. Also contributing to the increases in cash used was
      a
      $83 increase in prepaid expenses and a $140 decrease in accounts payable.
      Partially offsetting the increases in cash used was a $73 increase in accrued
      expenses. The increase in inventories is intended to increase products available
      for auction. Accounts receivable increased $636 primarily due to the increase
      in
      credit card receivables and increased open account sales in the Business to
      Business sales channel. The increase in credit card receivables is attributable
      to the timing of the payments by the credit card processing companies, which
      creates a lag between the sale date and the receipt of proceeds from the credit
      card processing companies.








23





Net
      cash
      used in investing activities was $473 for the six months ended June 30, 2008
      due
      primarily to the purchase of property and equipment. Net cash used in investing
      activities was $102 for the period ended June 30, 2007. The increase in
      purchases of property and equipment for the six months ended June 30, 2008
      related primarily to hardware and software purchases as IT infrastructure
      investment increased for the six months ended June 30, 2008.





Net
      cash
      provided by financing activities was $3,713 for the six months ended June 30,
      2008, compared to the net cash used of $1,415 for the same period last year.
      The
      cash inflow in 2008 is due to advances on the Wells Fargo Credit Agreement
      of
      $3,911 offset by $198 of inventory purchases financed through the flooring
      facility.





The
      non-cash investment transaction relates the purchase of the redtag.com URL
      which accounted for $203 for the six months ended June 30, 2008. This
      transaction is discussed in the intangibles section in Note 1, Basis of
      Presentation.





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 $25.0 million. 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 $7.0 million 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 $125,000 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 $125,000. As of June 30, 2008 we had
      $35,000 in deferred financing fees being amortized over the life of the Credit
      Agreement. As of June 30, 2008, the effective loan rate was 8.25%, we had an
      outstanding balance of $3,911,000.





On
      July
      25, 2008, Wells Fargo Bank notified the Company of the Company’s failure to meet
      the minimum excess availability requirement of $3.5 million. Since the Company
      did not meet the minimum excess availability requirement as stated in the
      agreement, the financial covenants went into effect which required that we
      demonstrate net earnings at the levels stated in the agreement. Due to the
      recent restructuring, the Company was unable to meet the covenants. Wells Fargo
      Bank has not elected to accelerate or call the loan at this point, but has
      put
      into effect the default interest rate of 11.25% on the outstanding balance
      of
      the loan.





In
      response to the notification of violation from Wells Fargo, the Company is
      currently evaluating several options; including, but not limited to, the payment
      of a waiver fee of $100,000 to Wells Fargo Bank along with resetting the
      covenants, complete the sale of 2.1 million shares of common stock held in
      treasury in a private offering, draw upon the Fusion Capital Equity Line or
      refinance the Wells Fargo credit facility with alternative lenders.




We
      believe that the above options in conjunction with the current working capital,
      cash flows from operations and availability under our new equity facility,
      discussed below, will be adequate to support our current operating plans for
      at
      least the next 12 months.




On
      July
      15, 2008 the Company signed a $10.0 million common stock purchase agreement
      with
      Fusion Capital Fund II, LLC, an Illinois limited liability company (“Fusion
      Capital”). Concurrently with entering into the common stock purchase agreement,
      the Company entered into a registration rights agreement with Fusion Capital.
      Under the registration rights agreement, the Company agreed to file a
      registration statement related to the transaction with the U.S. Securities
      and
      Exchange Commission (“SEC”) covering the shares that have been issued or may be
      issued to Fusion Capital under the common stock purchase agreement. The Company
      expects to file the registration statement by August 28, 2008. After the SEC
      has
      declared effective the registration statement related to the transaction, the
      Company has the right over a 24-month period to sell shares of common stock
      to
      Fusion Capital from time to time in amounts between $60,000 to $1.0 million,
      depending on certain conditions set forth in the agreement, up to an aggregate
      of $10.0 million.





In
      consideration for entering into the agreement, upon execution of the common
      stock purchase agreement the Company issued to Fusion Capital 230,074 shares
      of
      the Company’s restricted common stock as a commitment fee. Also, the Company
      will issue to Fusion Capital an additional 230,074 shares as a commitment fee
      pro rata as the Company receives the $10.0 million of future funding. The
      purchase price of the shares related to the $10.0 million of future funding
      will
      be based on the prevailing market prices of the Company’s common stock at the
      time of sales without any fixed discount, and the Company will control the
      timing and amount of any sales of shares to Fusion Capital. Fusion Capital
      shall
      not have the right or the obligation to purchase any shares of the Company’s
      common stock on any business day that the price of the Company’s common stock is
      below $0.75 per share. The common stock purchase agreement may be terminated
      by
      the Company at any time at the Company’s discretion without any cost to the
      Company. There are no negative covenants, restrictions on future funding,
      penalties or liquidated damages in the agreement. The proceeds received by
      the
      Company under the common stock purchase agreement will be used to provide
      working capital to further implement the Company’s recently announced strategic
      change to focus on liquidating excess inventories.





24




The
      Company issued the initial 230,074 shares at the agreed upon price of $1.52
      per
      share, determined based on the 20-day moving average as of the date the
      agreement was accepted. The Company will record the transaction in the quarter
      ended September 30, 2008.





**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 Chief Financial Officer, 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 Chief Financial Officer 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.





**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.




25





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





For
      the
      three months ended June 30, 2008, options to purchase an aggregate
      of 296,500 shares of the Company’s common stock were granted to
      individuals, all employees of Enable. 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**





Effective
      August 8, 2008, the Company changed its name to Enable Holdings, Inc. from
      uBid.com Holdings, Inc. The amendment to the Company’s certificate of
      incorporation was filed with the Secretary of State of the State of Delaware
      on
      August 4, 2008.





The
      name
      change was recommended by unanimous consent of the Company’s Board of Directors
      on July 14, 2008, and was approved by the written action of the Company’s
      stockholders owning more than a majority of the outstanding shares of the
      Company’s common stock. In connection with such name change, the Company’s
      ticker symbol on the NASDAQ OTC bulletin board has been changed to ENAB.OB,
      effective August 12, 2008.





**ITEM
      6. EXHIBITS**





See
      Exhibit Index on the following page.





26




**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 Chief Financial Officer 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 Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.




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**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 August 14, 2008.




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




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