**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 ________________
  **FORM
        10-Q**
 
 **x** **** **QUARTERLY
        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934**
  For
        the
        period ended **March
        31, 2006**
 
 o  **TRANSITION
        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934**
 
 **Commission
        file Number: 000-50995**
 ________________
  **uBid.com
        Holdings, Inc.**
 **(formerly
        known as Cape Coastal Trading Corporation)**
 *(Exact
        name of registrant as specified in its charter)*
  **Delaware**
              **52-2372260***(State
                  or Other Jurisdiction of*
              *(IRS
                  Employer**Incorporation
                  or Organization)*
              *Identification
                  No.)*
 
 **8550
        West Bryn Mawr, Suite 200, Chicago, Illinois 60631**
 *(Address
        of principal executive offices and zip code)*
 
 **Registrant’s
        telephone number including area code:**
 **(773)
        272-5000**
 
 **Securities
        registered pursuant to Section 12(b) of the Act:**
 **None**
 
 **Securities
        registered pursuant to Section 12(g) of the Act:**
 **Common
        Stock, par value $0.001 per share**
 (Title
        of
        Class)
 
 Indicate
        by check mark if the registrant is not required to file reports pursuant
        to
        Section 13 or Section 15(d) of the Act. Yes o No x
 
 Indicate
        by check mark whether the registrant (1) has filed all reports to be filed
        by
        Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
        12 months (or for such shorter period that the registrant was required to
        file
        such reports), and (2) has been subject to filing requirements for the past
        90
        days. Yes x No o
 
 Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, or a non-accelerated filer. See definition of “accelerated
        filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
        one):
 Large
        accelerated filer **o**     Accelerated
        filer o    Non-accelerated
        filer **x**
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Exchange
        Act Rule 12b-2). Yes o No x
 
 The
        number of shares outstanding of the registrant’s Common Stock, par value $0.001,
        as of May 12, 2006 was 20,333,333.
  
  
  **TABLE
        OF CONTENTS**
 PagePART
                    I
                Financial
                    InformationItem
                    1. Consolidated Financial StatementsConsolidated
                    Balance Sheets
                1Condensed
                    Consolidated Statements of Operations
                2Consolidated
                    Statement of Shareholders' Equity
                3Consolidated
                    Statements of Cash Flows
                4Notes
                    to Consolidated Financial Statements
                5Item
                    2. Management’s Discussion and Analysis of Financial Condition and Results
                    of Operations
                11Item
                    3. Quantitative and Qualitative Disclosures About Market Risk
                16Item
                    4. Controls and Procedures
                16PART
                    II
                Other
                    InformationItem
                    1. Legal Proceedings
                17Item
                    1A. Risk Factors
                17Item
                    2. Unregistered Sales of Equity Securities and Use of
                    Proceeds
                17Item
                    3. Default Upon Senior Securities
                17Item
                    4. Submission of Matters to a Vote of Security Holders
                17Item
                    5. Other Information
                18Item
                    6. Exhibits
                18Signatures
                19
  
 
 **PART
        I****.
        FINANCIAL INFORMATION**
  **ITEM
        1. CONSOLIDATED FINANCIAL STATEMENTS**
  **uBid.com
        Holdings, Inc**
 **Consolidated
        Balance Sheets**
 **(Dollars
        in Thousands. except par value data)**
 **March
                    31, 2006**
                
                **December
                    31, 2005**(Unaudited)**Assets****Current
                    Assets**Cash
                    and cash equivalents
                
                $
                7,008
                
                $
                21,176Restricted
                    investments
                
                
                6,659
                
                
                7,003Accounts
                    receivable, net
                
                
                2,177
                
                
                1,306Merchandise
                    inventories
                
                
                16,323
                
                
                5,989Prepaid
                    expenses and other current assets
                
                
                592
                
                
                646**Total
                    Current Assets**
                
                
                32,759
                
                
                36,120**Property
                    and Equipment, net**
                
                
                500
                
                
                524**Total
                    Assets**
                
                $
                33,259
                
                $
                36,644**Liabilities
                    and Shareholders' Equity****Current
                    Liabilities**Flooring
                    facility
                
                $
                892
                
                $
                1,612Accounts
                    payable
                
                
                5,043
                
                
                4,456Accrued
                    expensesAdvertising
                
                
                693
                
                
                397Merger
                    and offering costs
                
                
                399
                
                
                2,000Other
                
                
                1,115
                
                
                1,187Current
                    maturities of long-term debt
                
                
                307
                
                
                410**Total
                    Current **Liabilities****
                
                
                8,449
                
                
                10,062******Redeemable
                    Common Stock,**$.001
                    par value
                    (2,666,668 shares issued and
                    outstanding)
                
                
                -
                
                
                12,000**Shareholders'
                    Equity**Common
                    stock, $.001 par value (200,000,000 shares authorized;20,333,333
                    and 16,732,666 issued and outstanding, respectively)
                
                
                20
                
                
                17Stock
                    warrants
                
                
                8,086
                
                
                6,322Additional
                    paid-in-capital
                
                
                48,371
                
                
                25,907Treasury
                    stock, at cost (2,666,668 shares)
                
                
                (12,000
                )
                
                -Retained
                    deficit
                
                
                (19,667
                )
                
                (17,664
                )**Total
                    Shareholders' Equity**
                
                
                24,810
                
                
                14,582**Total
                    Liabilities and Shareholders' Equity**
                
                $
                33,259
                
                $
                36,644
 The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.
  1
 
 **uBid.com
        Holdings, Inc**
 **Condensed
        Consolidated Statements of Operations**
 **(Dollars
        in Thousands, except for per share data)**
 **(Unaudited)**
 
 **Three
                      Months Ended****March 31,****2006**
              
              **Three
                      Months Ended****March 31,****2005****Net
                  Revenues**
              
              $
              20,088
              
              $
              26,818**Cost
                  of Revenues**
              
              
              17,178
              
              
              24,164Gross
                  Profit
              
              
              2,910
              
              
              2,654**Operating
                  Expenses**General
                  and administrative
              
              
              3,534
              
              
              3,147Sales
                  and marketing
              
              
              1,525
              
              
              1,283Total
                  operating expenses
              
              
              5,059
              
              
              4,430**Loss
                  From Operations**
              
              
              (2,149
              )
              
              (1,776
              )**Interest
                  Income (Expense), net**
              
              
              146
              
              
              (417
              )**Net
                  Loss**
              
              
              (2,003
              )
              
              (2,193
              )Preferred
                  Stock Dividends
              
              
              -
              
              
              (15
              )**Net
                  Loss Available to Common Shareholders**
              
              $
              (2,003
              )
              $
              (2,208
              )**Net
                  Loss per share - Basic and****Diluted**
              
              $
              (0.10
              )
              $
              (0.89
              )**Weighted
                  Average Shares - Basic and Diluted**
              
              
              19,955,536
              
              
              2,487,107
 
 The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.
  2
 
 **uBid.com
        Holdings, Inc**
 **Consolidated
        Statement of Shareholders' Equity**
 **(Dollars
        in Thousands)**
 **(Unaudited)**
 Common
                    Stock
                
                
                
                
                
                **Treasury
                    Stock****Shares**
                
                **Dollars**
                
                **Stock****Warrants**
                
                **Paid-in****Capital**
                
                **Shares**
                
                **Dollars**
                
                **Retained****Deficit**
                
                **Total**Balance,
                    December 31, 2005
                
                
                16,732,666
                
                $
                17
                
                $
                6,322
                
                $
                25,907
                
                
                —
                
                $
                —
                
                $
                (17,664
                )
                $
                14,582Second
                    private offering
                
                
                3,000,000
                
                
                3
                
                
                1,560
                
                
                11,937
                
                
                —
                
                
                —
                
                
                —
                
                
                13,500Redemption
                    of common stock
                
                
                —
                
                
                —
                
                
                —
                
                
                12,000
                
                
                2,666,668
                
                
                (12,000
                )
                
                —
                
                
                —Stock
                    compensation expense
                
                
                —
                
                
                —
                
                
                —
                
                
                231
                
                
                —
                
                
                —
                
                
                
                
                
                231Second
                    private offering costs
                
                
                600,667
                
                
                —
                
                
                204
                
                
                (1,704
                )
                
                —
                
                
                —
                
                
                —
                
                
                (1,500
                )Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (2,003
                )
                
                (2,003
                )Balance,
                    March 31, 2006
                
                
                20,333,333
                
                $
                20
                
                $
                8,086
                
                $
                48,371
                
                
                2,666,668
                
                $
                (12,000
                )
                $
                (19,667
                )
                $
                24,810
 
 
 The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.
  3
  **uBid.com
        Holdings, Inc**
 **Consolidated
        Statements of Cash Flows**
 **(Dollars
        in Thousands)**
 **(Unaudited)**
  **Three****Months
                      Ended****March 31****2006**
              
              **Three****Months
                      Ended****March 31****2005****Cash
                  Flows From Operating Activities**Net
                  loss
              
              $
              (2,003
              )
              $
              (2,193
              )Adjustments
                  to reconcile net loss to net cash used inOperating
                  activitiesDepreciation
              
              
              69
              
              
              51Non-cash
                  compensation expense
              
              
              231
              
              
              -Changes
                  in assets and liabilitiesAccounts
                  receivable
              
              
              (871
              )
              
              (927
              )Merchandise inventories
              
              
              (10,334
              )
              
              (765
              )Prepaid expenses and other current assets
              
              
              54
              
              
              (201
              )Accounts payables
              
              
              587
              
              
              1,183Accrued expenses
              
              
              (1,377
              )
              
              (425
              )**Net
                  cash used in operating activities**
              
              
              (13,644
              )
              
              (3,277
              )**Cash
                  Flows From Investing Activities**Capital
                  expenditures
              
              
              (45
              )
              
              (20
              )Change
                  in restricted investments
              
              
              344
              
              
              -**Net
                  cash provided (used in) by investing activities**
              
              
              299
              
              
              (20
              )**Cash
                  Flows From financing Activities**Change
                  in flooring facility
              
              
              (720
              )
              
              1,256Proceeds
                  from issuance of related-party debt
              
              
              -
              
              
              2,600Proceeds
                  from second private placement, net of cash expenses
              
              
              12,000
              
              
              -Redemption
                  of common stock
              
              
              (12,000
              )
              
              -Payments
                  on long-term debt
              
              
              (103
              )
              
              (103
              )**Net
                  cash (used in) provided by financing activities**
              
              
              (823
              )
              
              3,753**Net
                  (Decrease) Increase in Cash and Cash Equivalents**
              
              
              (14,168
              )
              
              456**Cash
                  and Cash Equivalents, beginning of period**
              
              
              21,176
              
              
              1,734**Cash
                  and Cash Equivalents, end of period**
              
              $
              7,008
              
              $
              2,190**Supplemented
                  Cash Flow Disclosure**Cash
                  paid for interest
              
              $
              46
              
              $
              305Warrants
                  issued in second offering
              
              $
              1,560
              
              $
              -Shares
                  and warrants issued as stock issuance costs
              
              $
              204
              
              $
              -
 
 The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.
  4
  **UBID.COM
        HOLDINGS, INC.**
 **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **March
        31, 2006**
 **(Unaudited)**
 
 **1.**  **Basis
        of Presentation**
 
 uBid.com
        Holdings, Inc. (the “Company”) operates a leading on-line Business to Consumer
        and Business to Business marketplace that enables itself, certified merchants,
        manufacturers, retailers, distributors and small businesses to offer high
        quality excess, new, overstock, close-out, refurbished and limited supply
        brand
        name merchandise to consumer and business customers primarily located in
        the
        United States. Through the Company’s website, located at www.ubid.com, the
        Company offers merchandise across a wide range of product categories including
        but not limited to computer products, consumer electronics, apparel, 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.
 
 The
        Company’s unaudited, consolidated 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 (“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/A for
        the
        year ended December 31, 2005.
 
 The
        preparation of financial statements in accordance with U.S. generally accepted
        accounting principles requires management to make estimates and assumptions
        that
        affect the amounts reported in the Company’s Consolidated Financial Statements
        and accompanying notes. Actual results could differ materially from those
        estimates.
 
 **2.**  **Summary
        of Significant Accounting Policies**
  Since
        December 31, 2005, none of the critical accounting policies, or the Company’s
        application thereof, as more fully described in the Company’s 2005 Annual
        Report, has significantly changed. Certain critical accounting policies have
        been presented below due to the significance of related transactions during
        the
        three months ended March 31, 2006.
 
 ***Revenue
        Recognition***
 
 The
        Company sells merchandise under two types of arrangements, direct purchase
        sales
        and revenue sharing arrangements.
 
 For
        direct purchase sales, the Company is responsible for conducting the auction
        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.
  5
  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.
 
 ***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”). Prior to 2006, the Company accounted for employee stock options
        using the method of accounting prescribed by Accounting Principles Board
        Opinion
        No. 25, Accounting for Stock Issued to Employees, and associated interpretations
        using the intrinsic method. Generally, no expense was recognized related
        to its
        stock options under this method because the stock option’s exercise price was
        set at the stock’s fair market value on the date the option was
        granted.
 
 **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. Considering the retroactive reflection
        of
        the share exchange, no common stock equivalents were outstanding until December
        29, 2005.
  ****
              **March
                  31, 2006**Shares
                  subject to stock warrants
              
              
              3,063,336Shares
                  subject to stock options
              
              
              1,763,4004,826,736
   6
  **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. 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 Financial Statements reflect
        the
        impact of the merger and the resulting exchange of the Company’s common stock
        outstanding before the conversion and exercise of the convertible preferred
        stock and warrants). 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
        respective life, a risk free interest rate of 5.0%, no expected dividends
        and a
        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 a 68.0% volatility.
        Issuance costs, including the value of the warrants, were $4.7
        million.
 
 On
        February 3, 2006, the Company completed the second part of the
        private offering of Units to accredited investors. In this offering, the
        Company sold 3,000,000 shares of its common stock and warrants to
        purchase 750,002 shares of its common stock on the same terms as
        described above for an aggregate of $13.5 million. The Company also
        redeemed the 2,666,668 shares of common stock issued in connection with the
        merger and the first private offering that were subject to
        redemption at a price of $4.50 per share and issued 600,667 shares of common
        stock (valued at $4.50 per share) to shareholders of Cape Coastal prior to
        the
        merger 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 $3.2 million.
  7
 
 **5.**  **Stock-Based
        Compensation**
 
 Effective
        January 1, 2006, uBid adopted the fair value recognition provision of SFAS
        123R, using the modified prospective transition method and therefore has
        not
        restated results for prior periods. Under this transition method, stock-based
        compensation expense for the first quarter of 2006 includes compensation
        expense
        for all stock-based compensation awards granted prior to, but not yet vested
        as
        of March 31, 2006, based on the grant date fair value estimated in
        accordance with the original provision of SFAS No. 123, Accounting for
        Stock-Based Compensation” (SFAS 123”). Stock-based compensation expense for all
        stock-based compensation awards granted after January 1, 2006 is based
        on the grant-date fair value estimated in accordance with the provisions
        of SFAS
        123R. The Company recognizes these compensation costs on a straight-line
        basis over the requisite service period of the award which is generally the
        option vesting term of four years. The total compensation expense related
        to the
        stock option plan for the three months ended March 31, 2006 is approximately
        $0.2 million.
 
 **6.**  **2005
        Equity Incentive Plan**
 
 The
        2005
        Equity Incentive Plan (the “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 awards
        (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
        Plan. If an incentive award granted pursuant to the Plan expires, terminates,
        is
        unexercised or is forfeited, or if any shares are surrendered to uBid in
        connection with an incentive award, the shares subject to such award and
        the
        surrendered shares will become available for further awards under the Plan.
        On
        December 29, 2005, uBid granted options under the Plan to purchase 1,721,700
        shares of common stock to certain officers and other employees.
 
 All
        of
        the options issued on December 29, 2005 under the Plan will expire on December
        29, 2015 if not exercised prior to that date. None of the options granted
        under
        the Plan on December 29, 2005 were issued for cash consideration collected
        from
        the participants. The options were granted to participants on the basis of
        services to be provided to the Company by the participants. Prior to December
        29, 2005, there were no outstanding stock options.
 
  8
  The
        fair
        value of the 72,000 options awarded during the quarter ended March 31, 2006
        was
        estimated using the Black-Sholes option pricing model with the following
        assumptions:
 
 **Three
                  Months**
                **Ended**
                **March
                  31, 2006**Significant
                  assumptions (weighted average):Risk
                  -free rate
              
              
              5
              %Dividend
                  yield
              
              
              0.0
              %Expected
                  volatility
              
              
              68.0
              %Expected
                  life (years)
              
              
              4
  The
        risk-free interest rate is based on the U.S. Treasury Bill rates at the time
        of
        grant. 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. The Company estimated
        the volatility of its common stock at the date of grant based on the historical
        volatility of its industry and competitors’ stock. The expected term of the
        options is based on what the Company believes will be representative of future
        behavior.
 
 
 The
        following is a summary of all of the Company’s stock option activity and related
        information for the three months ended March 31, 2006:
 
 **Shares
                  under option**
              
              **Weighted-average
                  exercise** **price per share**December
                  31, 2005
              
              
              1,721,700
              
              $
              2.08Granted
              
              
              72,400
              
              
              3.73Exercised
              
              
              -
              
              
              -Surrendered
              
              
              (30,700
              )
              
              2.08March
                  31, 2006
              
              
              1,763,400
              
              $
              2.15
 
 **Exercise**
                **Price**
              ****
              **Number**
                **Outstanding
                  at**
                **March
                  31, 2006**
              ****
              **Weighted**
                **Average**
                **Remaining**
                **Contractual**
                **Life**
              ****
              **Weighted**
                **Average**
                **Exercise**
                **Price**
              ****
              **Number**
                **Exercisable
                  at**
                **March
                  31, 2006**
              ****
              **Weighted**
                **Average**
                **Exercise**
                **Price**$4.50
              
              
              1,691,000
              
              
              
              9.7
              
              
              $
              2.08
              
              
              -
              
              $
              2.08$7.10
              
              
              1,600
              
              
              
              9.8
              
              
              $
              3.92
              
              
              -
              
              $
              3.92$6.50
              
              
              300
              
              
              
              9.9
              
              
              $
              3.59
              
              
              -
              
              $
              3.59$6.75
              
              
              70,500
              
              
              
              10.0
              
              
              $
              3.73
              
              
              -
              
              $
              3.731,763,400
              
              
              
              9.8
              
              
              $
              2.15
              
              
              -
              
              $
              2.15
 
 The
        aggregate intrinsic value of the outstanding options (the difference between
        the
        closing stock price on the last trading day of the first quarter of 2006
        of
        $6.40 per share and the exercise price, multiplied by the number of in the
        money
        options) that would have been received by the option holders had all the
        option
        holders exercised their options on March 31, 2006 was $3.2 million. This
        amount
        will change based on changes in the fair market value of the Company’s common
        stock.
 
 As
        of
        March 31, 2006, $3.6 million of total unrecognized compensation cost related
        to
        stock options is expected to be recognized over a weighted-average period
        of
        3.75 years.
  9


**7.**  **Subsequent
        Events**
 
 Pursuant
        to registration rights related to many of the securities issued in the December
        2005 and February 2006 transactions, the Company was required to register
        certain shares for resale within 120 days of the December 29, 2005 closing
        or
        incur liquidated damages, in cash, in the amount of 1.0% of the purchase
        price
        paid for such securities by the investors for each month until the registration
        statement is declared effective by the SEC. A registration statement on Form
        S-1
        was filed within the required period, but was selected for review by the
        SEC,
        which has delayed the effectiveness of the registration statement. On April
        28,
        2006, the Company became obligated to pay $0.4 million for liquidated damages
        and will have to pay additional amounts for each month after April 28, 2006
        that
        the registration statement is not declared effective.  The
        Company intends to request an amendment to the securities purchase agreement
        and
        waiver of the liquidated damages.   There is no assurance one will be
        granted.
  On
        May 9, 2006, the Company and its 100%-owned subsidiary, uBid, Inc. 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 uBid, Inc. of up
        to a maximum of $25.0 million. The amount actually available to us will
        vary from time to time, depending on, among other factors, the amount of
        our
        eligible inventory and the amount of our eligible accounts receivable. The
        obligations under the Credit Agreement and all related agreements are secured
        by
        all of uBid, Inc.’s 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 Agreement bear interest at a base rate (Wells Fargo Bank's
        prime rate) or LIBOR plus 2.5%. The Credit Agreement requires us to pay a
        prepayment fee of $0.5 million if we terminate the Credit Agreement during
        its
        first year, $0.4 million if we terminate the Credit Agreement during its
        second
        year and $0.1 million if we terminate the Credit Agreement during the third
        year. The Credit Agreement also requires us to pay a variety of other fees
        and
        expenses, including minimum monthly interest of $.01 million.
  10
 
 **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 condensed consolidated
        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/A
        for the fiscal year ended December 31, 2005. uBid.com Holdings, Inc. is a
        holding company for uBid, Inc., our operating business. For purposes of this
        Quarterly Report, unless otherwise indicated or the context otherwise requires,
        all references herein to “uBid,” “we,” “us,” and “our” refer to uBid.com
        Holdings, Inc. and our subsidiary.
 
 **Overview**
 
 We
        operate an online marketplace located at www.ubid.com offering
        new, close-out, overstock and refurbished 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, housewares, watches, jewelry,
        travel, sporting goods, home improvement products and collectibles.
  Our
        business model provides value for consumers, manufacturers, distributors,
        retailers and other approved third party merchants. Consumers shop in a
        trustworthy and secure online marketplace and have the opportunity to bid
        their
        own prices on popular, brand-name products realizing product savings of
        generally 20% to 80% off retail prices. Our online marketplace provides
        merchants with an efficient and economical distribution channel for maximizing
        revenue on their merchandise. Merchants can monetize overstock and close-out
        inventory, expand their customer base and increase sales without compromising
        existing distribution channels.
  Our
        business model consists of two distinct business channels: uBid Direct and
        the
        UCM Program.
  We
        purchase merchandise outright in the uBid Direct channel. 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 by allowing prescreened third party
        merchants to sell their product through our online marketplace. 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 currently
        offers 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 five million members.
  11
  **Executive
        Commentary**
  ***Success
        Measures*** :
        Our
        management believes that the most important financial and non-financial measures
        that track our progress include sales, orders shipped, website traffic, number
        of orders, inventory turnover, 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:
  ***Number
        of Orders***
  This
        represents the total number of orders shipped in a specified period. We analyze
        the number of orders 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
        generated within a given time period. We analyze average order value primarily
        to monitor costs and other operating expenses.
  ***Visitors***
  A
        Visitor
        is a consumer who voluntarily clicks through to the website (uBid.com) using
        an
        online 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.
  ***Approved
        UCM Vendors***
  Vendors
        that have gone through the approval process to sell merchandise through our
        website.
  **Q2**
                **2004**
              
              **Q3**
                **2004**
              
              **Q4**
                **2004**
              
              **Q1**
                **2005**
              
              **Q2**
                **2005**
              
              **Q3**
                **2005**
              
              **Q4**
                **2005**
              
              **Q1**
                **2006****Measure**Number
                  of orders (in thousands)Direct
              
              
              39
              
              
              33
              
              
              41
              
              
              46
              
              
              39
              
              
              36
              
              
              43
              
              
              36uBid
                  Certified Merchant
              
              
              49
              
              
              43
              
              
              50
              
              
              51
              
              
              64
              
              
              72
              
              
              93
              
              
              87Total
                  orders
              
              
              88
              
              
              76
              
              
              91
              
              
              97
              
              
              103
              
              
              108
              
              
              136
              
              
              123Average
                  Order ValueDirect
              
              $
              531
              
              $
              613
              
              $
              511
              
              $
              443
              
              $
              493
              
              $
              495
              
              $
              398
              
              $
              465uBid
                  Certified Merchant
              
              $
              94
              
              $
              101
              
              $
              104
              
              $
              119
              
              $
              106
              
              $
              112
              
              $
              108
              
              $
              107Visitors
                  (in thousands)
              
              
              4,526
              
              
              5,523
              
              
              7,245
              
              
              6,829
              
              
              7,545
              
              
              8,287
              
              
              7,051
              
              
              6,369Approved
                  UCM Vendors
              
              
              55
              
              
              53
              
              
              70
              
              
              169
              
              
              202
              
              
              401
              
              
              628
              
              
              949
 
 ***Revenue
        Source*** :
 
        We derive our revenue from sales of products to businesses, consumers, and
        direct sales to businesses. 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. 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.
  12
  Our
        revenue is dependent in part on sales of products provided by Sony Electronics,
        Inc (Sony). and Hewlett-Packard Company (HP). Sony related products represent
        14.0% of sales for quarter ended March 31, 2006 compared to 36.8% for the
        quarter ended March 31, 2005. HP related products represented 9.2% of sales
        for
        the quarter ended March 31, 2006 compared to 14.5 % for the quarter ended
        March
        31, 2005. No other supplier represented more than 5% of our net revenues
        for any
        period presented.
 
 ***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 and related party interest on borrowings. Interest expense
        on advances from related parties is primarily based on an annual interest
        rate
        of 14%.
 
 **Results
        of Operations**
 
 The
        following table sets forth, for the periods presented, certain data from
        our
        statement of income 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.
 
 **Three
                  months ended March 31****2006**
              
              **2005****(Dollars
                  in thousands)**Net
                  Revenues
              
              $
              20,088
              
              
              100.0
              %
              $
              26,818
              
              
              100.0
              %Cost
                  of Revenue
              
              
              17,178
              
              
              85.5
              %
              
              24,164
              
              
              90.1
              %Gross
                  margin
              
              
              2,910
              
              
              14.5
              %
              
              2,654
              
              
              9.9
              %General
                  and administrative
              
              
              3,534
              
              
              17.6
              %
              
              3,147
              
              
              11.7
              %Sales
                  and marketing
              
              
              1,525
              
              
              7.6
              %
              
              1,283
              
              
              4.8
              %Total
                  operating expenses
              
              
              5,059
              
              
              25.2
              %
              
              4,430
              
              
              16.5
              %Loss
                  from operations
              
              
              (2,149
              )
              
              (10.7
              )%
              
              (1,776
              )
              
              (6.6
              )%Interest
                  and other, net
              
              
              146
              
              
              0.7
              %
              
              (417
              )
              
              (1.6
              )%Net
                  Loss
              
              
              (2,003
              )
              
              (10.0
              )%
              
              (2,193
              )
              
              (8.2
              )%Preferred
                  Stock Dividend
              
              
              —
              
              
              —
              
              
              (15
              )
              
              —Net
                  Loss Available to Common Shareholders
              
              $
              (2,003
              )
              
              (10.0
              )%
              $
              (2,208
              )
              
              (8.2
              )%
  13
 
 **Comparison
        of Three Months ended March 31, 2006 and Three Months ended March 31,
        2005**
 
 ***Net
        Revenues:*** Net
        revenues for the quarter ended March 31, 2006 were $20.1 million, a decrease
        of
        $6.7 million, or 25.0%. Direct consumer revenues decreased $4.2 million or
        20.0%
        while direct business revenues decreased $2.9 million or 52.3% and UCM revenues
        increased $0.4 million or 124% over the quarter ended March 31, 2005.
 
 Direct
        revenues decreased primarily as a result of decreased volumes and average
        sales
        prices of desktop computers. Desktop computer sales decreased 69.1% over
        the
        same prior year period. The decrease in desktops was mitigated by growth
        in Home
        and Garden and Video merchant categories. The growth percentages were 793.5%
        and
        211.0%, respectively. In addition, traffic to the website quarter over quarter
        was down 6.7%.
 
 Total
        orders increased by 26,000 or 26.8% to 123,000 at March 31, 2006. Direct
        orders
        decreased by 10,000 or 21.7%. UCM orders increased by 36,000 or 70.6% from
        51,000 to 87,000. The total number of approved UCM vendors to sell on the
        website grew from 169 in March 2005 to 949, or 461%, in March 2006.
 
 We
        will
        continue to concentrate significant resources to drive UCM revenue growth
        by
        increasing the participation of merchants in our UCM program. We are increasing
        our inventory investment with the $25.4 million proceeds from the first private
        offering to reverse the decline in direct sales.
  
 ***Gross
        Profit:*** Gross
        profit for quarter ended March 31, 2006 was $2.9 million, an increase of
        $0.3 million or 9.6% compared to the quarter ended March 31, 2005. The
        increase was primarily a result of the increased UCM net revenues and higher
        margins in the Direct Business channel. The Direct Business margin percentage
        increased from 3.5% in the quarter ended March 31, 2005 to 14.5% for the
        quarter
        ended March 31, 2006 due to the change in sales mix. Overall gross profit
        as a
        percentage of net revenues increased to 14.5% from 9.9% respectfully.
  14
 
 ***Sales
        and Marketing, General and Administrative Expenses:*** SG&A
        expenses for the quarter ended March 31, 2006 were $5.1 million, an increase
        of
        $0.6 million or 14.2%, compared to quarter ended March 31, 2005. The increase
        in
        Advertising expenses of $0.2 million or 18.8% was primarily due to the increased
        online marketing rates for Business to Consumer traffic and increased spending
        on the Business to Business (UCM) vendor lead generation program. The cost
        per
        visitor for Business to Consumer channel increased 32.2% from ¢14.9 per visitor
        to ¢19.7. The Business to Business channel had a cost of acquisition of $144
        per
        merchant from December 31, 2005. There were no marketing programs for Business
        to Business (UCM) in the prior year quarter. General & Administrative
        expenses increased by $0.4 million or 12.3% from the quarter ended March
        31,
        2005. Of the total increase, $0.2 million was due to an increase in legal,
        accounting, and D&O insurance expenses required for our various public
        filings. Salary and benefits increased $0.2 million from the same prior year
        period due to the hiring of two senior members of the management team and
        selected employee increases. This increase was offset by the decrease of
        $0.2
        million in Telecommunications, Hardware and Storage fees. The decrease is
        related to the expiration of some equipment leases and other favorable pricing
        with storage fees. Warehouse expenses increase $0.1 million from the same
        prior
        year period due to the acquisition of additional warehouse space required
        for
        the business to business product and overall growth in inventory. The increase
        in 2006 was offset by the elimination of related party management fees of
        $0.1
        million. In addition, $0.2 million was incurred related to stock based
        compensation expense.
 
 
 
 **SG&A
                  Expenses:**
              
              **Three
                  Month**
                **Period
                  Ended**
                **March
                  31, 2006**
              
              **Three
                  Month**
                **Period
                  Ended**
                **March
                  31, 2005**
              
              **Increase
                  (Decrease)****(Dollars
                  in millions)**Stock-based
                  Compensation
              
              $
              0.2
              
              $
              —
              
              $
              0.2Salary
                  and Benefits
              
              
              1.8
              
              
              1.6
              
              
              0.2Warehouse
                  Expense
              
              
              0.3
              
              
              0.2
              
              
              0.1Depreciation
              
              
              0.1
              
              
              0.1
              
              
              —Advertising
                  Expense
              
              
              1.3
              
              
              1.1
              
              
              0.2Credit
                  Card Fees
              
              
              0.7
              
              
              0.6
              
              
              0.1Telecommunications,
                  Hardware and Storage
              
              
              0.2
              
              
              0.4
              
              
              (0.2
              )Legal,
                  Audit, Insurance, and other Regulatory Fees
              
              
              0.3
              
              
              0.1
              
              
              0.2Facilities
                  Expense
              
              
              0.2
              
              
              0.2
              
              
              —Related
                  Party Management Fees
              
              
              —
              
              
              0.1
              
              
              (0.1
              )Other
                  SG&A
              
              
              —
              
              
              0.1
              
              
              (0.1
              )$
              5.1
              
              $
              4.5
              
              $
              0.6
 
 
 ***Other
        Expense:*** Interest
        income was $0.1 million for the quarter ended March 31, 2006 versus interest
        expense of $0.4 million for the quarter ended March 31, 2005. We retired
        all of
        our debt after the capital raise on December 29, 2005, resulting in a reduction
        of interest expense and an increase in interest income in the first quarter
        of
        2006.
 
 ***Net
        Losses:*** We
        experienced a net loss of $2.0 million or $.10 per share for the quarter
        ended
        March 31, 2006 compared to a net loss of $2.2 million or $.89 per share for
        the
        quarter ended March 31, 2005.
  ***Liquidity
        and Capital Resources***
 
 Historically,
        our primary sources of capital had been cash flow from operations and loans
        from
        affiliated parties. More recently, our primary source of cash flow has been
        from
        operations and the $29.5 million raised in the December 29, 2005 private
        offering.
  15
 
 Net
        cash
        used in operating activities for quarter ended March 31, 2006 was $13.6 million,
        compared to $3.3 million used in the quarter ended March 31, 2005. Inventory
        for
        the period ending March 31, 2006 increased $10.3 million or 172.5% from December
        31, 2005. We are increasing our inventory investment with the proceeds received
        from the first private offering to increase product available for auction
        and
        reverse the decline in direct sales.
  Net
        cash
        provided by investing activities was $0.3 million for quarter ended
        March 31, 2006 primarily from a decrease in restricted investments as a result
        of the expiration of letters of credit that were no longer
        required.
 
 Net
        cash
        used in financing activities was $0.8 million for quarter ended March 31,
        2006
        compared to a cash inflow of $3.8 million for quarter ended March 31, 2005.
        The
        cash outflow for the three months ended March 31, 2006 was primarily for
        $1.5
        million in payments made related to the merger and offering costs. In addition,
        $0.7 million in payments on the IBM flooring facility were made. For the
        quarter
        ended March 31, 2005, the Company had related party borrowings to fund the
        operating losses and working capital needs.
 
 On
        February 6, 2006, we redeemed a total of 2,666,668 shares of common stock
        issued subject to redemption in the merger and first part of the offering,
        at a redemption price of $4.50 per share.  We also issued 600,667 shares of
        common stock to our financial advisor, Calico Capital Group.  Finally,
        we issued additional warrants to purchase 90,000 shares of our common stock
        to
        our placement agents, which warrants are exercisable for five years at an
        exercise price of $4.50 and the value of which, $0.2 million, was recorded
        as
        additional costs of the equity issuance.
 
 We
        currently estimate that we will incur material commitments for capital
        expenditures equal to $1.0 million for systems upgrades which shall be made
        in the third and fourth quarters of 2006.
 
 We
        believe that current working capital, together with cash flows from operations
        and current cash will be adequate to support our current operating plans
        for at
        least the next 12 months.
  **ITEM
        3.****QUANTITATIVE
        AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**
  We
        currently have no exposure to risks of fluctuating interest rates or fluctuating
        currency exchange rates. It is our policy not to enter into derivative financial
        instruments. Accordingly, we do not believe that changes in interest or currency
        rates will have a material effect on our liquidity, financial condition or
        results of operations.
  **ITEM
        4.****CONTROLS
        AND PROCEDURES**
 
 *Disclosure
        Controls and Procedures.* uBid
        maintains disclosure controls and procedures that have been designed to ensure
        that information related to uBid 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
        senior manager in charge of investor relations, principal risk management
        officer, chief information officer and certain other members of our senior
        management.
  16
 
 Our
        Chief
        Executive Officer and Vice President, Finance, with the participation of
        the
        compliance committee, evaluated the effectiveness of the design and operation
        of
        our 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 our disclosure controls and procedures,
        our Chief Executive Officer and Vice President, Finance believe that, as
        of the
        end of the period covered by this Quarterly Report, our disclosure controls
        and
        procedures are effective to ensure that information required to be disclosed
        by
        us in the reports we file or submit 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 our internal control over financial reporting identified
        in the evaluation that occurred during our first quarter of fiscal year 2006
        that have materially affected, or are reasonably likely to materially affect,
        our internal control over financial reporting.
 
 **PART
        II OTHER INFORMATION**
 
 **ITEM
        1.**  **LEGAL
        PROCEEDINGS**
 
 From
        time
        to time we may be named in claims arising in the ordinary course of business.
        Currently, no legal proceedings or claims are pending against us or involve
        us
        that, in the opinion of our 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 our Annual
        Report on Form 10-K for the year ended December 31, 2005, which could materially
        affect our business, financial condition or future results. The risks described
        in our Annual Report on Form 10-K is not the only risks facing the Company.
        Additional risks and uncertainties not currently known to us or that are
        currently deemed to be immaterial also may materially adversely affect our
        business, financial conditions and/or operating results.
 
 **ITEM
        2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
        PROCEEDS**
 
 During
        the quarter ended March 31, 2006, options to purchase an aggregate of 72,400
        shares of our common stock were granted to employees. Options to purchase
        an
        aggregate of 1,600 shares at $7.10 per share were granted on January 15,
        2006,
        options to purchase an aggregate of 300 shares at $6.50 per share were granted
        on February 14, 2006, and options to purchase an aggregate of 70,500 shares
        at
        $6.75 per share were granted on March 15, 2006. The options all have a term
        of
        ten years and vest in four annual increments beginning on the anniversary
        date
        of 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. All other sales
        and
        issuances of unregistered securities in the quarter ended March 31, 2006
        were
        previously reported in our Current Report on Form 8-K filed with the Securities
        and Exchange Commission on February 3, 2006.
 
 **ITEM
        3. DEFAULT UPON SENIOR SECURITIES**
 
 None
 
 **ITEM
        4.****SUBMISSION
        OF MATTERS TO A VOTE OF SECURITY HOLDERS**
  None,
        except as previously disclosed in Information Statements filed with the
        Securities and Exchange Commission on January 20, 2006 and January 30, 2006,
        respectively, pursuant to Section 14C.
  17
 
 **ITEM
        5. OTHER INFORMATION**
 
 None
 
 **ITEM
        6.**  **EXHIBITS**
 
 See
        Exhibit Index on page following signature pages.
  18
 
 **SIGNATURES**
 
 Pursuant
        to requirements of Section 13 or 15(d) of the Securities Exchange Act of
        1934,
        the Registrant has duly caused this report to be signed on its behalf by
        the
        undersigned, thereunto duly authorized as of May 12, 2006.
 **UBID.COM
                  HOLDINGS, INC.**By:
              /s/ Miguel A. Martinez, Jr.Name:  Miguel
                  A. Martinez, Jr.
                Title:    
                  Vice President, Finance
                (Principal
                  Financial Officer and Principal Accounting
                  Officer)
  19
  **EXHIBIT
        INDEX**
 
 **Exhibit
                  No.**
              
              **Description**31.1
              
              Certification
                  of the President and Chief Executive Officer pursuant to Section
                  302 of
                  the Sarbanes-Oxley Act of 2002.31.2
              
              Certification
                  of the Vice President, Finance pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.32.1
              
              Certification
                  of the President and Chief Executive Officer pursuant to 18 U.S.C.
                  Section
                  1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
                  Act of
                  2002.32.2
              
              Certification
                  of the Vice President, Finance pursuant to 18 U.S.C. Section 1350,
                  as
                  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.
 
  20