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, 2010





 ̈
            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
      EmployerIncorporation
      or Organization)
            Identification
      No.)





1140
W. Thorndale Avenue, Itasca, Illinois 60143


(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
 ̈





Indicate
by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such a shorter period that
the registrant was required to submit and post such files.) Yes x No  ̈





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  ̈
        Accelerated filer  ̈      
Non-accelerated filer  ̈
    Smaller reporting company x





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





The
number of shares outstanding of the registrant’s Common Stock, par value $0.001,
as of June 30, 2010 was 19,726,678.










ENABLE
HOLDINGS, INC.


TABLE
OF CONTENTS





PART
      I. FINANCIAL INFORMATIONItem
      1
                                              Financial
      StatementsConsolidated
      Condensed Balance Sheets - June 30, 2010 (unaudited) and December 31,
      2009
                                              
                                              3Consolidated
      Condensed Statements of Operations – Three and Six Months Ended June 30,
      2010 and 2009 (unaudited)
                                              
                                              4Consolidated
      Condensed Statement of Shareholders’ Equity – Six Months Ended June 30,
      2010 (unaudited)
                                              
                                              5Consolidated
      Condensed Statements of Cash Flows – Six Months ended June 30, 2010 and
      2009 (unaudited)
                                              
                                              6Notes
      to Unaudited Consolidated Condensed Financial Statements
                                              
                                              7Item
      2
                                              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                              
                                              17Item
      3
                                              Quantitative
      and Qualitative Disclosures About Market Risk
                                              
                                              27Item
      4
                                              Controls
      and Procedures
                                              
                                              27PART
      II. OTHER INFORMATIONItem
      1
                                              Legal
      Proceedings
                                              
                                              27Item
      1A
                                              Risk
      Factors
                                              
                                              27Item
      2
                                              Unregistered
      Sales of Equity Securities and Use of Proceeds
                                              
                                              28Item
      3
                                              Default
      Upon Senior Securities
                                              
                                              28Item
      4
                                              Submission
      of Matters to a Vote of Security Holders
                                              
                                              28Item
      5
                                              Other
      Information
                                              
                                              28Item
      6
                                              Exhibits
      Index
                                              
                                              28Signatures
                                              
                                              29





2




PART
1. FINANCIAL INFORMATION




ITEM 1. FINANCIAL
STATEMENTS





ENABLE
HOLDINGS, INC. and Subsidiaries


Consolidated Condensed  Balance
Sheets


(Dollars
in Thousands, except per share amounts)




As ofJune 30, 2010
                  
                  
                  December 31, 2009(unaudited)AssetsCurrent
      AssetsCash
      and cash equivalents
                  
                  $
                  80
                  
                  
                  $
                  1,018Accounts
      receivable, less allowance for doubtful accounts of $3 and $3,
      respectively
                  
                  
                  45
                  
                  
                  
                  200Merchandise
      inventories, less reserve for obsolescence of $193 and $25,
      respectively
                  
                  
                  918
                  
                  
                  
                  433Reserve
      deposit
                  
                  
                  242
                  
                  
                  
                  569Prepaid
      expenses and other current assets
                  
                  
                  215
                  
                  
                  
                  172Total
      Current Assets
                  
                  
                  1,500
                  
                  
                  
                  2,392Property
      and Equipment, net
                  
                  
                  2,054
                  
                  
                  
                  2,337Purchased
      Intangible Assets, net
                  
                  
                  202
                  
                  
                  
                  202Total
      Assets
                  
                  $
                  3,756
                  
                  
                  $
                  4,931Liabilities
      and Shareholders' DeficitCurrent
      LiabilitiesAccounts
      payable
                  
                  $
                  5,545
                  
                  
                  $
                  6,977Accrued
      expenses:Other
                  
                  
                  797
                  
                  
                  
                  1,458Due to former bridge note holder
                  
                  
                  -
                  
                  
                  
                  700Deferred
      rent
                  
                  
                  34
                  
                  
                  
                  42Convertible
      notes
                  
                  
                  758
                  
                  
                  
                  -Notes
      payable
                  
                  
                  1,892
                  
                  
                  
                  -Flooring
      facility
                  
                  
                  2,151
                  
                  
                  
                  535Total
      Current Liabilities
                  
                  
                  11,177
                  
                  
                  
                  9,712Long-term
      notes payable
                  
                  
                  -
                  
                  
                  
                  1,904Shareholders'
      DeficitCommon
      stock, $.001 par value (200,000,000 shares authorized;
      19,726,678  outstanding at June 30, 2010 and December
      31,2009)
                  
                  $
                  22
                  
                  
                  $
                  22Preferred
      stock, $.002 par value (2,697,205 and 2,497,205 issued and outstanding at
      June 30, 2010 and December 31, 2009, respectively)
                  
                  
                  5
                  
                  
                  
                  5Stock
      subscription receivable
                  
                  
                  -
                  
                  
                  
                  (1,354
                  )Treasury
      stock, 2,135,550 shares of common stock, at cost
                  
                  
                  (2,242
                  )
                  
                  
                  (2,242
                  )Additional
      paid-in-capital
                  
                  
                  51,827
                  
                  
                  
                  50,625Accumulated
      deficit
                  
                  
                  (57,033
                  )
                  
                  
                  (53,741
                  )Total
      Shareholders' Deficit
                  
                  $
                  (7,421
                  )
                  
                  $
                  (6,685
                  )Total
      Liabilities and Shareholders' Deficit
                  
                  $
                  3,756
                  
                  
                  $
                  4,931





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 per share amounts)


(Unaudited)





Three Months Ended
                
                
                Six Months EndedJune 30,
                
                
                June 30,2010
                
                
                2009
                
                
                2010
                
                
                2009Net
      Revenues
                
                $
                3,604
                
                
                $
                2,979
                
                
                $
                6,594
                
                
                $
                8,073Cost
      of Revenues
                
                
                3,112
                
                
                
                1,934
                
                
                
                5,353
                
                
                
                5,799Gross
      Profit
                
                
                492
                
                
                
                1,045
                
                
                
                1,241
                
                
                
                2,274Operating
      ExpensesGeneral
      and administrative
                
                
                1,777
                
                
                
                2,857
                
                
                
                3,236
                
                
                
                5,724Sales
      and marketing
                
                
                146
                
                
                
                293
                
                
                
                290
                
                
                
                588Total
      operating expenses
                
                
                1,923
                
                
                
                3,150
                
                
                
                3,526
                
                
                
                6,312Loss
      From Operations
                
                
                (1,431
                )
                
                
                (2,105
                )
                
                
                (2,285
                )
                
                
                (4,038
                )Other
      Income (Expense)Interest
      (expense) income, net
                
                
                (930
                )
                
                
                (537
                )
                
                
                (1,052
                )
                
                
                (1,229
                )Miscellaneous
      income (expense)
                
                
                (10
                )
                
                
                (22
                )
                
                
                45
                
                
                
                (22
                )Loss
      on financial instruments
                
                
                -
                
                
                
                (356
                )
                
                
                -
                
                
                
                (404
                )Total
      Other Expense
                
                
                (940
                )
                
                
                (915
                )
                
                
                (1,007
                )
                
                
                (1,655
                )Net
      Loss
                
                $
                (2,371
                )
                
                $
                (3,020
                )
                
                $
                (3,292
                )
                
                $
                (5,693
                )Net
      Loss per share - Basic and Diluted
                
                $
                (0.12
                )
                
                $
                (0.16
                )
                
                $
                (0.17
                )
                
                $
                (0.29
                )Weighted
      Average Shares - Basic and Diluted
                
                
                19,726,678
                
                
                
                19,358,722
                
                
                
                19,726,678
                
                
                
                19,358,722





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





4




ENABLE
HOLDINGS, INC. and Subsidiaries


Consolidated Condensed Statement of
Shareholders’ Equity


(Dollars
in Thousands, except per share amounts)


(Unaudited)





Common Stock
                    
                    
                    Preferred Stock
                    
                    
                    Paid-in
                    
                    
                    Treasury Stock
                    
                    
                    Subscriptions
                    
                    
                    AccumulatedShares
                    
                    
                    Dollars
                    
                    
                    Shares
                    
                    
                    Dollars
                    
                    
                    Capital
                    
                    
                    Shares
                    
                    
                    Dollars
                    
                    
                    Receivable
                    
                    
                    Deficit
                    
                    
                    TotalBalance,
      December 31, 2009
                    
                    
                    19,726,678
                    
                    
                    $
                    22
                    
                    
                    
                    2,497,205
                    
                    
                    $
                    5
                    
                    
                    $
                    50,625
                    
                    
                    
                    2,135,550
                    
                    
                    $
                    (2,242
                    )
                    
                    $
                    (1,354
                    )
                    
                    $
                    (53,741
                    )
                    
                    $
                    (6,685
                    )Stock
      compensation expense
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    20
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    20Preferred stock
      issuance (1)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,354
                    
                    
                    
                    -
                    
                    
                    
                    1,354Preferred stock
      issuance (2)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    200,000
                    
                    
                    
                    -
                    
                    
                    
                    500
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    500Beneficial conversion
      option (3)
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    682
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    682Net
      Loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (3,292
                    )
                    
                    
                    (3,292
                    )Balance,
      June 30, 2010
                    
                    
                    19,726,678
                    
                    
                    $
                    22
                    
                    
                    
                    2,697,205
                    
                    
                    $
                    5
                    
                    
                    $
                    51,827
                    
                    
                    
                    2,135,550
                    
                    
                    $
                    (2,242
                    )
                    
                    $
                    -
                    
                    
                    $
                    (57,033
                    )
                    
                    $
                    (7,421
                    )





(1) Proceeds received from
preferred stock subscriptions receivable.


(2) Issued 200,000 shares of
preferred stock at $2.50 per share. Proceeds of $500 received.


(3) Beneficial conversion
option at issuance of $758 of Convertible Notes convertible at $0.10 per
share.





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





5




ENABLE
HOLDINGS, INC. and Subsidiaries


Consolidated
Condensed Statement of Cash Flows


(Dollars
in Thousands, except per share data)


(Unaudited)





Six months ended June 30,2010
                        
                        
                        2009Cash
      Flows From Operating ActivitiesNet
      loss
                        
                        $
                        (3,292
                        )
                        
                        $
                        (5,693
                        )Adjustments
      to reconcile net loss to net cash used in operating
    activitiesDepreciation
      and amortization
                        
                        
                        335
                        
                        
                        
                        278Non-cash
      stock compensation expense
                        
                        
                        20
                        
                        
                        
                        99Interest
      on warrants issued 90-day bridge loan
                        
                        
                        -
                        
                        
                        
                        757Common
      stock and warrants issued for services
                        
                        
                        -
                        
                        
                        
                        967Loss
      on derivative liability
                        
                        
                        -
                        
                        
                        
                        468Interest
      on beneficial conversion option on convertible notes
                        
                        
                        682
                        
                        
                        
                        -Changes
      in assets and liabilities:Accounts
      receivable
                        
                        
                        154
                        
                        
                        
                        480Merchandise
      inventories
                        
                        
                        (485
                        )
                        
                        
                        323Prepaid
      expenses and other current assets
                        
                        
                        284
                        
                        
                        
                        (955
                        )Accounts
      payable
                        
                        
                        (1,432
                        )
                        
                        
                        1,774Accrued
      expenses
                        
                        
                        (661
                        )
                        
                        
                        (581
                        )Deferred
      rent
                        
                        
                        (8
                        )
                        
                        
                        -Net
      cash (used in) provided by operating activities
                        
                        
                        (4,403
                        )
                        
                        
                        (2,083
                        )Cash
      Flows From Investing ActivitiesCapital
      expenditures
                        
                        
                        (51
                        )
                        
                        
                        (468
                        )Change
      in restricted cash
                        
                        
                        -
                        
                        
                        
                        178Net
      cash used in investing activities
                        
                        
                        (51
                        )
                        
                        
                        (290
                        )Cash
      Flows From Financing ActivitiesProceeds
      from flooring facility
                        
                        
                        5,389
                        
                        
                        
                        1,582Payments
      on flooring facility
                        
                        
                        (3,773
                        )
                        
                        
                        (439
                        )Proceeds
      from convertible debenture
                        
                        
                        -
                        
                        
                        
                        1,315Payment
      to bridge note holder
                        
                        
                        (700
                        )
                        
                        
                        (100
                        )Proceeds
      from preferred stock issuance
                        
                        
                        1,854
                        
                        
                        
                        -Proceeds
      from convertible notes
                        
                        
                        758
                        
                        
                        
                        -Payments
      on 6% L-T note payable
                        
                        
                        (12
                        )
                        
                        
                        -Net
      cash provided by financing activities
                        
                        
                        3,516
                        
                        
                        
                        2,358Net
      (Decrease) Increase in Cash and Cash Equivalents
                        
                        
                        (938
                        )
                        
                        
                        (15
                        )Cash
      and Cash Equivalents, beginning of period
                        
                        
                        1,018
                        
                        
                        
                        99Cash
      and Cash Equivalents, end of period
                        
                        $
                        80
                        
                        
                        $
                        84Supplemented
      Cash Flow DisclosureCash
      paid for interest
                        
                        $
                        511
                        
                        
                        $
                        408





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





6




Notes
to Unaudited Consolidated Condensed Financial Statements (Dollars in Thousands,
except per share amounts)





Note
1. Basis of presentation





Enable
Holdings, Inc. (the "Company" or "Enable"), operates leading on-line
websites that allow 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. Through the Company's websites, located at www.uBid.com and
www.RedTag.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, automobiles, home
improvement products and collectibles. The Company's marketplace employs a
combination of auction style and fixed price formats.





Each
of the Company’s current business segments provides a combination of solutions
for sellers to efficiently liquidate their excess inventory. The segments are
listed below:





1)
            uBid.com:The
      Company’s flagship website, which has operated for 13 years. The
      website allows merchants to sell excess inventory and allows consumers to
      buy products in an auction or fixed price
  format.




2)
            RedTag.com:The
      Company’s fixed price internet site offers name brand merchandise
      with a low shipping and handling fee of only
  $1.95.




3)
            RedTag
      Live:The Company’s live liquidation group, dedicated to
      selling through the traditional in-store sales and live liquidation
      sales.




4)
            Dibu Trading
      Company:A wholesale inventory liquidation company
      dedicated to Business-to-Business (“B2B”) solutions, providing
      manufacturers and distributors the ability to sell large quantities of
      excess inventory. For example, when a retailer needs to liquidate a large
      quantity of inventory, they contact the Company to find a buyer that will
      buy the entire inventory in a single transaction. Our B2B experience
      allows us to present deals to multiple interested buyers to attain the
      highest possible recovery for the
seller.




5)
            Commerce
      Innovations:A software service company which licenses auction
      software to third party companies. Companies, businesses and governments
      can use the Company’s platform to sell excess furniture, appliances,
      autos, and other surplus. This allows them to utilize a trusted platform
      while reducing live auction costs, as well as an efficient way to reach a
      wider target audience.





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, 2009. 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 condensed 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.





7




Note
2. New accounting pronouncements




In
January 2010, the FASB issued Accounting Standards Update No. 2010-06 (“ASU
2010-06”), “Fair Value Measurements and Disclosures (Topic 820): Improving
Disclosures about Fair Value Measurements.” ASU 2010-06 requires reporting
entities to make new disclosures about recurring or nonrecurring fair value
measurements including significant transfers into and out of Level 1 and
Level 2 fair value measurements and information on purchases, sales,
issuances, and settlements on gross basis in the reconciliation of Level 3
fair value measurements. ASU 2010-06 is effective for annual reporting periods
beginning after December 15, 2009, except for Level 3 reconciliation
disclosures which are effective for annual periods beginning after
December 15, 2010. The adoption of ASU 2010-06 did not have a material
impact on the Company’s financial statements.




Note
3. Summary of significant accounting policies




1)
            Revenue
      recognition




The
Company’s business currently consists of three distinct channels: Certified
Merchant (CM), Managed Supply and Cash Recovery. The Company sells merchandise
through the CM Program channel by allowing prescreened third party merchants to
sell their product through our online marketplace to consumers and
businesses.  The Company does not take title to this merchandise and
therefore does not bear the related inventory risk. In the CM Program, the
Company is the primary obligor to whom payment is due, but it bears no inventory
or returns risk, so the Company records only its commission as revenue. Through
the Managed Supply channel, the Company sells inventory that is consigned to it.
The inventory is either stored at the Company’s warehouse or the sellers’
therefore the Company records only its commission as revenue. The Company
purchases merchandise outright in the Cash Recovery channel and sells to
consumers and businesses. On this merchandise, the Company bears 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. In
all instances where the credit card authorization has been received but
merchandise has not been shipped, the Company defers revenue recognition until
the merchandise is shipped.





Sales are
reported net of estimated returns and allowances which we estimate based upon
recent historical information such as return rates experience. Management also
considers any other current information and trends in making estimates. If
actual sales return and allowances are greater than estimated by management,
additional expenses may be incurred.





2)
            Shipping and handling
      costs




Shipping
costs that are billable to the customer are included in revenue and 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 during 2009 and direct
warehouse costs in 2010 are included in general and administrative expenses and
were $6 and $128 for the quarters ended June 30, 2010 and 2009, respectively.
Handling costs for the six months ended June 30, 2010 and 2009 were $15 and
$303, respectively.





3)
            Intangibles




Each
reporting period, the Company evaluates its intangible assets to determine
whether events and circumstances continue to support an indefinite useful life,
and record an impairment charge if needed. No impairment was recorded at June
30, 2010.





Note
4. Earnings (loss) per share





The
Company computes both the basic and diluted loss per share. Basic loss per share
is computed by dividing the loss available to common stockholders 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,
                  
                  2010
                  
                  
                  2009Shares
      subject to stock warrants
                  
                  
                  -
                  
                  
                  
                  59,921,423Shares
      subject to stock options
                  
                  
                  1,000,000
                  
                  
                  
                  5,416,694Shares
      subject to Series A Preferred Stock
                  
                  
                  180,254,210
                  
                  
                  
                  -Shares
      subject to Convertible Notes
                  
                  
                  7,580,000
                  
                  
                  
                  -188,834,210
                  
                  
                  
                  65,338,117





Earnings
per share for the six months ended June 30, 2010 and 2009 were $(0.17) and
$(0.29), respectively.




8




4)
            Derivative financial
      instruments




As a
result of the adoption of ASC 815 (formerly EITF 07-5), the Company is required
to “Determine the Fair Value of a Financial Asset When the Market for That Asset
Is Not Active”, and to disclose the fair value measurements required by ASC
820-10, “Fair
Value Measurements and Disclosures.” The derivative liability recorded at fair
value in the balance sheet as of the adoption of ASC 815 on March 31, 2009 is
categorized based upon the level of judgment associated with the inputs used to
measure its fair value. Hierarchical levels, defined by ASC 820-10, are directly
related to the amount of subjectivity associated with the inputs to fair
valuations of these liabilities are as follows:





Level 1 —
Inputs are unadjusted, quoted prices in active markets for identical assets or
liabilities at the measurement date;




Level 2 —
Inputs other than Level 1 inputs that are either directly or indirectly
observable; and




Level 3 —
Unobservable inputs, for which little or no market data exist, therefore require
an entity to develop its own assumptions.





As of June 30, 2010 there was no
outstanding derivative liability.





9




Note
5. Financing Arrangements





On
January 16, 2009, the Company received extensions from certain accredited
investors who previously made commitments for an aggregate of $2,550 in the form
of 90-day bridge loans which extended the original maturity date of January 12,
2009 by an additional 90 days (the “Bridge Note Holders”).  During the
first quarter of 2009, the Company paid off $100 associated with the bridge
loans and negotiated further extensions. On December 11, 2009, the Company
entered into a restructuring agreement under which the Bridge Note Holders were
paid $700 in cash and received a 24 month note for $900 with interest payable at
6% annually. The interest is paid quarterly and the principal is due quarterly
starting in the second year of the loan. The Bridge Note Holders forgave all
principal and interest due under the original notes in exchange for 877,511
shares of Series A Preferred Stock.





In March
2009, the Company completed a private placement offering to accredited
investors. Investors purchased units, with each unit consisting of a senior
convertible debenture for one share of common stock of the Company, and a
warrant, depending on the date of investment, to acquire either two shares or
one share of common stock for ten years at a purchase price of $0.25 per share.
The debentures paid interest at a rate of 12% per annum, had a term of 30 months
and were convertible into the Company’s common stock at any time at the option
of the investor. The Company received $1,315 which was held in an escrow account
until April 29, 2009. The Company used the proceeds to pay operating expenses
and to fulfill immediate inventory requirements. Of the $1,315 proceeds
received, $25 was used for legal expenses while $60 was paid to the brokers who
assisted with the offering. On December 11, 2009, the Company entered into a
restructuring agreement with the secured debenture holders and as part of the
restructuring the secured debenture holders received interest due under the 12%
debenture and a note for $822 which bears interest at an annual rate of 6%.
Interest is payable quarterly and the note is due in 24 months. The secured
debenture holders also received 119,694 shares of Series A Preferred Stock and
forgave previously issued debt.





On
October 9, 2009, the Company received a $500 loan in the form of 2009
convertible promissory notes provided from a group of accredited investors. The
Company repaid the loan in full on December 2, 2009.





During
the fourth quarter of 2009 the Company entered into a restructuring agreement
with the Bridge Note Holders. As part of the restructuring, the Bridge Note
Holders received $700 in cash and were issued a $900 note that is due in 24
months. The note bears interest at a 6% annual rate. Interest is payable
quarterly and the note plus any accrued interest is payable starting 15 months
from the closing date. The Bridge Note Holders forgave previously issued debt,
canceled all the warrants received and received 877,511 shares of Series A
Preferred Stock.  Per ASC 470-60 – Accounting for Troubled Debt
Restructuring, a gain was recorded for the difference between the fair market
value of the preferred stock issued and the fair value of the debt forgiven and
warrants surrendered.





In
connection with the debt restructuring, two long term notes for $900 and $822
both of which both bear interest at a rate of 6% per annum, were issued by the
Company. The $900 note was issued to the Bridge Note Holders and is payable in
quarterly installments starting in March, 2011. The $822 note was issued to the
12% debenture holders, interest is payable quarterly and is due, along with any
accrued interest in 24 months. All previously issued debt was forgiven in
conjunction with the restructuring agreement.




June 30
                    
                    Note 1
                    
                    
                    Note 2
                    
                    
                    TotalFace
      Value
                    
                    $
                    900
                    
                    
                    $
                    822
                    
                    
                    $
                    1,722Interest
                    
                    
                    78
                    
                    
                    
                    92
                    
                    
                    
                    170Note
      Value
                    
                    $
                    978
                    
                    
                    $
                    914
                    
                    
                    $
                    1,892




As of
July 31, 2010 the accrued interest due June 30, 2010 was not paid on either of
the notes.





During
December 2009, 1,500,000 shares of Series A Preferred Stock were sold to
accredited investors at $2.50 per share. At December 31, 2009 the Company had
commitments to purchase all 1,500,000 shares. The Company received $2,396 in
cash and the remaining $1,354 was recorded as a subscription receivable. All
monies were received by February 24, 2010. Each share of Series A Preferred
Stock is convertible into 66.83 shares of common stock. The Series A Preferred
Stock has a liquidation preference equal to a minimum Internal Rate of Return of
25%, but cannot exceed three times the investment amount.





On May
29, 2010, the Company signed $800 notes to fund a RedTag Live event in Omaha,
NE. Proceeds of the notes were used for operating expenses and inventory
purchases for the event. The notes were due on June 29, 2010 and accrue interest
at a rate of 1.0% per week. The Company repaid $42 of principal on June 15,
2010.





The notes
contained a conversion option in the event of a default. In the event of a
default, the note holders at their sole discretion can elect to convert all or a
portion of the note to shares of common stock. The shares of common stock shall
be valued at $0.10 per share for purposes thereof or, approximately 7,580,000
shares in aggregate. Per ASC 470-20-25 the Company recorded the beneficial
conversion option on the convertible notes as interest expense of $682 during
the current period ended June 30, 2010.





Due to
lower than projected results at the RedTag Live event, at July 31, 2010 the
Company is in default of the terms of the note. The Company is currently
discussing options with the note holders.





Note
6. 2005 Equity Incentive Plan and Stock Based Compensation





The
Company’s 2005 Equity Incentive Plan is an equity-based compensation plan to
provide incentives, 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”).





At
December 31, 2009 all outstanding options were canceled. In connection with the
restructuring and fund raising a substantial amount of equity was issued. The
number of shares authorized to be issued under the plan as approved by the
Company’s stockholders on May 11, 2010 is 25,000,000.  If an Incentive
Award granted pursuant to the 2005 Equity Incentive Plan expires, terminates, is
unexercised or is forfeited, or if any shares are surrendered to the
Company in connection with an Incentive Award, the shares subject to such
award and the surrendered shares will become available for future awards under
the 2005 Equity Incentive Plan. Options generally vest over a period of four
years and have a ten year contractual life.





10




The
Company measures the cost of employee service received in exchange for a share
based award (stock options and restricted stock) based on the fair value of the
award. The Company recognizes stock-based 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.





Stock
options





Stock
option activity under the Company’s 2005 Equity Incentive Plan for the three
months ended June 30, 2010 follows:





Shares
                    
                    
                    Weighted-
                      Average
                      exercise price
                      pershareOutstanding
      at December 31, 2009
                    
                    
                    -
                    
                    
                    $
                    -Granted
                    
                    
                    1,000,000
                    
                    
                    
                    0.07Exercised
                    
                    
                    -
                    
                    
                    
                    -Forfeited/Cancelled/Surrendered
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      at March 31, 2010
                    
                    
                    1,000,000
                    
                    
                    $
                    0.07Granted
                    
                    
                    -
                    
                    
                    
                    -Exercised
                    
                    
                    -
                    
                    
                    
                    -Forfeited/Cancelled/Surrendered
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      at June 30, 2010
                    
                    
                    1,000,000
                    
                    
                    $
                    0.07Exercisable
      at June 30, 2010
                    
                    
                    250,000
                    
                    
                    $
                    0.07





The fair
value of the stock options granted under the Company’s 2005 Equity Incentive
Plan was estimated using the Black-Scholes option pricing model with the
following weighted average assumptions:





June
      30,2010
                  
                  
                  2009Risk
      - free interest rate
                  
                  
                  5.0
                  %
                  
                  
                  5.0
                  %Dividend
      yield
                  
                  
                  0.0
                  %
                  
                  
                  0.0
                  %Expected
      volatility
                  
                  
                  70.0
                  %
                  
                  
                  68.0
                  %Expected
      life (years)
                  
                  
                  10.0
                  
                  
                  
                  6.0Weighted
      average grant date fair value
                  
                  $
                  0.04
                  
                  
                  $
                  1.36Estimated
      forfeiture rate (1)
                  
                  
                  0.0
                  %
                  
                  
                  5.0
                  %





(1)The stock compensation
expensed during the period ended June 30, 2009 and June 30, 2010 were
insignificant, thus the Company forgoed adjusting the expense for estimated
forfeitures. The Company will evaluate the expense for future periods for actual
forfeitures





The
risk-free interest rate is based on 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 do so in the foreseeable-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.




11




The
following table presents additional information regarding outstanding and
exercisable options at June 30, 2010.





Outstanding
                        
                        
                        ExercisableExercise
                          Price
                        
                        Number
                          Outstanding at
                          June 30, 2010
                        
                        
                        Weighted
                          Average
                          Exercise Price
                        
                        
                        Weighted Average
                          Remaining
                          Contractual Life
                        
                        
                        Number
                          Exercisable at
                          June 30, 2010
                        
                        
                        Weighted
                          Average
                          Exercise Price.01
      - 2.00
                        
                        
                        1,000,000
                        
                        
                        $
                        0.07
                        
                        
                        
                        9.60
                        
                        
                        
                        250,000
                        
                        
                        $
                        0.072.01
      - 4.00
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -4.01
      - 5.00
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -1,000,000
                        
                        
                        $
                        0.07
                        
                        
                        
                        9.60
                        
                        
                        
                        250,000
                        
                        
                        $
                        0.07




As of
June 30, 2010 there was $36 of total unrecognized compensation cost related to
the non-vested option awards under the Equity Incentive Plan that is expected to
be recognized over the remaining vesting period of the non-vested option
awards.





Restricted
Stock





As of
June 2010, there was no unvested restricted common stock
outstanding.





Stock–based
Compensation Expense





Stock-based
compensation expense recognized under the 2005 Equity Incentive Plan for the six
months ended June 30, 2010 and 2009 was as follows:




(Dollars
      in Thousands)Six
      Months Ended June 30, 20102010
                            
                            
                            2009Stock
      Options
                            
                            $
                            20
                            
                            
                            $
                            99


12




Note
7. Common Stock warrants and Series A Convertible Preferred Stock





There are no warrants outstanding as of
June 30, 2010. All warrants were canceled in December 2009 in conjunction with
the debt restructuring described in Note 5.





Series
A Convertible Preferred Stock





There are
25,000,000 shares authorized of preferred stock with preferences and rights to
be determined by our Board of Directors. In December 2009, as part of a debt
restructuring, the Board of Directors approved the issuance of 3,000,000 shares
of Series A Preferred Stock. At December 31, 2009 there were 2,497,205 shares of
Series A Preferred Stock issued and outstanding. During the first quarter of
2010 an additional 200,000 shares of Series A Preferred Stock were issued for a
total of 2,697,205 shares of Series A Preferred Stock issued and outstanding at
June 30, 2010.





The Series A Preferred Stock was issued
to the Bridge Note Holders and the 12% debenture holders as part of a debt
restructuring during the fourth quarter of 2009. The Bridge Note Holders
received 877,511 shares of Series A Preferred Stock and forgave all previously
issued debt. In addition to the receipt of Series A Preferred Stock, the Bridge
Note Holders received $700 in cash and received a note for $900 which bears
interest at an annual rate of 6%. The Bridge Note Holders also agreed to cancel
all their outstanding warrants.





In conjunction with the restructuring,
the 12% debenture holders received 119,694 shares of Series A Preferred Stock.
In addition, they received a note for $822 which bears interest at an annual
rate of 6%. The 12% debenture holders received all interest accrued and payable.
The 12% debenture holders also agreed to cancel all their outstanding
warrants.





The remaining 1,500,000 shares of
Series A Preferred Stock were sold to accredited investors at $2.50 per share.
At December 31, 2009 the Company had commitments to purchase all 1,500,000
shares. The Company received $2,396 in cash and the remaining $1,354 was
recorded as a subscription receivable. All monies were received by February 24,
2010. During the quarter ended March 31, 2010 an additional 200,000 shares of
Series A Preferred Stock were sold to accredited investors at $2.50 per share.
The Series A Preferred Stock is convertible into 66.83 shares of common stock
per share of Series A Preferred Stock. The Series A Preferred Stock has a
liquidation preference of a minimum Internal Rate of Return of 25% but no more
than three times the investment amount.





As part
of the debt restructuring, all options issued to employees under the 2005 Equity
Incentive Plan were canceled. Employees received no consideration for the
cancellations.





The
restructuring of the bridge notes and 12% debentures was accounted for in
accordance with ASC 470-60 – Accounting for Troubled Debt Restructuring, and
resulted in a gain being recorded for the difference between the fair market
value of the Series A Preferred Stock issued and the fair value amount of the
debt forgiven and warrants surrendered.





13




Note 8.  Long-Term Debt





During
the fourth quarter of 2009 the Company entered into a restructuring agreement
with the Bridge Note Holders. As part of the restructuring, the Bridge Note
Holders were to receive $700 in cash and were issued a $900 note. The note bears
interest at a 6% annual rate. Interest on the note is payable quarterly. The
note is payable starting 15 months from the closing date. The Bridge Note
Holders forgave previously issued debt, canceled all the warrants received and
received 877,511 shares of Series A Preferred Stock.  Per ASC 470-60 –
Accounting for Troubled Debt Restructuring a gain was recorded for the
difference between the fair market value of the preferred stock issued and the
fair value of the debt forgiven and warrants surrendered.





In
connection with the debt restructuring, two long term notes for $900 and $822
both of which bear interest at a rate of 6% per annum. Interest
on the note is payable quarterly. The note balance is due in 24 months from the
closing date.





All
previously issued debt was forgiven in conjunction with the restructuring
agreement.





As of
July 31, 2010 the Company was in default and interest due June 30, 2010 has not
been paid.




Note 9.  Flooring Facility





During
2010 and 2009, the Company entered into multiple short-term inventory financing
arrangements with various investors. The arrangements allow the Company to
finance inventory purchases for which interest is accrued at a rate of .50% per
week to 1% per week. At June 30, 2010 and 2009 the liability related to such
financing arrangements totaled $2,151 and $1,513 respectively. At June 30, 2010
the Company is in default of the terms of the notes. The Company is currently
discussing options with the note holders.




Note
10. Segment Information





During 2008,
the Company commenced efforts to change its business model. Concurrent with this
change, the Company reorganized the segments based on the business units. Each
segment provides a combination of seller solutions for sellers to efficiently
liquidate their inventory. The seller solutions offered by the Company are:
Certified Merchant (CM), Managed Supply and Cash Recovery. Each of the business
segments, except commerce innovations, can offer the three seller
solutions.





14




The
revenue and gross profit breakdown based on the Company’s five business segments
is as follows:


(The
Company does not summarize expenses based on the segments).




(Dollars in Thousands)Three months Ended June 30,
                                                        
                                                        
                                                        Six months Ended June 30,Net Revenue
                                                        
                                                        2010
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        2009
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        2010
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        2009uBid,com
                                                        
                                                        $
                                                        2,215
                                                        
                                                        
                                                        
                                                        61.5
                                                        %
                                                        
                                                        $
                                                        1,579
                                                        
                                                        
                                                        
                                                        53.0
                                                        %
                                                        
                                                        $
                                                        4,303
                                                        
                                                        
                                                        
                                                        65.3
                                                        %
                                                        
                                                        $
                                                        4,264
                                                        
                                                        
                                                        
                                                        52.8
                                                        %RedTag.com
                                                        
                                                        
                                                        388
                                                        
                                                        
                                                        
                                                        10.8
                                                        %
                                                        
                                                        
                                                        119
                                                        
                                                        
                                                        
                                                        4.0
                                                        %
                                                        
                                                        
                                                        747
                                                        
                                                        
                                                        
                                                        11.3
                                                        %
                                                        
                                                        
                                                        246
                                                        
                                                        
                                                        
                                                        3.0
                                                        %RedTag
      Live
                                                        
                                                        
                                                        422
                                                        
                                                        
                                                        
                                                        11.7
                                                        %
                                                        
                                                        
                                                        11
                                                        
                                                        
                                                        
                                                        0.4
                                                        %
                                                        
                                                        
                                                        422
                                                        
                                                        
                                                        
                                                        6.4
                                                        %
                                                        
                                                        
                                                        803
                                                        
                                                        
                                                        
                                                        9.9
                                                        %Dibu
      Trading Co.
                                                        
                                                        
                                                        579
                                                        
                                                        
                                                        
                                                        16.1
                                                        %
                                                        
                                                        
                                                        1,270
                                                        
                                                        
                                                        
                                                        42.6
                                                        %
                                                        
                                                        
                                                        1,122
                                                        
                                                        
                                                        
                                                        17.0
                                                        %
                                                        
                                                        
                                                        2,760
                                                        
                                                        
                                                        
                                                        34.2
                                                        %Commerce
      Innovations
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -Total
                                                        
                                                        $
                                                        3,604
                                                        
                                                        
                                                        
                                                        100.0
                                                        %
                                                        
                                                        $
                                                        2,979
                                                        
                                                        
                                                        
                                                        100.0
                                                        %
                                                        
                                                        $
                                                        6,594
                                                        
                                                        
                                                        
                                                        100.0
                                                        %
                                                        
                                                        $
                                                        8,073
                                                        
                                                        
                                                        
                                                        100.0
                                                        %Gross ProfituBid,com
                                                        
                                                        $
                                                        530
                                                        
                                                        
                                                        
                                                        107.7
                                                        %
                                                        
                                                        $
                                                        887
                                                        
                                                        
                                                        
                                                        84.9
                                                        %
                                                        
                                                        $
                                                        1,180
                                                        
                                                        
                                                        
                                                        95.1
                                                        %
                                                        
                                                        $
                                                        1,801
                                                        
                                                        
                                                        
                                                        79.2
                                                        %RedTag.com
                                                        
                                                        
                                                        45
                                                        
                                                        
                                                        
                                                        9.1
                                                        %
                                                        
                                                        
                                                        17
                                                        
                                                        
                                                        
                                                        1.6
                                                        %
                                                        
                                                        
                                                        87
                                                        
                                                        
                                                        
                                                        7.0
                                                        %
                                                        
                                                        
                                                        34
                                                        
                                                        
                                                        
                                                        1.5
                                                        %RedTag
      Live
                                                        
                                                        
                                                        (104
                                                        )
                                                        
                                                        
                                                        (21.1
                                                        )%
                                                        
                                                        
                                                        2
                                                        
                                                        
                                                        
                                                        0.2
                                                        %
                                                        
                                                        
                                                        (109
                                                        )
                                                        
                                                        
                                                        (8.8
                                                        )%
                                                        
                                                        
                                                        187
                                                        
                                                        
                                                        
                                                        8.2
                                                        %Dibu
      Trading Co.
                                                        
                                                        
                                                        21
                                                        
                                                        
                                                        
                                                        4.3
                                                        %
                                                        
                                                        
                                                        139
                                                        
                                                        
                                                        
                                                        13.3
                                                        %
                                                        
                                                        
                                                        83
                                                        
                                                        
                                                        
                                                        6.7
                                                        %
                                                        
                                                        
                                                        252
                                                        
                                                        
                                                        
                                                        11.1
                                                        %Commerce
      Innovations
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -Total
                                                        
                                                        $
                                                        492
                                                        
                                                        
                                                        
                                                        100.0
                                                        %
                                                        
                                                        $
                                                        1,045
                                                        
                                                        
                                                        
                                                        100.0
                                                        %
                                                        
                                                        $
                                                        1,241
                                                        
                                                        
                                                        
                                                        100.0
                                                        %
                                                        
                                                        $
                                                        2,274
                                                        
                                                        
                                                        
                                                        100.0
                                                        %Gross Profit
      %uBid,com
                                                        
                                                        
                                                        23.9
                                                        %
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        56.2
                                                        %
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        27.4
                                                        %
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        42.2
                                                        %RedTag.com
                                                        
                                                        
                                                        11.6
                                                        %
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        14.3
                                                        %
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        11.6
                                                        %
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        13.8
                                                        %RedTag
      Live
                                                        
                                                        
                                                        (24.6
                                                        )%
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        18.2
                                                        %
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (25.8
                                                        )%
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        23.3
                                                        %Dibu
      Trading Co.
                                                        
                                                        
                                                        3.6
                                                        %
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        10.9
                                                        %
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        7.4
                                                        %
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        9.1
                                                        %Commerce
      Innovations
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        -Total
                                                        
                                                        
                                                        13.7
                                                        %
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        35.1
                                                        %
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        18.8
                                                        %
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        28.2
                                                        %





Note
11. Related Party Transactions





At June
30, 2010, the Company had an outstanding balance of $176 in unpaid Board of
Directors fees. A member of the Company’s Board of Directors has provided
inventory financing during the six months ended June 30, 2010 and was owed $234
in loan principal at June 30, 2010.




Note
12. Going Concern





The
accompanying consolidated financial statements have been prepared assuming that
we will continue as a going concern, considering we realize the assets and
liquidate the liabilities in the normal course of business. As of June 30, 2010
we had accumulated a deficit of approximately $57 million.  Over the
last twelve years and through the second quarter of 2010, we have incurred
losses due to operational problems, capital constraints and a change in our
business model. During 2006 and 2007 the Company’s operations were funded by the
capital raised during our 2005/2006 private offerings. During 2008 the Company
had fully utilized these funds and drew on our bank line of credit. However,
after the second quarter of 2008 the Company did not meet the established bank
covenants and was required to pay off the outstanding balance. Due to the
Company’s recurring losses we could not obtain new bank financing. Instead
during 2008, 2009 and 2010 we received financing from our investors to fund our
operations through the issuance of various debt instruments. We have also
utilized short term financing deals in order to make inventory purchases. During
2009 the Company restructured our financing, reducing our debt from $4.6 million
to $1.9 million. We also issued preferred stock, raising approximately $4.2
million. Most of this capital raised was used to pay off our outside vendors
therefore we need to either raise additional capital, obtain financing or
increase revenue in order for operations to continue. The current credit market
remains volatile which affects our ability to raise long-term capital financing
and inventory financing needed to run our business. This, coupled with our lack
of cash, significantly reduces the Company’s ability to pursue the plans noted
below. This creates substantial doubt about our ability to continue as a going
concern.





15





Management’s
plans to continue operations consist of the following:





·
            Negotiate
      loan default cures with lenders,


·
            Increase
      available inventory for sale through establishing an asset based lending
      credit line (ABL) of approximately
$3,000,


·
            Raise
      additional long term equity
capital,


·
            Increase
      revenues through focused marketing to customers in our robust data base
      reestablishing our sites as ones that appeal to the diversified
      demographics of the group,


·
            Increase
      revenues through the introduction of diversified product lines to serve
      the asset recovery industry,


·
            Increase
      revenues by completing the installation of our ERP application allowing us
      to provide all the requirements necessary for our vendors and Certified
      Merchants to sell product through us both domestically and
      globally,


·
            Increase
      revenues through the introduction of transaction fees and restructuring of
      CM vendor rate card, and


·
            Execute
      revised business plan under new leadership and expanded
    board.





As a
result of the conditions discussed above, and in accordance with generally
accepted accounting principles in the United States, there exists substantial
doubt about our ability to continue as a going concern. Our continued operations
are contingent on our ability to be successful in implementing the above plans.
There is no assurance that we will be successful in these efforts, therefore
there is substantial doubt as to our ability to have sufficient cash to meet our
operating requirements and continue as a going concern. The accompanying
consolidated financial statements do not reflect adjustments relating to the
recoverability and classification of assets or liabilities that might result
from the outcome of these uncertainties.





Note
13. Subsequent Events





The
Company has evaluated subsequent events through the date financial statements
were issued.





The
Convertible Notes with a balance of $758 matured on June 29, 2010 and principal
and interest due were unpaid as of the date the financial statements were
issued. The Convertible Notes are convertible in the event of a default for the
failure to make any payment of interest or principal when
due.   In the event of a default, the note holders at their sole
discretion can elect to convert a portion of the note to shares of common stock
at $0.10 per share. The Company is currently conducting negotiations with the
convertible note holders.





During
2010 and 2009, the Company entered into multiple short-term inventory financing
arrangements with various investors. At July 31, 2010 the Company is in default
of the terms of the notes. The Company is currently discussing options with the
note holders.





On August
6, 2010, Amy Powers, Vice President Technology and Commerce of Enable Holdings,
Inc. (the "Company") resigned to pursue new business opportunities. The Company
is beginning the process of analyzing replacement options.





On August
6, 2010, Timothy E. Takesue, Executive Vice President Merchandising of the
Company resigned from his current position and effective immediately took on the
position of Vice President Special Projects.





16




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, 2009. 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, 2009. 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 leading online websites located at www.uBid.com and
www.RedTag.com,
respectively. The two websites offer high quality excess, new, overstock,
close-out, recertified 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 minimize the potential for fraud by certifying all merchants
and processing 100% of all transactions between buyers and sellers. Our online
properties offer brand-name merchandise from over 200 product categories
including computer products, consumer electronics, apparel, house wares,
watches, jewelry, travel, sporting goods, home improvement products and
collectibles.





Our
current business model provides value for consumers, manufacturers,
distributors, retailers and other approved third party merchants. Consumers shop
in a trustworthy and secure online environment 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 properties provide 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 three distinct business channels: Certified
Merchant (CM), Managed Supply and Cash Recovery.




We sell
merchandise through the CM 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 CM 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. Through the Managed Supply channel, we sell inventory
that is consigned to us. The inventory is either stored at our warehouse or at
the sellers’ therefore the Company records only its commission as revenue. We
purchase merchandise outright in the Cash Recovery channel 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. 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 properties are 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.





We conduct live liquidation events at
various times throughout the year.  Live sales are conducted over a
short period of time (usually a week) and all the merchandise is sold
locally.





17





Our
current seven proprietary selling solutions within the five operating divisions
are:





·
            uBid.com: Our flagship
      website, which has operated for 13 years. The website allows merchants to
      sell excess inventory and allows consumers to buy products in an auction
      price format.




·
            RedTag.com: Our fixed
      price internet site offers name brand merchandise with a low shipping and
      handling fee of only $1.95.





·
            RedTag Live: Our live
      liquidation group, dedicated to selling through the traditional in-store
      sales and live liquidation sales.





·
            Dibu Trading Co.: A
      wholesale inventory liquidation company dedicated to Business-to-Business
      solutions, providing manufacturers and distributors the ability to sell
      large quantities of excess inventory. For example, when a retailer needs
      to liquidate a large quantity of inventory, they contact us to find a
      buyer that will buy the entire inventory in a single transaction. Our B2B
      experience allows us to present deals to multiple interested buyers to
      attain the highest possible recovery for the
  seller.





·
            Commerce Innovations: A
      software service company which licenses auction software to third party
      companies. Companies, businesses and governments can use our platform to
      sell excess furniture, appliances, autos, and other surplus. This allows
      them to utilize a trusted platform while reducing live auction costs, as
      well as an efficient way to reach a wider target
  audience.





The
Company’s current financial results during the first and second quarter of 2010
as well as results in 2008 and 2009 were negatively impacted by the planned
change in the business model and the severe global economic downturn. We have
made major changes to our traditional operations as we transition to the new
business model.





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 migrating fixed price listings to
the RedTag platform based on the new business model. The reduction in the number
of unprofitable listings improved our auction success rate and provides
efficiencies to both buyers and sellers on our platform.




Executive Commentary





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:




2010
                
                
                2009
                
                
                2008uBid.com
                
                Quarter 2
                
                
                Quarter 1
                
                
                Quarter 4
                
                
                Quarter 3
                
                
                Quarter 2
                
                
                Quarter 1
                
                
                Quarter 4
                
                
                Quarter 3GMS
      (in thousands)
                
                $
                4,238
                
                
                $
                4,604
                
                
                $
                4,103
                
                
                $
                5,113
                
                
                $
                9,555
                
                
                $
                11,821
                
                
                $
                12,374
                
                
                $
                14,385Number
      of Orders (in thousands)
                
                
                35
                
                
                
                36
                
                
                
                43
                
                
                
                52
                
                
                
                70
                
                
                
                81
                
                
                
                94
                
                
                
                95Average
      Order Value
                
                $
                121
                
                
                $
                126
                
                
                $
                95
                
                
                $
                98
                
                
                $
                137
                
                
                $
                145
                
                
                $
                131
                
                
                $
                152Visitors
      to Bidders %
                
                
                3.2
                %
                
                
                3.2
                %
                
                
                2.5
                %
                
                
                1.8
                %
                
                
                3.3
                %
                
                
                3.1
                %
                
                
                2.9
                %
                
                
                3.3
                %Auctions
      Closed (in thousands)
                
                
                720
                
                
                
                441
                
                
                
                367
                
                
                
                371
                
                
                
                373
                
                
                
                377
                
                
                
                383
                
                
                
                215Auction
      Success Rate
                
                
                3.7
                %
                
                
                6.6
                %
                
                
                9.1
                %
                
                
                10.0
                %
                
                
                13.0
                %
                
                
                14.4
                %
                
                
                15.0
                %
                
                
                26.6
                %RedTag.com1GMS
      (in thousands)
                
                $
                526
                
                
                $
                399
                
                
                $
                288
                
                
                $
                386
                
                
                $
                140
                
                
                $
                143
                
                
                $
                474
                
                
                $
                304Number
      of Orders (in thousands)
                
                
                5
                
                
                
                4
                
                
                
                3
                
                
                
                3
                
                
                
                2
                
                
                
                2
                
                
                
                5
                
                
                
                3Average
      Order Value
                
                $
                113
                
                
                $
                101
                
                
                $
                86
                
                
                $
                122
                
                
                $
                88
                
                
                $
                83
                
                
                $
                96
                
                
                $
                119Visitors
      to Bidders %
                
                
                15.0
                %
                
                
                15.0
                %
                
                
                17.0
                %
                
                
                10.4
                %
                
                
                3.5
                %
                
                
                9.6
                %
                
                
                30.2
                %
                
                
                15.1
                %





18




(1)
            RedTag.com was first launched in
      August 2008.




(Auctions
in these metrics refer to auctions and fixed price listings)




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 CM 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 merchandise 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
to Bidder %: 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 include both
successful auctions and auctions with no bids.




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





Reconciliation
of GMS to GAAP


(Dollars
in thousands)





Three Months EndedJune 30,
                          
                          
                          Six Months EndedJune 30,2010
                          
                          
                          2009
                          
                          
                          2010
                          
                          
                          2009Direct
                          
                          $
                          2,390
                          
                          
                          $
                          864
                          
                          
                          $
                          4,772
                          
                          
                          $
                          2,729UCM
                          
                          $
                          2,375
                          
                          
                          $
                          8,910
                          
                          
                          $
                          4,995
                          
                          
                          $
                          18,912Business
      to Business
                          
                          $
                          579
                          
                          
                          $
                          1,271
                          
                          
                          $
                          1,122
                          
                          
                          $
                          2,760Total
      GMS
                          
                          $
                          5,344
                          
                          
                          $
                          11,045
                          
                          
                          $
                          10,889
                          
                          
                          $
                          24,401Cancellations
                          
                          
                          (125
                          )
                          
                          
                          (791
                          )
                          
                          
                          (240
                          )
                          
                          
                          (1,704
                          )Backlog
                          
                          
                          137
                          
                          
                          
                          60
                          
                          
                          
                          70
                          
                          
                          
                          110GAAP
      Entry
                          
                          
                          (1,560
                          )
                          
                          
                          (7,055
                          )
                          
                          
                          (3,766
                          )
                          
                          
                          (13,963
                          )Returns
                          
                          
                          (192
                          )
                          
                          
                          (280
                          )
                          
                          
                          (359
                          )
                          
                          
                          (771
                          )Net
      Sales
                          
                          $
                          3,604
                          
                          
                          $
                          2,979
                          
                          
                          $
                          6,594
                          
                          
                          $
                          8,073





GMS
                      Total
      revenue in auctions closed and Business to Business
      transactionsCancellations
                      Auctions
      that will not be shipped due to credit and other issuesBacklog
                      Auctions
      & orders pending review in credit & approved orders at warehouse
      pending shipmentGAAP
      Entry
                      Entry
      required to eliminate sales under revenue sharing and commission
      arrangementsunder
      accounting principles generally accepted in the United States of America
      ("GAAP")Returns
                      Credits
      issued to customers for return products and customer satisfaction and
      related
reserves





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 and RedTag.com websites, live
sales events 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.





19




Our
revenue is dependent in part on sales of products produced by or purchased from
several vendors.  The following vendors accounted for revenues greater
than 5% of our total revenues in the six months ended June 2010 and 2009. No
other supplier represented more than 5% of our net revenues for any period
presented.





Three Months Ended
                      
                      
                      Six Months EndedJune 30,
                      
                      
                      June 30,Vendor
                      
                      2010
                      
                      
                      2009
                      
                      
                      2010
                      
                      
                      2009Hewlett
      Packard Company
                      
                      
                      38.4
                      %
                      
                      
                      42.2
                      %
                      
                      
                      36.9
                      %
                      
                      
                      42.1
                      %Always
      - at - Market
                      
                      
                      6.8
                      %
                      
                      
                      6.5
                      %
                      
                      
                      3.7
                      %
                      
                      
                      6.4
                      %Global
      Phoenix Computer
                      
                      
                      5.4
                      %
                      
                      
                      4.0
                      %
                      
                      
                      4.9
                      %
                      
                      
                      3.6
                      %




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 the CM
Program and Managed Supply revenues. 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.





Results
of Operations (Dollars in Thousands)





Comparison
of three months ended June 30, 2010 and 2009


(Dollars
in thousands, except per share data and average order value)





The  below
sets forth certain data from our statement of operations as a percentage of net
revenues as well as the increase (decrease) in quarter ended June 2010 as
compared to June 2009. This information should be read in conjunction with our
financial statements and notes thereto included elsewhere in this
report.




20





(Dollars in Thousands)Three months ended June 30,2010
                      
                      
                      2009
                      
                      
                      Increase (Decrease)Net
      Revenues:uBid.com
                      
                      $
                      2,215
                      
                      
                      
                      61.5
                      %
                      
                      $
                      1,579
                      
                      
                      
                      53.0
                      %
                      
                      $
                      636
                      
                      
                      
                      40.3
                      %RedTag.com
                      
                      
                      388
                      
                      
                      
                      10.8
                      %
                      
                      
                      119
                      
                      
                      
                      4.0
                      %
                      
                      
                      269
                      
                      
                      
                      226.1
                      %RedTag
      LIVE
                      
                      
                      422
                      
                      
                      
                      11.7
                      %
                      
                      
                      11
                      
                      
                      
                      0.4
                      %
                      
                      
                      411
                      
                      
                      
                      3736.4
                      %Dibu
      Trading Co.
                      
                      
                      579
                      
                      
                      
                      16.1
                      %
                      
                      
                      1,270
                      
                      
                      
                      42.6
                      %
                      
                      
                      (691
                      )
                      
                      
                      (54.4
                      )%Total
      Net Revenues
                      
                      
                      3,604
                      
                      
                      
                      100.0
                      %
                      
                      
                      2,979
                      
                      
                      
                      100.0
                      %
                      
                      
                      625
                      
                      
                      
                      21.0
                      %Gross
      Profit:uBid.com
                      
                      
                      530
                      
                      
                      
                      14.7
                      %
                      
                      
                      887
                      
                      
                      
                      29.8
                      %
                      
                      
                      (357
                      )
                      
                      
                      (40.2
                      )%RedTag.com
                      
                      
                      45
                      
                      
                      
                      1.2
                      %
                      
                      
                      17
                      
                      
                      
                      0.6
                      %
                      
                      
                      28
                      
                      
                      
                      164.7
                      %RedTag
      LIVE
                      
                      
                      (104
                      )
                      
                      
                      (2.9
                      )%
                      
                      
                      2
                      
                      
                      
                      0.1
                      %
                      
                      
                      (106
                      )
                      
                      
                      (5300.0
                      )%Dibu
      Trading Co.
                      
                      
                      21
                      
                      
                      
                      0.6
                      %
                      
                      
                      139
                      
                      
                      
                      4.7
                      %
                      
                      
                      (118
                      )
                      
                      
                      84.9
                      %Total
      Gross Profit
                      
                      
                      492
                      
                      
                      
                      13.7
                      %
                      
                      
                      1,045
                      
                      
                      
                      35.1
                      %
                      
                      
                      (553
                      )
                      
                      
                      (52.9
                      )%General
      and administrative
                      
                      
                      1,777
                      
                      
                      
                      49.3
                      %
                      
                      
                      2,857
                      
                      
                      
                      95.9
                      %
                      
                      
                      (1,080
                      )
                      
                      
                      (37.8
                      )%Sales
      and marketing
                      
                      
                      146
                      
                      
                      
                      4.1
                      %
                      
                      
                      293
                      
                      
                      
                      9.8
                      %
                      
                      
                      (147
                      )
                      
                      
                      (50.2
                      )%Total
      operating expenses
                      
                      
                      1,923
                      
                      
                      
                      53.4
                      %
                      
                      
                      3,150
                      
                      
                      
                      105.7
                      %
                      
                      
                      (1,227
                      )
                      
                      
                      (39.0
                      )%Loss
      from operations
                      
                      
                      (1,431
                      )
                      
                      
                      (39.7
                      )%
                      
                      
                      (2,105
                      )
                      
                      
                      (70.7
                      )%
                      
                      
                      674
                      
                      
                      
                      32.0
                      %Interest
      expense, net
                      
                      
                      (930
                      )
                      
                      
                      (25.8
                      )%
                      
                      
                      (537
                      )
                      
                      
                      (18.0
                      )%
                      
                      
                      393
                      
                      
                      
                      73.2
                      %Miscellaneous
      income/(expense)
                      
                      
                      (10
                      )
                      
                      
                      (0.3
                      )%
                      
                      
                      (22
                      )
                      
                      
                      (0.7
                      )%
                      
                      
                      12
                      
                      
                      
                      (54.5
                      )%Loss on
      financial instruments
                      
                      
                      -
                      
                      
                      
                      0.0
                      %
                      
                      
                      (356
                      )
                      
                      
                      (12.0
                      )%
                      
                      
                      356
                      
                      
                      
                      100.0
                      %Net
      Loss
                      
                      $
                      (2,371
                      )
                      
                      
                      (65.8
                      )%
                      
                      $
                      (3,020
                      )
                      
                      
                      (101.4
                      )%
                      
                      $
                      649
                      
                      
                      
                      (21.5
                      )%





Revenue
and Gross Profit




Web
Properties:  uBid.com and RedTag.com




Net
revenue for the web properties increased $905 or 53.3% and gross profit
decreased $329 or 36.4% in the quarter ended June 30, 2010 compared to the same
period in 2009. Visitors to the two web properties decreased 501 or
26.5%.  The decline in revenue was primarily in the Certified Merchant
channel as merchants reduced the amount of postings due to payment history and
declining visitor traffic.  The decrease in the Certified Merchant
channel was partially offset by a $1,570 increase in the Direct channel
attributable to increased inventory levels due to the availability of inventory
financing. The gross margin dollars decreased $329 on lower sales volumes. The
gross margin percentage decreased to 22.0% from 53.2% as sales volume in the
Certified Merchant channel decreased $2,346 or 55.0%. The gross margin
percentage will fluctuate based on the sales mix of Direct to Certified Merchant
volumes as on Certified Merchant sales the Company records only its commission
as revenue so the resulting gross margin is 100.0%.




Offline
Sales Channels: Dibu Trading Co. and RedTag Live




Net
revenue for the offline sales channels decreased approximately 21.9% in the
second quarter of 2010 as compared to 2009, which was due to a decrease in Dibu
trading revenues of $691 or 54.4% due to slower sales volumes and liquidity
constraints. A live liquidation event was held in Omaha, NE during the current
period and contributed $422 to the offline sales channel revenue.





The live
liquidation event resulted in a negative gross profit as merchandise was
discounted deeply in an effort to increase traffic to the event and reduce
transportation costs from the event back to the Itasca facility.





21





Sales,
General and Administrative 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. The following is a summary of the SG&A
expenses:





(Dollars in Thousands)Three months endedJune30,2010
                    
                    
                    2009
                    
                    
                    Increase
                      (Decrease)Salary
      and Benefits
                    
                    $
                    723
                    
                    
                    $
                    1,189
                    
                    
                    $
                    (466
                    )Advertising
                    
                    
                    122
                    
                    
                    
                    230
                    
                    
                    
                    (108
                    )RedTag
      Live Events
                    
                    
                    306
                    
                    
                    
                    99
                    
                    
                    
                    207Credit
      Card Fees
                    
                    
                    151
                    
                    
                    
                    258
                    
                    
                    
                    (107
                    )Legal,
      Audit, Insurance & Regulatory Fees
                    
                    
                    184
                    
                    
                    
                    554
                    
                    
                    
                    (370
                    )Consulting
      and Outside Services
                    
                    
                    25
                    
                    
                    
                    98
                    
                    
                    
                    (73
                    )Warehouse
                    
                    
                    8
                    
                    
                    
                    128
                    
                    
                    
                    (120
                    )Stock
      Based Compensation
                    
                    
                    3
                    
                    
                    
                    69
                    
                    
                    
                    (66
                    )Telecommucations,
      Hardware and Storage
                    
                    
                    130
                    
                    
                    
                    187
                    
                    
                    
                    (57
                    )Depreciation
      & Amortization
                    
                    
                    167
                    
                    
                    
                    159
                    
                    
                    
                    8Other
      SG&A
                    
                    
                    20
                    
                    
                    
                    25
                    
                    
                    
                    (5
                    )Facility
      Fees
                    
                    
                    61
                    
                    
                    
                    98
                    
                    
                    
                    (37
                    )Travel
                    
                    
                    21
                    
                    
                    
                    38
                    
                    
                    
                    (17
                    )Dues
      & Subscriptions
                    
                    
                    2
                    
                    
                    
                    18
                    
                    
                    
                    (16
                    )$
                    1,923
                    
                    
                    $
                    3,150
                    
                    
                    $
                    (1,227
                    )





SG&A
expenses decreased $1,227 or 38.95% in the quarter ended June 2010 as compared
to the quarter ended June 2009.  The primary reason for the decrease
in these expenses was the implementations of several cost reduction initiatives
starting in November 2009. The primary categories contributing to the decrease
are as follows:





·
            Salary and benefits expenses
      decreased $466 or 39.19% in the quarter ended June 2010 due staff
      reductions and salary reductions. Most senior managers and other managers
      took salary reductions starting in November 2009 ranging from 10% to over
      60%.





·
            Advertising expenses decreased
      $108 or 46.96% due to the continued elimination of advertising campaigns
      due to liquidity constraints





·
            RedTag Live event expenses
      increased $207 or 209.09% due to a live liquidation event held in Omaha,
      NE during the current
period.





·
            Credit card fees decreased $107
      or 41.47% due to decreased sales
volume.





·
            Legal, audit, insurance, and
      other regulatory fees decreased $370 or 66.79% primarily due to fees
      incurred in the convertible debt issuance during the six months ended June
      30, 2009.





·
            Consulting and outside services
      decreased $73 or 74.49% as we continued to eliminate outside services and
      consulting contracts.





·
            Warehouse
      expense decreased $120 or 93.75% primarily as a result of the relocation
      to a multi-use facility that includes a warehouse for in-house order
      fulfillment.





Interest
Expense




Interest
expense increased $393 due to interest expense of $682 on the beneficial
conversion option on the Convertible Notes issued during the three months ended
June 30, 2010. Interest expense on warrants issued during the three months ended
June 30, 2009 was $364. All warrants were canceled in 2009 in conjunction with
the restructure.





Net
Losses





The
Company experienced a net loss of $2,371 or $0.12 per share for the three months
ended June 30, 2010 compared to a net loss of $3,020 or $0.16 per share for the
three months ended June 30, 2009. Net loss decreased due to lower operating
costs resulting from cost reduction measures imposed starting in the fourth
quarter of 2009.





Miscellaneous
Expense





Miscellaneous
expense of $10 was recorded during the three months ended June 30, 2010. The
expense resulted from the settlement of a legal dispute related to intellectual
property.





22




Comparison
of six months ended June 30, 2010 and 2009


(Dollars
in thousands, except per share data and average order value)





The below
sets forth certain data from our statement of operations as a percentage of net
revenues as well as the increase (decrease) in the six months ended June 2010 as
compared to June 2009. This information should be read in conjunction with our
financial statements and notes thereto included elsewhere in this
report.





Six months ended June 30,2010
                      
                      
                      2009
                      
                      
                      Increase (Decrease)Net
      Revenues:uBid.com
                      
                      $
                      4,303
                      
                      
                      
                      65.3
                      %
                      
                      $
                      4,264
                      
                      
                      
                      52.8
                      %
                      
                      $
                      39
                      
                      
                      
                      0.9
                      %RedTag.com
                      
                      
                      747
                      
                      
                      
                      11.3
                      %
                      
                      
                      246
                      
                      
                      
                      3.0
                      %
                      
                      
                      501
                      
                      
                      
                      203.7
                      %RedTag
      LIVE
                      
                      
                      422
                      
                      
                      
                      6.4
                      %
                      
                      
                      803
                      
                      
                      
                      9.9
                      %
                      
                      
                      (381
                      )
                      
                      
                      (47.4
                      )%Dibu
      Trading Co.
                      
                      
                      1,122
                      
                      
                      
                      17.0
                      %
                      
                      
                      2,760
                      
                      
                      
                      34.2
                      %
                      
                      
                      (1,638
                      )
                      
                      
                      (59.3
                      )%Total
      Net Revenues
                      
                      
                      6,594
                      
                      
                      
                      100.0
                      %
                      
                      
                      8,073
                      
                      
                      
                      100.0
                      %
                      
                      
                      (1,479
                      )
                      
                      
                      (18.3
                      )%Gross
      Profit:uBid.com
                      
                      
                      1,180
                      
                      
                      
                      17.9
                      %
                      
                      
                      1,801
                      
                      
                      
                      22.3
                      %
                      
                      
                      (621
                      )
                      
                      
                      (34.5
                      )%RedTag.com
                      
                      
                      87
                      
                      
                      
                      1.3
                      %
                      
                      
                      34
                      
                      
                      
                      0.4
                      %
                      
                      
                      53
                      
                      
                      
                      155.9
                      %RedTag
      LIVE
                      
                      
                      (109
                      )
                      
                      
                      (1.7
                      )%
                      
                      
                      187
                      
                      
                      
                      2.3
                      %
                      
                      
                      (296
                      )
                      
                      
                      (158.3
                      )%Dibu
      Trading Co.
                      
                      
                      83
                      
                      
                      
                      1.3
                      %
                      
                      
                      252
                      
                      
                      
                      3.1
                      %
                      
                      
                      (169
                      )
                      
                      
                      (67.1
                      )%Total
      Gross Profit
                      
                      
                      1,241
                      
                      
                      
                      18.8
                      %
                      
                      
                      2,274
                      
                      
                      
                      28.2
                      %
                      
                      
                      (1,033
                      )
                      
                      
                      (45.4
                      )%General
      and administrative
                      
                      
                      3,236
                      
                      
                      
                      49.1
                      %
                      
                      
                      5,724
                      
                      
                      
                      70.9
                      %
                      
                      
                      (2,488
                      )
                      
                      
                      (43.5
                      )%Sales
      and marketing
                      
                      
                      290
                      
                      
                      
                      4.4
                      %
                      
                      
                      588
                      
                      
                      
                      7.3
                      %
                      
                      
                      (298
                      )
                      
                      
                      (50.7
                      )%Total
      operating expenses
                      
                      
                      3,526
                      
                      
                      
                      53.5
                      %
                      
                      
                      6,312
                      
                      
                      
                      78.2
                      %
                      
                      
                      (2,786
                      )
                      
                      
                      (44.1
                      )%Loss
      from operations
                      
                      
                      (2,285
                      )
                      
                      
                      (34.7
                      )%
                      
                      
                      (4,038
                      )
                      
                      
                      (50.0
                      )%
                      
                      
                      1,753
                      
                      
                      
                      (43.4
                      )%Interest
      expense, net
                      
                      
                      (1,052
                      )
                      
                      
                      (16.0
                      )%
                      
                      
                      (1,229
                      )
                      
                      
                      (15.2
                      )%
                      
                      
                      177
                      
                      
                      
                      14.4
                      %Miscellaneous
      income (expense)
                      
                      
                      45
                      
                      
                      
                      0.7
                      %
                      
                      
                      (22
                      )
                      
                      
                      (0.3
                      )%
                      
                      
                      67
                      
                      
                      
                      (304.5
                      )%Loss  on
      financial instruments
                      
                      
                      -
                      
                      
                      
                      0.0
                      %
                      
                      
                      (404
                      )
                      
                      
                      (5.0
                      )%
                      
                      
                      (404
                      )
                      
                      
                      100.0
                      %Net
      Loss
                      
                      $
                      (3,292
                      )
                      
                      
                      (49.9
                      )%
                      
                      $
                      (5,693
                      )
                      
                      
                      (70.5
                      )%
                      
                      $
                      2,401
                      
                      
                      
                      (42.2
                      )%





Revenue
and Gross Profit




Web
Properties:  uBid.com and RedTag.com




Net web
property revenue increased 12.0% and gross profit decreased 31.0% in the six
months ended June 30, 2010 compared to the same period in 2009. Visitors to the
two web properties decreased 1,247 or 30.0%.  The increased revenue
was primarily attributable to a $501 or 203.7% increase in revenue in the
Redtag.com sales channel. The increased revenue in the RedTag.com channel is
primarily attributable to increases in traffic resulting from “Deal-of-the-Day”
promotions.





Offline
Sales Channels: Dibu Trading Co. and RedTag Live




Net
revenue for the offline sales channels decreased 56.7% in the six months ended
June 30, 2010 as compared to 2009. Capital constraints caused lower inventories
in the offline channels resulting in decreased Dibu revenues. RedTag Live
revenue decreased $381 or 47.4% in the six months ended June 30, 2010 compared
to June 2009.  The decrease resulted from decreased results from a
live liquidation event held in Omaha, NE in the current period compared to a
live liquidation event in South Florida in the same period of the prior
year.




23




Sales,
General and Administrative 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. The following is a summary of the SG&A
expenses:




(Dollars
      in Thousands)Six
      months endedJune
      30,Increase2010
                                                    
                                                    
                                                    2009
                                                    
                                                    
                                                    (Decrease)Salary
      and Benefits
                                                    
                                                    $
                                                    1,353
                                                    
                                                    
                                                    $
                                                    2,376
                                                    
                                                    
                                                    $
                                                    (1,023
                                                    )Advertising
                                                    
                                                    
                                                    243
                                                    
                                                    
                                                    
                                                    436
                                                    
                                                    
                                                    
                                                    (193
                                                    )RedTag
      Live Events
                                                    
                                                    
                                                    306
                                                    
                                                    
                                                    
                                                    461
                                                    
                                                    
                                                    
                                                    (155
                                                    )Credit
      Card Fees
                                                    
                                                    
                                                    321
                                                    
                                                    
                                                    
                                                    538
                                                    
                                                    
                                                    
                                                    (217
                                                    )Legal,
      Audit, Insurance & Regulatory Fees
                                                    
                                                    
                                                    410
                                                    
                                                    
                                                    
                                                    898
                                                    
                                                    
                                                    
                                                    (488
                                                    )Consulting
      and Outside Services
                                                    
                                                    
                                                    34
                                                    
                                                    
                                                    
                                                    234
                                                    
                                                    
                                                    
                                                    (200
                                                    )Warehouse
                                                    
                                                    
                                                    15
                                                    
                                                    
                                                    
                                                    303
                                                    
                                                    
                                                    
                                                    (288
                                                    )Stock
      Based Compensation
                                                    
                                                    
                                                    20
                                                    
                                                    
                                                    
                                                    99
                                                    
                                                    
                                                    
                                                    (79
                                                    )Telecommucations,
      Hardware and Storage
                                                    
                                                    
                                                    258
                                                    
                                                    
                                                    
                                                    339
                                                    
                                                    
                                                    
                                                    (81
                                                    )Depreciation
      & Amortization
                                                    
                                                    
                                                    335
                                                    
                                                    
                                                    
                                                    278
                                                    
                                                    
                                                    
                                                    57Other
      SG&A
                                                    
                                                    
                                                    44
                                                    
                                                    
                                                    
                                                    46
                                                    
                                                    
                                                    
                                                    (2
                                                    )Facility
      Fees
                                                    
                                                    
                                                    142
                                                    
                                                    
                                                    
                                                    172
                                                    
                                                    
                                                    
                                                    (30
                                                    )Travel
                                                    
                                                    
                                                    42
                                                    
                                                    
                                                    
                                                    69
                                                    
                                                    
                                                    
                                                    (27
                                                    )Dues
      & Subscriptions
                                                    
                                                    
                                                    3
                                                    
                                                    
                                                    
                                                    63
                                                    
                                                    
                                                    
                                                    (60
                                                    )$
                                                    3,526
                                                    
                                                    
                                                    $
                                                    6,312
                                                    
                                                    
                                                    $
                                                    (2,786
                                                    )




SGA
expenses decreased $2,787 or 44.1% for the six months ended June 2010 as
compared to the same period June 2009. The primary categories contributing to
the decrease are as follows:





·
            Salary and benefits expenses
      decreased $1,023 or 43.06% due to staff and salary
      reductions,





·
            Advertising expenses decreased
      $193 or 44.27% due to the elimination of ineffective advertising campaigns
      and liquidity constraints.





·
            Credit card fees decreased $217
      or 40.33% due to the decrease in sales volume at the web
      properties.





·
            Legal, audit, insurance, and
      other regulatory fees decreased $488 or 54.34% primarily due to fees
      incurred in the convertible debt issuance in the prior
      period.





·
            Consulting and outside services
      decreased $200 or 85.5% as we continued to eliminate outside services and
      consulting contracts.





·
            Warehouse
      expense decreased $288 or 95.05% primarily as a result of the relocation
      to a multi-use facility that includes a warehouse for in-house order
      fulfillment.





Interest
Expense





Interest
expense decreased $177 due to interest expense of $682 on the beneficial
conversion option on the Convertible Notes issued during the six months ended
June 30, 2010.  Interest expense on warrants issued during the six
months ended June 30, 2009 was $818. All warrants were canceled in 2009 in
conjunction with the restructure. Interest expense related to inventory
financing was $357 and $129 for the six months ended June 2010 and 2009,
respectively.





Net
Losses




The
Company experienced a net loss of $3,292 or $0.17 per share for the six months
ended June 30, 2010 compared to a net loss of $5,693 or $0.29 per share for the
six months ended June 30, 2009. The net loss decreased primarily due to cost
reductions.




Liquidity and Capital
Resources





Net cash used in operating activities for the six months ended June
30, 2010 was $4,403 compared to $2,083 used in the six months ended June 30,
2009. The significant change in net cash provided by operating activities was
primarily due to the decrease in accounts payable of $1,432 compared to an
increase of $1,774 during the same period of the prior year. The increase in
inventories of $485 also contributed to the net cash used in operating
activities. Cash raised in the financing that closed on February 24, 2010 was
used to pay vendors and purchase inventories to impact the sales generated. The
improvement in the net loss compared to the same period in the prior year also
reduced the net cash required for operating activities.





Net cash used in investing activities
was $51 and $290 for the six months ended June 30, 2010 and 2009, respectively.
The decrease in net cash used was due to lower capital spending.





Net cash
provided by financing activities was $3,516 for the six months ended June 30,
2010, compared to $2,358 for the same period last year. The increase in cash
provided is a result of the sale of preferred stock and increased borrowing to
purchase inventories on the flooring facility and through the issuance of
convertible notes. A payment of $700 was made to a Bridge Note Holder during the
six months ended June 30, 2010.





The
Convertible Notes matured on June 29, 2010 and principal and interest due were
unpaid as of the date the financial statements were issued. The Convertible
Notes are convertible in the event of a default for the failure to make any
payment of interest or principal when due.   In the event of a
default, the note holders at their sole discretion can elect to convert a
portion of the note to shares of common stock at $0.10 per share. The Company is
currently in default and is conducting negotiations with the convertible note
holders.





24




As a
result of the tightening credit market (including uncertainties with respect to
financial institutions and the global credit markets), extreme volatility in
energy costs and other macro-economic challenges currently affecting the economy
of the United States and other parts of the world, customers or vendors may
experience serious cash flow problems and as a result, may modify, delay or
cancel plans to purchase the Company’s products and vendors may significantly
and quickly increase their prices or reduce their output. Additionally, if the
Company  is not successful in securing financing, we may not be able
to pay, or may delay payment of, accounts payables owed to our vendors which may
adversely affect the Company’s ability to procure additional materials and
services needed to meet our customers’ requirements. If the Company is unable to
secure long-term financing or capital, the operations will be difficult to
continue for the near term. However, there is no assurance that we will be
successful in these efforts, which raises substantial doubt as to our ability to
continue as a going concern.




25




In the
fourth quarter of 2009 the Company received commitments to purchase 1,700,000
shares of preferred for $3,750 from accredited investors many of which had
invested in the previous bridge loan and convertible debentures. The Company
raised an additional $500 during the first quarter of 2010. These proceeds were
used to pay the October 9, 2009 $500 loan, to restructure the bridge loan and
convertible debenture, pay the $700 owed to the bridge loan holders, pay down
vendor balances and to fund operations.





Throughout
2009 negotiations with vendors were undertaken and for the most part
successfully completed with all creditors to partially settle outstanding
balances and or establish extended payment terms.





On March
31, 2010, in conjunction with the issuance of our annual report, our auditors
issued a qualified opinion which raised substantial doubt about our ability to
continue as a going concern. Management’s plans to alleviate this condition
consist of, but are not limited to the following:





·
            Negotiate
      loan default cures with lenders,


·
            Increase
      available inventory for sale through establishing an asset based lending
      credit line (ABL) of approximately
$3,000,


·
            Raise
      additional long term equity
capital,


·
            Increase
      revenues through focused marketing to customers in our robust data base
      reestablishing our sites as ones that appeal to the diversified
      demographics of the group,


·
            Increase
      revenues through the introduction of diversified product lines to serve
      the asset recovery industry,


·
            Increase
      revenues by completing the installation of our ERP application allowing us
      to provide all the requirements necessary for our vendors and Certified
      Merchants to sell product through us both domestically and
      globally,


·
            Increase
      revenues through the introduction of transaction fees and restructuring of
      CM vendor rate card, and


·
            Execute
      revised business plan under new leadership and expanded
    board.





As a
result of the conditions discussed above, and in accordance with generally
accepted accounting principles in the United States, there exists substantial
doubt about our ability to continue as a going concern. Our continued operations
are contingent on our ability to be successful in implementing the above plans.
There is no assurance that we will be successful in these efforts, therefore
there is substantial doubt as to our ability to have sufficient cash to meet our
operating requirements and continue as a going concern. The accompanying
consolidated financial statements do not reflect adjustments relating to the
recoverability and classification of assets or liabilities that might result
from the outcome of these uncertainties.





26





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 the
Company’s 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




Under
the supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the
end of the period covered by this report (the "Evaluation Date"). Based on this
evaluation, our principal executive officer and principal financial officer
concluded as of the Evaluation Date that our disclosure controls and procedures
were effective such that the information relating to the Company, including our
consolidated subsidiaries, required to be disclosed in our SEC reports
(i) is recorded, processed, summarized and reported within the time
periods specified in SEC rules and forms, and (ii) is accumulated and
communicated to the Company’s management, including our principal executive
officer and principal financial officer, as appropriate to allow timely
decisions regarding required disclosure.




Under
the supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of any changes in our internal control over financial reporting (as
such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) that occurred during our most recently completed fiscal quarter. Based on
that evaluation, our principal executive officer and principal financial officer
concluded that there has not been any change in our internal control over
financial reporting during that quarter that ended June 30, 2010 has materially
affected, or is reasonably likely to materially affect, our 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 its business
or financial condition.





ITEM 1A. RISK FACTORS





As a
result of the tightening credit market (including uncertainties with respect to
financial institutions and the global credit markets), increases in energy costs
and other macro-economic challenges currently affecting the economy of the
United States and other parts of the world, customers and vendors may experience
serious cash flow problems and as a result, may modify, delay or cancel plans to
purchase the Company’s products and vendors may significantly and quickly
increase their prices or reduce their output. Additionally, if the Company is
not successful in securing financing, it may not be able to pay, or may delay
payment of, accounts payables owed to its vendors which may adversely affect the
Company’s ability to procure additional materials and services needed to meet
its customer’s requirements. The Company is in default of the terms of the
Convertible Notes and is in default of the terms of notes issued for multiple
short-term inventory financing arrangements with various investors. The Company
is currently conducting negotiations with the note holders and the outcome of
the negotiations is uncertain. If economic conditions in the United States and
other key parts of the world deteriorate further or do not show improvement, the
Company may experience material adverse impacts to its business and operating
results.




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, 2009, 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.




27





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





For the
six months ended June 30, 2010, options to purchase an aggregate
of 1,000,000 shares of the Company’s common stock were granted to Patrick
L. Neville who became the Chief Executive Officer of the Company. The options
have a term of ten years and vest over a four year period annually
beginning 25% on the date of grant and 25% over the next three anniversaries of
the date of grant.





ITEM 3. DEFAULT UPON SENIOR
SECURITIES





As noted
in Note 13 Subsequent Events, the Company is in default of the terms of the
Convertible Notes and is in default of the terms of notes issued for multiple short-term inventory financing
arrangements with various investors. The Company is currently conducting
negotiations with the note holders.





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




The
Company’s 2010 Annual Meeting was held on May 11, 2010.  The
votes cast with respect to each item of business properly presented at the
meeting are as follows:





1.
            The stockholders elected (i)
      Donald Miller, to serve until his term expires at the 2012 Annual Meeting
      or until his successor is elected and qualified; (ii) Casey L. Gunnell and
      Patrick L. Neville, to service until their terms expire at the 2013 Annual
      Meeting or until either of their successors are elected and qualified; and
      (iii) Jeffry Parell, to serve until his term expires at the 2011 Annual
      Meeting or until his successor is elected and
      qualified.




For
                      
                      
                      Withheld AuthorityDonald
      Miller
                      
                      114,119,514
                      
                      
                      53,540Casey
      L. Gunnell
                      
                      114,119,514
                      
                      
                      53,540Patrick
      L. Neville
                      
                      114,119,514
                      
                      
                      53,540Jeffry
      Parell
                      
                      114,119,514
                      
                      
                      53,540





2.
            The
      stockholders approved an amendment to the Company’s Certificate of
      Incorporation to increase the number of authorized shares of Common Stock
      from 200,000,000 to 300,000,000.




For
                  
                  
                  113,393,143Against
                  
                  
                  2,694,571Abstain
                  
                  
                  2,673,480




3.
            The
      stockholders approved an increase in the number of shares of Common Stock
      authorized for issuance under the Enable Holdings, Inc. 2005 Equity
      Incentive Plan to 25,000,000.




For
                  
                  
                  107,576,947Against
                  
                  
                  6,675,107Abstain
                  
                  
                  1,000




4.
            The
      stockholders ratified BDO Seidman, LLP as the Company’s independent
      registered public accounting firm for the fiscal year ending December 31,
      2010.




For
                  
                  
                  108,706,758Against
                  
                  
                  26,609Abstain
                  
                  
                  27,827




ITEM 5. OTHER INFORMATION





None.





ITEM 6. EXHIBITS





Exhibit
      No.
            
            Description31.1
            
            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 13, 2010.




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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