**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**









**FORM
      10-Q**





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




For
      the
      period ended **March
      31, 2007**





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





**Commission
      file Number: 000-50995**









**uBid.com
      Holdings, Inc.**


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





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





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


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





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


**(773)
      272-5000**





Indicate
      by check mark whether the registrant (1) has filed all reports to be filed
      by
      Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
      12 months (or for such shorter period that the registrant was required to file
      such reports), and (2) has been subject to filing requirements for the past
      90
      days. Yes x No o





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




Large
      accelerated filer **o** Accelerated filer o Non-accelerated filer **x**





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





The
      number of shares outstanding of the registrant’s Common Stock, par value $0.001,
      as of May 07, 2007 was 18,197,783








**TABLE
      OF CONTENTS**





**Page**PART
                I
            
            Financial
                InformationItem
                1.Consolidated
                Condensed Financial Statements (Unaudited)Consolidated
                Condensed Balance Sheets (Unaudited) March 31, 2007 and December
                31,
                2006
            
            3Consolidated
                Condensed Statements of Operations (Unaudited) Three months ended
                March
                31, 2007 and 2006
            
            4Consolidated
                Condensed Statement of Shareholders' Equity (Unaudited) Three months
                ended
                March 31, 2007
            
            5Consolidated
                Condensed Statements of Cash Flows (Unaudited) Three months ended
                March
                31, 2007 and 2006
            
            6Notes
                to Consolidated Condensed Financial Statements
            
            7-14Item
                2.Management’s
                Discussion and Analysis of Financial Condition and
                Resultsof
                Operations
            
            14-19Item
                3.Quantitative
                and Qualitative Disclosures About Market Risk
            
            20Item
                4.Controls
                and Procedures
            
            20PART
                II
            
            Other
                InformationItem
                1.Legal
                Proceedings
            
            20Item
                1A.Risk
                Factors
            
            20Item
                2.Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            21Item
                3.Default
                Upon Senior Securities
            
            21Item
                4.Submission
                of Matters to a Vote of Security Holders
            
            21Item
                5.Other Information
            
            21Signatures
            
            23




2


**uBid.com
        Holdings, Inc and Subsidiaries**
 **Consolidated
        Condensed Balance Sheets**
 **(Dollars
        in Thousands, except par value data)**
 **(Unaudited)**
  **March
                  31, 2007**
              
              **December
                  31, 2006****Assets****Current
                  Assets**Cash
                  and cash equivalents
              
              $
              13,779
              
              $
              14,785Restricted
                  investments
              
              
              216
              
              
              214Accounts
                  receivable, less allowance for doubtful accounts of $215 and $60,
                  respectively
              
              
              1,223
              
              
              1,810Merchandise
                  inventories
              
              
              6,127
              
              
              4,054Prepaid
                  expenses and other current assets
              
              
              910
              
              
              1,189**Total
                  Current Assets**
              
              
              22,255
              
              
              22,052**Property
                  and Equipment, net**
              
              
              859
              
              
              924**Purchased
                  Intangible Assets**
              
              
              512
              
              
              602**Total
                  Assets**
              
              $
              23,626
              
              $
              23,578**Liabilities
                  and Shareholders' Equity****Current
                  Liabilities**Flooring
                  facility
              
              $
              501
              
              $
              152Accounts
                  payable
              
              
              3,371
              
              
              2,239Accrued
                  expenses:Advertising
              
              
              462
              
              
              428Other
              
              
              734
              
              
              1,024**Total
                  Current Liabilities**
              
              
              5,068
              
              
              3,843******Shareholders'
                  Equity**Common
                  stock, $.001 par value (200,000,000 shares authorized;20,333,333
                  issued and outstanding)
              
              
              20
              
              
              20Stock
                  warrants
              
              
              8,086
              
              
              8,086Additional
                  paid-in-capital
              
              
              37,086
              
              
              36,848Accumulated
                  deficit
              
              
              (26,634
              )
              
              (25,219
              )**Total
                  Shareholders' Equity**
              
              
              18,558
              
              
              19,735**Total
                  Liabilities and Shareholders' Equity**
              
              $
              23,626
              
              $
              23,578


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




3


**uBid.com
        Holdings, Inc. and Subsidiaries**
 **Consolidated
        Condensed Statements of Operations**
 **(Dollars
        in Thousands, except for per share data)**
 **(Unaudited)**
  **Three
                  Months Ended March 31,**2007
              
              2006Net
                  Revenues
              
              $
              9,607
              
              $
              20,088Cost
                  of Revenues
              
              
              7,055
              
              
              17,178Gross
                  Profit
              
              
              2,552
              
              
              2,910Operating
                  ExpensesGeneral
                  and administrative
              
              
              3,022
              
              
              3,534Sales
                  and marketing
              
              
              1,069
              
              
              1,525Total
                  operating expenses
              
              
              4,091
              
              
              5,059Loss
                  From Operations
              
              
              (1,539
              )
              
              (2,149
              )Interest
                  Expense
              
              
              (112
              )
              
              (47
              )Interest
                  Income
              
              
              176
              
              
              193Other
                  Income, net
              
              
              60
              
              
              0Net
                  Loss
              
              $
              (1,415
              )
              $
              (2,003
              )Net
                  Loss per share - Basic andDiluted
              
              $
              (0.07
              )
              $
              (0.10
              )Weighted
                  Average Shares - Basic and Diluted
              
              
              20,333,333
              
              
              19,955,536


The accompanying notes are an integral part of these consolidated condensed
        financial statements.
  4




**uBid.com
        Holdings, Inc.** **Consolidated
          Condensed Statements of Shareholders' Equity** **(Dollars
            in Thousands)** **(Unaudited)**
  **Common
                  Stock**
              
              **Stock**
              
              **Paid-in**
              
              **Accumulated****Shares**
              
              **Dollars**
              
              **Warrants**
              
              **Capital**
              
              **Deficit**
              
              **Total**Balance,
                  December 31, 2006
              
              
              20,333,333
              
              $
              20
              
              $
              8,086
              
              $
              36,848
              
              $
              (25,219
              )
              $
              19,735Stock
                  compensation expense
              
              
              —
              
              
              —
              
              
              —
              
              
              238
              
              
              —
              
              
              238Net
                  Loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (1,415
              )
              
              (1,415
              )Balance,
                  March 31, 2007
              
              
              20,333,333
              
              $
              20
              
              $
              8,086
              
              $
              37,086
              
              $
              (26,634
              )
              $
              18,558




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


5




**uBid.com
        Holdings, Inc and Subsidiaries** **Consolidated
          Condensed Statements of Cash Flows** **(Dollars
            in Thousands)**
 **(Unaudited)**
  **Three
                  Months Ended March 31,****2007**
              
              **2006****Cash
                  Flows From Operating Activities**Net
                  loss
              
              $
              (1,415
              )
              $
              (2,003
              )Adjustments
                  to reconcile net loss to net cash used inOperating
                  activitiesDepreciation
                  and amortization
              
              
              182
              
              
              69Non-cash
                  stock compensation expense
              
              
              238
              
              
              231Changes
                  in assets and liabilities:Accounts receivable
              
              
              587
              
              
              (871
              )Merchandise inventories
              
              
              (2,073
              )
              
              (10,334
              )Prepaid expenses and other current assets
              
              
              279
              
              
              54Accounts payable
              
              
              1,132
              
              
              587Accrued expenses
              
              
              (257
              )
              
              (1,377
              )**Net
                  cash used in operating activities**
              
              
              (1,327
              )
              
              (13,644
              )**Cash
                  Flows From Investing Activities**Capital
                  expenditures
              
              
              (26
              )
              
              (45
              )Change
                  in restricted investments
              
              
              (2
              )
              
              344**Net
                  cash provided by (used in) investing activities**
              
              
              (28
              )
              
              299**Cash
                  Flows From financing Activities**Change
                  in flooring facility
              
              
              349
              
              
              (720
              )Proceeds
                  from sale of common stock and warrants
              
              
              -
              
              
              13,500Redemption
                  of common stock
              
              
              -
              
              
              (12,000
              )Fees
                  paid in conjunction with Merger and offerings
              
              
              -
              
              
              (1,500
              )Payments
                  on long-term debt
              
              
              -
              
              
              (103
              )**Net
                  cash provided by (used in) financing activities**
              
              
              349
              
              
              (823
              )**Net
                  Decrease in Cash and Cash Equivalents**
              
              
              (1,006
              )
              
              (14,168
              )**Cash
                  and Cash Equivalents, beginning of period**
              
              
              14,785
              
              
              21,176**Cash
                  and Cash Equivalents, end of period**
              
              $
              13,779
              
              $
              7,008**Supplemented
                  Cash Flow Disclosure**Cash
                  paid for interest
              
              $
              75
              
              $
              46Warrants
                  and stock issued as stock issuance costs
              
              $
              -
              
              $
              2,907


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


6




**UBID.COM
      HOLDINGS, INC.** **and Subsidiaries**


**NOTES
      TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**


**March
      31, 2007**


**Dollars
      in Thousands except per share data**


**(Unaudited)**








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





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





The
      Company’s unaudited consolidated 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, 2006. The consolidated
      condensed financial statements include the accounts of the Company and its
      wholly owned subsidiaries. All material intercompany accounts and transactions
      have been eliminated in the consolidated financial statements.





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





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




Since
      December 31, 2006, none of the critical accounting policies, or the Company’s
      application thereof, as more fully described in the Company’s 2006 Annual
      Report, has significantly changed. Certain critical accounting policies have
      been presented below due to the significance of related transactions during
      the
      three months ended March 31, 2007.





***Revenue
      Recognition***





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





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




7





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





***Long-Lived
      Assets***




Long-lived
      assets are reviewed for impairment whenever events or circumstances indicate
      the
      remaining useful life of any long-lived assets may warrant revision or that
      the
      remaining carrying value of such assets may not be recoverable. When factors
      indicate that such assets should be evaluated for possible impairment, the
      Company uses an estimate of the undiscounted cash flows over the remaining
      life
      of the asset in measuring whether the asset is recoverable. No impairment has
      been recognized for the periods ended March 31, 2007 or 2006.





***Stock
      Based Compensation***





Effective
      January 1, 2006, the Company adopted Statement of Financial Accounting Standards
      No. 123(R) (“SFAS 123R”). This pronouncement requires companies to measure the
      cost of employee service received in exchange for a share based award (typically
      stock options) based on the fair value of the award. The Company has elected
      to
      use the “modified prospective” transition method for stock options granted prior
      to January 1, 2006, but for which the vesting period is not complete. Under
      this
      transition method, the Company accounts for such awards on a prospective basis,
      with expense being recognized in its statement of operations beginning in the
      first quarter of 2006 and continuing over the remaining requisite service period
      based on the grant date fair value estimated in accordance with Statement of
      Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
      (“SFAS 123”). The Company recognizes these compensation costs on a straight-line
      basis over the requisite service period of the award which is generally the
      option vesting term of four years. The total compensation expense related to
      the
      stock option plan for the three months ended March 31, 2007 and 2006 was
      approximately $238 and $231, respectively.





***Recent
      Pronouncements***





Updates
      to recent accounting standards as disclosed in the Company’s Annual Report on
      Form 10-K for the year ended December 31, 2006 are as follows:





In
      July
      2006, the Financial Accounting Standards Board (“FASB”) issued FASB
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an
      interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48
      clarifies the accounting for uncertainty in income taxes by prescribing the
      recognition threshold a tax position is required to meet before being recognized
      in the financial statements. It also provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure, and transition. FIN 48 is effective for fiscal years beginning
      after December 15, 2006 and was adopted by the Company in the first quarter
      of fiscal 2007.




We
      have
      reviewed the impact of FIN 48 on our consolidated condensed financial statements
      and have determined we do not have material uncertain tax positions or
      unrecognized tax benefits and there is no material impact on our financial
      position, results of operations or cash flows. We classify interest on tax
      settlements as a component of interest expense and penalties on tax settlements
      as a component of administrative expense in our financials. The Company’s FIN 48
      evaluation was performed for the years 2003 through 2006, which are the years
      that remain subject to federal and state examinations as of January 1,
      2007.





On
      February 15, 2007, the FASB issued Statement of Financial Accounting Standards
      No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities
      -
      Including an Amendment of FASB Statement No. 115" ("SFAS 159"). This standard
      permits an entity to measure financial instruments and certain other items
      at
      estimated fair value. Most of the provisions of SFAS No. 159 are elective;
      however, the amendment to FASB No. 115, "Accounting for Certain Investments
      in
      Debt and Equity Securities," applies to all entities that own trading and
      available-for-sale securities. The fair value option created by SFAS 159 permits
      an entity to measure eligible items at fair value as of specified election
      dates. The fair value option (a) may generally be applied instrument by
      instrument, (b) is irrevocable unless a new election date occurs, and (c) must
      be applied to the entire instrument and not to only a portion of the instrument.
      SFAS 159 is effective as of the beginning of the first fiscal year that begins
      after November 15, 2007. Early adoption is permitted as of the beginning of
      the
      previous fiscal year provided that the entity (i) makes that choice in the
      first
      120 days of that year, (ii) has not yet issued financial statements for any
      interim period of such year, and (iii) elects to apply the provisions of FASB
      157. We are currently evaluating the impact of SFAS 159, if any, on our
      consolidated financial statements.





8





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





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





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


**March
                  31,**
              
              **2007**
              
              **2006**Shares
                  subject to stock warrants
              
              
              3,903,336
              
              
              3,903,336Shares
                  subject to stock options
              
              
              1,678,900
              
              
              1,763,4005,582,236
              
              
              5,666,736
  **4.
      Merger and Private Offerings**





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





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





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




9





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





The
      Company’s registration statement on Form S-1 originally filed on February 28,
      2006 was declared effective by the Securities and Exchange Commission on July
      21, 2006. The Registration Statement includes 20,210,109 shares of common stock
      which are held by existing shareholders of the Company. The Company currently
      has 20,333,333 shares of common stock outstanding. The registration statement
      also includes 3,903,338 shares of common stock issuable upon exercise of
      warrants held by investors of the Company. The Company's shares will continue
      to
      trade under the symbol UBHI on the NASD OTC Bulletin Board.





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





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





A
      total
      of 2,500,000 shares of common stock have been reserved for issuance under the
      2005 Equity Incentive Plan. If an Incentive Award granted pursuant to the 2005
      Equity Incentive Plan expires, terminates, is unexercised or is forfeited,
      or if
      any shares are surrendered to the Company in connection with an
      Incentive Award, the shares subject to such award and the surrendered shares
      will become available for future awards under the 2005 Equity Incentive Plan.
      Options generally vest over a period of four years and have a ten year
      contractual life. At March 31, 2007 and 2006, the Company had options to
      purchase 1,678,900 and 1,763,400 shares, respectively, of common stock
      outstanding to certain officers and other employees. The compensation costs
      charged against income was $238 and $231 for the periods ended March 31, 2007
      and 2006, respectively, and are included in General and Administrative Expenses
      in the Consolidated Condensed Statement of Operations





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





The
      fair
      value of the options awarded during the periods ended March 31, 2007 and 2006,
      were estimated using the Black-Scholes option pricing model with the following
      weighted average assumptions:




10




**March
                  31,**
              
              **2007**
              
              **2006**Risk
                  -free interest rate
              
              
              5.0
              %
              
              5.0
              %Dividend
                  yield
              
              
              0.0
              %
              
              0.0
              %Expected
                  volatility
              
              
              68.0
              %
              
              68.0
              %Expected
                  life (years)
              
              
              6.0
              
              
              4.0Grant
                  date fair value
              
              $
              2.15
              
              $
              2.08Expected
                  forfeiture rate
              
              
              5.0
              %
              
              4.9
              %




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





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


**Weighted-****average****Shares
                  under**
              
              **exercise
                  price per****option**
              
              **share**Outstanding
                  at December 31, 2006
              
              
              1,530,600
              
              
              4.50Granted
              
              
              250,000
              
              
              1.49Exercised
              
              
              -
              
              
              -Surrendered
              
              
              (101,700
              )
              
              4.91Outstanding
                  at March 31, 2007
              
              
              1,678,900
              
              $
              4.08Exercisable
                  at March 31, 2007
              
              
              86,475
              
              $
              4.81




As
      of
      March 31, 2007 there was $3,381 of total unrecognized compensation cost related
      to the nonvested option awards under the 2005 Equity Incentive Plan. That cost
      is expected to be recognized over the 3.0 year remaining vesting period of
      the
      nonvested option awards. The total fair value of the option awards that vested
      during the three months ended March 31, 2007 was $74.





The
      following summarizes information about stock options at March 31,
      2007:




11


**Outstanding**
              
              **Exercisable****Weighted****Average**
              
              **Weighted**
              
              
              
              **Weighted****Number**
              
              **Remaining**
              
              **Average**
              
              **Number**
              
              **Average****Exercise**
              
              **Outstanding
                at**
              
              **Contractual**
              
              **Exercise**
              
              **Exercisable
                  at**
              
              **Exercise****Price**
              
              **March
                31, 2007**
              
              **Life**
              
              **Price**
              
              **March
                  31, 2007**
              
              **Price**$1.48
              
              
              100,000
              
              
              10.0
              
              $
              1.48
              
              
              -
              
              $
              -$1.50
              
              
              150,000
              
              
              10.0
              
              $
              1.50
              
              
              -
              
              $
              -$2.90
              
              
              51,400
              
              
              9.9
              
              $
              2.90
              
              
              3,125
              
              $
              2.9$3.55
              
              
              30,000
              
              
              9.8
              
              $
              3.55
              
              
              -
              
              $
              -$3.65
              
              
              1,000
              
              
              9.7
              
              $
              3.65
              
              
              -
              
              $
              -$3.95
              
              
              500
              
              
              9.7
              
              $
              3.95
              
              
              -
              
              $
              -$4.50
              
              
              1,261,800
              
              
              9.1
              
              $
              4.50
              
              
              65,450
              
              $
              4.50$5.25
              
              
              300
              
              
              9.6
              
              $
              5.30
              
              
              75
              
              $
              5.25$6.15
              
              
              1,000
              
              
              9.0
              
              $
              6.15
              
              
              -
              
              $
              -$6.15
              
              
              50,000
              
              
              9.0
              
              $
              6.15
              
              
              12,750
              
              $
              6.15$6.45
              
              
              0
              
              
              9.5
              
              $
              6.45
              
              
              -
              
              $
              -$6.49
              
              
              1,000
              
              
              9.5
              
              $
              6.49
              
              
              -
              
              $
              -$6.50
              
              
              300
              
              
              9.1
              
              $
              6.50
              
              
              -
              
              $
              -$6.50
              
              
              15,000
              
              
              9.2
              
              $
              6.50
              
              
              3,825
              
              $
              6.5$6.50
              
              
              10,000
              
              
              9.5
              
              $
              6.50
              
              
              -
              
              $
              -$6.65
              
              
              400
              
              
              9.3
              
              $
              6.65
              
              
              -
              
              $
              -$6.74
              
              
              5,000
              
              
              9.2
              
              $
              6.74
              
              
              1,250
              
              $
              6.74$6.80
              
              
              1,200
              
              
              9.5
              
              $
              6.80
              
              
              -
              
              $
              -1,678,900
              
              
              
              
              $
              4.08
              
              
              86,475
              
              $
              4.81




The
      aggregate intrinsic value of the outstanding options (the difference between
      the
      closing stock price on the last trading day of the year ended March 31, 2007
      of
      $1.20 per share and the exercise price, multiplied by the number of in-the-money
      options) was zero. This amount will change based on changes in the fair market
      value of the Company’s common stock.





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





On
      May 9, 2006, the Company and its subsidiaries entered into a Credit and
      Security Agreement with Wells Fargo Bank, National Association acting through
      Wells Fargo Business Credit and related security agreements and other agreements
      described in the Credit and Security Agreement (the “Credit Agreement”). The
      Credit Agreement provides for advances to the Company of up to a maximum of
      $25,000. The amount actually available to the Company will vary from time to
      time, depending on, among other factors, the amount of eligible inventory and
      the amount of eligible accounts receivable. The obligations under the Credit
      Agreement and all related agreements are secured by all of the Company assets.
      The initial term of the Agreement is three years, expiring on April 28,
      2009. Up to $7,000 of the maximum amount is available for irrevocable, standby
      and documentary letters of credit. Advances under the Credit Agreement bear
      interest at a base rate (Wells Fargo Bank's prime rate) or LIBOR plus 2.5%.
      The
      Credit Agreement requires a prepayment fee of $500 if the Company terminates
      the
      Credit Agreement during its first year, $375  if
      it
      terminates the Credit Agreement during its second year and $125 if the Company
      terminates the Credit Agreement during the third year. The Credit Agreement
      requires the Company, among other things, to limit capital expenditures and
      maintain minimum availability on the line. Also, the Company is obligated
      contractually by a restrictive lock box arrangement. The Credit Agreement also
      requires the Company to pay a variety of other fees and expenses, including
      minimum monthly interest of $10. The Company as of March 31, 2007 had $95 in
      deferred financing fees being amortized over the life of the Credit Agreement.
      As of March 31, 2007, the effective loan rate was 8.25% and the Company had
      no
      outstanding balance and was in compliance with all the loan
      covenants.




12





**7.
      Segment Information**





The
      Company is organized into four operating segments: Direct sales channel, UCM
      sales channel, Business to Business sales channel and Other. In classifying
      its
      operational entities into a particular segment, the Company segregated its
      operations with similar economic characteristics, products and services,
      customers and methods of distribution into distinct operating groups. Prior
      to
      March 31, 2007, all operating segments were aggregated into one reportable
      segment. The shift in revenues from the Direct sales channel to the UCM sales
      channel has resulted in separate reportable operating segments.





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





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





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





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


**Three
                  months Ended March 31,**Net
                  Revenue
              
              **2007**
              
              **2006**Direct
              
              $
              7,768
              
              $
              16,304UCM
              
              
              1,472
              
              
              1,009Business
                  to Business
              
              
              62
              
              
              2,687Other
              
              
              305
              
              
              88Total
              
              $
              9,607
              
              $
              20,088Gross
                  ProfitDirect
              
              $
              761
              
              $
              1,423UCM
              
              
              1,472
              
              
              1,009Business
                  to Business
              
              
              14
              
              
              390Other
              
              
              305
              
              
              88Total
              
              $
              2,552
              
              $
              2,910Gross
                  Profit %Direct
              
              
              9.8
              %
              
              8.7
              %UCM
              
              
              100.0
              %
              
              100.0
              %Business
                  to Business
              
              
              22.6
              %
              
              14.5
              %Other
              
              
              100.0
              %
              
              100.0
              %Total
              
              
              26.6
              %
              
              14.5
              %


13




**8.
      Subsequent Event**




On
      April
      25, 2007, the Company
      repurchased in a private transaction 2,135,550 shares of common stock and
      580,937 warrants at a combined price of $1.05 for the common stock and for
      the
      warrants for an aggregate total of $2,242,328 from a private investor. The
      repurchase represents 11% of the common stock and warrants currently
      outstanding. The Company has 18,197,783 outstanding shares of common stock
      after
      the repurchase.




**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, 2006. uBid.com Holdings, Inc. is a holding
      company for uBid, Inc., and DiBu Trading Corp., Inc. our operating businesses.
      For purposes of this Quarterly Report, unless otherwise indicated or the context
      otherwise requires, all references herein to “uBid,” “we,” “us,” and “our” refer
      to uBid.com Holdings, Inc. and our subsidiary.





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 the risk factors
      detailed in our filings with the SEC, including our Annual Report on Form 10-K
      for the year ended December 31, 2006. We assume no obligation to update such
      forward-looking statements or to update the reasons actual results could differ
      materially from those anticipated in such forward-looking statements.





**Overview**





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





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




14




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




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




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




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




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





**Executive
      Commentary**




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




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





***Gross
      Merchandise Sales (GMS)***


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





***Number
      of Orders***


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




***Average
      Order Value***


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




***Visitors***


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





***Bidders***


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





***Visitors
      to Bidder Conversion***


The
      percentage of visitors that bid on an auction item. We use this as a measure
      of
      the effectiveness of advertising.




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




15




**Q1**
              
              **Q4**
              
              **Q3**
              
              **Q2**
              
              **Q1**
              
              **Q4**
              
              **Q3**
              
              **Q2****2007**
              
              **2006**
              
              **2006**
              
              **2006**
              
              **2006**
              
              **2005**
              
              **2005**
              
              **2005****Measure**GMS
                  (in thousands)
              
              $
              23,402
              
              $
              26,276
              
              $
              26,528
              
              $
              30,286
              
              $
              31,167
              
              $
              31,035
              
              $
              27,215
              
              $
              28,020Number
                  of orders (in thousands)Direct
              
              
              21
              
              
              24
              
              
              23
              
              
              37
              
              
              36
              
              
              43
              
              
              36
              
              
              39uBid
                  Certified Merchant
              
              
              104
              
              
              99
              
              
              89
              
              
              88
              
              
              87
              
              
              93
              
              
              72
              
              
              64Total
                  orders
              
              
              125
              
              
              123
              
              
              112
              
              
              125
              
              
              123
              
              
              136
              
              
              108
              
              
              103Average
                  Order ValueDirect
              
              $
              390
              
              $
              424
              
              $
              424
              
              $
              416
              
              $
              465
              
              $
              398
              
              $
              495
              
              $
              493uBid
                  Certified Merchant
              
              $
              120
              
              $
              126
              
              $
              128
              
              $
              110
              
              $
              107
              
              $
              108
              
              $
              112
              
              $
              106Visitors
                  (in thousands)
              
              
              6,744
              
              
              6,529
              
              
              6,488
              
              
              7,215
              
              
              6,369
              
              
              7,051
              
              
              8,287
              
              
              7,545Bidders
                  (in thousands)
              
              
              235
              
              
              239
              
              
              211
              
              
              255
              
              
              241
              
              
              267
              
              
              222
              
              
              251Bidders
                  to Visitors Percentage
              
              
              3.5
              %
              
              3.7
              %
              
              3.3
              %
              
              3.5
              %
              
              3.8
              %
              
              3.8
              %
              
              2.7
              %
              
              3.3
              %Approved
                  UCM Vendors
              
              
              2,513
              
              
              2,049
              
              
              1,716
              
              
              1,307
              
              
              949
              
              
              628
              
              
              401
              
              
              202




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





Our
      revenue is dependent in part on sales of products produced by or purchased
      from
      Sony Electronics, Inc. (“Sony”), Hewlett-Packard Company (“HP”), and Recoupit,
      Inc.(“Recoupit”). Sony related products represent 15.1% of sales for the quarter
      ended March 31, 2007 compared to 12.7% for the quarter ended March 31, 2006.
      HP
      related products represented 22.5% of sales for the quarter ended March 31,
      2007
      compared to 10.3 % for the quarter ended March 31, 2006. Recoupit related
      products represented 7.3% of sales for the quarter ended March 31, 2007 compared
      to 4.1% for the quarter ended March 31, 2006. No other supplier represented
      more
      than 5% of our net revenues for any period presented.





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





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





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


16





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





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


**Three
                  months ended March
                  31****2007**
              
              **2006**Net
                  Revenues
              
              $
              9,607
              
              
              100.0
              %
              $
              20,088
              
              
              100.0
              %Cost
                  of Revenue
              
              
              7,055
              
              
              73.4
              %
              
              17,178
              
              
              85.5
              %Gross
                  margin
              
              
              2,552
              
              
              26.6
              %
              
              2,910
              
              
              14.5
              %General
                  and administrative
              
              
              3,022
              
              
              31.5
              %
              
              3,534
              
              
              17.6
              %Sales
                  and marketing
              
              
              1,069
              
              
              11.1
              %
              
              1,525
              
              
              7.6
              %Total
                  operating expenses
              
              
              4,091
              
              
              42.6
              %
              
              5,059
              
              
              25.2
              %Loss
                  from operations
              
              
              (1,539
              )
              
              (16.0
              )%
              
              (2,149
              )
              
              (10.7
              )%Interest
                  Income / (Expense) & Other, Net
              
              
              64
              
              
              0.7
              %
              
              146
              
              
              0.7
              %Other
                  Income / (Expense)
              
              
              60
              
              
              0.6
              %
              
              -
              
              
              0.0
              %Net
                  Loss
              
              $
              (1,415
              )
              
              (14.7
              )%
              $
              (2,003
              )
              
              (10.0
              )%




**Comparison
      of Three Months ended March 31, 2007 and March 31, 2006**





Net
      loss
      for the three months ended March 31, 2007, was $1,415 or $0.07 basic and diluted
      loss per share. In the three months ended March 31, 2006, the loss was $2,003
      or
      $0.10 basic and diluted loss per share. The loss decreased by $588 or 29.3%
      from
      the same period in the prior year.





***Net
      Revenues:*** Net
      revenues for the quarter ended March 31, 2007 were $9,607, a decrease of
      $10,481, or 52.2% compared to the quarter ended March 31, 2006. The decline
      is
      primarily due to the shift from the Direct sales channel to the UCM platform
      in
      which only commission revenue is recorded.





****** Direct
      sales declined $11,161 or 58.8% to $7,830 from $18,991. The number of direct
      orders decreased 15,000 or 41.7% and the average direct order decreased $75.00
      per order or 16.1%. The average sales prices of computers and other consumer
      electronics continued to decline in the current period compared to the same
      period of the prior year. The sales and order decline was in part due to the
      shift from the direct sales channel to the UCM sales channel.





UCM
      revenues increased $447 or 44.3% to $1,456 from $1,009. The number of UCM orders
      increased 4,000 or 4.6% and the average order increased $13.00 per order or
      12.1%. In November 2006, we implemented a $0.30 per order charge which led
      to
      increased commission revenue for the three month period ended March 31, 2007.
      The UCM program revenues and orders have increased as the Company shifts the
      revenues from the direct sales channel to the UCM sales channel as mentioned
      above.





Other
      revenue, primarily online advertising revenue, increased $233 as a result of
      actively pursuing new online advertising by the hiring of an employee
      specializing in the advertising revenue sales in the third quarter of
      2006.





***Gross
      Profit:*** Gross
      profit for quarter ended March 31, 2007 was $2,552, a decrease of $358 or 12.3%
      compared to the quarter ended March 31, 2006. In the current period gross profit
      as a percentage of sales increased to 26.6% compared to 14.5% in the period
      ended March 31, 2006. The increase was due to the change in revenue mix
      discussed above.


17




***Sales
      and Marketing, General and Administrative Expenses:*** SG&A
      expenses for the quarter ended March 31, 2007 were $4,091, a decrease of $968
      or
      19.1%, compared to the quarter ended March 31, 2006.


**Three
                  Month**
              
              **Three
                  Month****Period
                  Ended**
              
              **Period
                  Ended**
              
              **Increase****SG&A
                Expenses:**
              
              **March
                  31, 2007**
              
              **March
                  31, 2006**
              
              **(Decrease)**Stock-based
                  Compensation
              
              $
              238
              
              $
              231
              
              $
              7Salary
                  and Benefits
              
              
              1,277
              
              
              1,567
              
              
              (290
              )Warehouse
                  Expense
              
              
              175
              
              
              285
              
              
              (110
              )Depreciation
                  & Amortization
              
              
              182
              
              
              70
              
              
              112Advertising
                  Expense
              
              
              968
              
              
              1,332
              
              
              (364
              )Credit
                  Card Fees
              
              
              512
              
              
              688
              
              
              (176
              )Telecommunications,
                  Hardware and Storage
              
              
              154
              
              
              209
              
              
              (55
              )Legal,
                  Audit, Insurance, and other Regulatory Fees
              
              
              147
              
              
              271
              
              
              (124
              )Facilities
                  Expense
              
              
              143
              
              
              155
              
              
              (12
              )Related
                  Party Management Fees
              
              
              -
              
              
              30
              
              
              (30
              )Consulting
                  and Outside Services
              
              
              169
              
              
              109
              
              
              60Other
                  SG&A
              
              
              126
              
              
              112
              
              
              14$
              4,091
              
              $
              5,059
              
              $
              (968
              )




Advertising
      expense decreased $364 or 27.3% as we continued to eliminate the least effective
      marketing efforts to optimize profitable online campaigns including television
      and print campaigns. The cost per visitor decreased to $0.14 per visitor from
      $0.21 per visitor in the same period of the prior year.





Total
      General & Administrative expenses decreased by $604 or 16.2% from the
      quarter ended March 31, 2006. The decrease of $290 in salary and benefits is
      a
      result of eliminating certain positions in the third quarter 2006.





Warehouse
      expense and credit card fees decreased $110 and $176, respectively, due to
      the
      lower sales volume.





Telecommunications,
      hardware and storage expenses decreased $55 as a result of negotiating new
      contracts with favorable rates.





Legal,
      Audit, Insurance and other regulatory fees decreased $124 or 45.4% primarily
      as
      a result of lower insurance premiums and legal fees. The Company completed
      its
      private placement on February 3, 2006 and Company’s registration statement on
      Form S-1 was declared effective on July 21, 2006. The expenses were higher
      in
      the first quarter of 2006 due to closing of the private placement as well as
      the
      registration statement which was in the process of being declared
      effective.





The
      decreases in expenses were offset by increases in depreciation and amortization,
      other SG&A and consulting of $112, $14 and $60, respectively. The increase
      in depreciation and amortization was a result of the recent purchases of
      intangible assets and computer equipment. Consulting and Outside services
      expense increased as temporary help was brought in to the advertising department
      to help with several projects. Several items in Other SG&A increased, none
      of which were material.





***Other
      Expense:*** Net
      interest income was $64 for the quarter ended March 31, 2007 versus interest
      income of $146 for the quarter ended March 31, 2006. The decrease in net
      interest income is attributed to increased interest expense relating to the
      minimum interest payment due under the credit facility terms. The Company
      retired all debt after receiving the capital raised on December 29,
      2005.





***Net
      Losses:*** The
      Company experienced a net loss of $1,415 or $.07 per share for the quarter
      ended
      March 31, 2007 compared to a net loss of $2,003 or $.10 per share for the
      quarter ended March 31, 2006.




18




***Liquidity
      and Capital Resources***





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





Net
      cash
      used in operating activities for three months ended March 31, 2007 was $1,327,
      compared to $13,644 used in the three months ended March 31, 2006. The net
      cash
      used in operating activities in the 2007 quarter was primarily the result of
      our
      net loss and a $2,073 increase in inventory since the year ended December 31,
      2006. The increase in inventory was offset by an increase in accounts payable
      as
      open trade terms with suppliers helped finance the inventory increase. The
      increase in inventories is intended to increase product available for auction.
      Accounts receivable decreased $587 due to lower on account sales since December
      31, 2006. Prepaid expenses and other current assets decreased $279 from the
      year
      ended December 31, 2006 as interest receivable of $182 was collected. In
      addition, a $50 rent deposit for the Danville, Illinois facility was returned
      to
      the Company. The decrease in accrued expenses of $257 was primarily a result
      of
      lower payroll accruals due to the reduced staffing and lower freight costs
      due
      to lower volumes.





Net
      cash
      used in operating activities for the period ended March 31, 2006 was $13,644.
      Inventory increased $10,334 in the period ended March 31, 2006 compared to
      December 31, 2005. The inventory was increased in an attempt to reverse the
      decline in the Direct channel sales.





Net
      cash
      used in investing activities was $28 for the period ended March 31, 2007 due
      primarily to the purchase of property and equipment. Net cash provided by
      investing activities was $299 for the period ended March 31, 2006 primarily
      from
      a decrease in restricted investments as a result of the expiration of letters
      of
      credit that were no longer required to have restricted collateral.





Net
      cash
      provided by financing activities was $349 for the three months ended March
      31,
      2007, compared to a cash outflow of $823 for the same period last year. The
      cash
      inflow in 2007 is due to the increased inventory financed through the flooring
      facility. Net cash used in financing activities for the period ended March
      31,
      2006 was primarily related to payments made on the flooring
      facility.





For
      the
      period ended March 31, 2006, the majority of the cash used for financing
      activities related to the second part of the private offering of the
      Company’s units to accredited investors on February 3, 2006. In this
      offering, the Company sold 3,000,000 shares of its common stock
      and warrants to purchase 750,002 shares of its common stock on the
      same terms as described in Note 4 for an aggregate of $13.5
      million. The Company also redeemed 2,666,668 shares of common stock
      issued in connection with the merger and the first private offering
      that were subject to redemption at a price of $4.50 per share and issued
      600,667 shares of common stock (valued at $4.50 per share) to shareholders
      of
      Cape Coastal prior to the merger and uBid’s financial advisor, Calico Capital
      Group. In addition, the Company issued additional warrants to purchase
      90,000 shares of its common stock to its placement agents on the same
      terms as described in Note 4. The second part of the private offering resulted
      in no net cash proceeds being retained by the Company.





On
      May 9, 2006, the Company and its subsidiaries entered into a Credit and
      Security Agreement with Wells Fargo Bank, National Association acting through
      Wells Fargo Business Credit and related security agreements and other agreements
      described in the Credit and Security Agreement (the “Credit Agreement”). The
      Credit Agreement provides for advances to the Company of up to a maximum of
      $25,000. The amount actually available to the Company will vary from time to
      time, depending on, among other factors, the amount of eligible inventory and
      the amount of eligible accounts receivable. The obligations under the Credit
      Agreement and all related agreements are secured by all of the Company assets.
      The initial term of the Agreement is three years, expiring on April 28,
      2009. Up to $7,000 of the maximum amount is available for irrevocable, standby
      and documentary letters of credit. Advances under the Credit Agreement bear
      interest at a base rate (Wells Fargo Bank's prime rate) or LIBOR plus 2.5%.
      The
      Credit Agreement requires a prepayment fee of $500 if the Company terminates
      the
      Credit Agreement during its first year, $375  if
      it
      terminates the Credit Agreement during its second year and $125 if the Company
      terminates the Credit Agreement during the third year. The Credit Agreement
      requires the Company, among other things, to limit capital expenditures and
      maintain minimum availability on the line. Also, the Company is obligated
      contractually by a restrictive lock box arrangement. The Credit Agreement also
      requires the Company to pay a variety of other fees and expenses, including
      minimum monthly interest of $10. The Company as of March 31, 2007 had $95 in
      deferred financing fees being amortized over the life of the Credit Agreement.
      As of March 31, 2007, the effective loan rate was 8.25% and the Company had
      no
      outstanding balance and was in compliance with all the loan
      covenants.




19





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





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




We
      currently have little exposure to risks of fluctuating interest rates or
      fluctuating currency exchange rates. Accordingly, we do not believe that changes
      in interest or currency rates will have a material effect on our liquidity,
      financial condition or results of operations. It is our policy not to enter
      into
      derivative financial instruments.





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





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





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





***Internal
      Control Over Financial Reporting.*** There
      have been no changes in our internal control over financial reporting identified
      in the evaluation that occurred during the first quarter of fiscal year 2007
      that have materially affected, or are reasonably likely to materially affect,
      our internal control over financial reporting.




**PART
      II OTHER INFORMATION**





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





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





**ITEM
      1A. RISK FACTORS**





In
      addition to other information set forth in this report, you should carefully
      consider the factors discussed in Part 1, “Item 1A. Risk Factors” in our Annual
      Report on Form 10-K for the year ended December 31, 2006, which could materially
      affect our business, financial condition or future results. The risks described
      in our Annual Report on Form 10-K are not the only risks facing the Company.
      Additional risks and uncertainties not currently known to us or that are
      currently deemed to be immaterial also may materially adversely affect our
      business, financial conditions and/or operating results.




20




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





For
      the
      three months ended March 31, 2007, options to purchase an aggregate of 250,000
      shares of our common stock were granted to individuals, all of whom joined
      the
      Company’s board of directors. Options to purchase an aggregate of 150,000 shares
      at $1.50 per share were granted on February 13, 2007 and options to purchase
      an
      aggregate of 100,000 shares at $1.48 per share were granted on March 7, 2007.
      The options all have a term of ten years and vest over a four year period either
      quarterly or annually beginning on the first quarter or year respectively after
      the date of grant. The option grants were exempt from registration under Section
      4(2) of the Securities Act of 1933, as amended, which provides an exemption
      for
      transactions not involving a public offering.




**ITEM
      3. DEFAULT UPON SENIOR SECURITIES**





None




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




**ITEM
      5. OTHER INFORMATION**





None





**ITEM
      6. EXHIBITS**





See
      Exhibit Index on page following signature pages.


21





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





22


**SIGNATURES**





Pursuant
      to requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
      the Registrant has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized as of May 14, 2007.


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





23