**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 **September
      30, 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 November 14, 2007 was 18,197,783








**TABLE
      OF CONTENTS**





**Page**PART
                I
            Financial
                InformationItem
                1.
            Consolidated
                Condensed Financial Statements (Unaudited)Consolidated
                Condensed Balance Sheets (Unaudited) September 30, 2007 and December
                31,
                2006
            3Consolidated
                Condensed Statements of Operations (Unaudited) Three months and Nine
                months ended September 30, 2007 and 2006
            4Consolidated
                Condensed Statement of Shareholders' Equity (Unaudited) Nine months
                ended
                September 30, 2007
            5Consolidated
                Condensed Statements of Cash Flows (Unaudited) Nine months ended
                September
                30, 2007 and 2006
            6Notes
                to Consolidated Condensed Financial Statements
            7-14Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            15-25Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            25Item
                4.
            Controls
                and Procedures
            25PART
                II
            Other
              InformationItem
                1.
            Legal
                Proceedings
            26Item
                1A.
            Risk
                Factors
            26Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            26Item
                3.
            Default
                Upon Senior Securities
            26Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            26Item
                5.
            Other
                Information
            26Item
                6.
            Exhibits
            26-27Signatures
            
            28-32




2




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


**Consolidated
      Condensed Balance Sheets**


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


**(Unaudited)**





**September 30, 2007**
            
            **December 31, 2006****Assets****Current
                Assets**Cash
                and cash equivalents
            
            $
            9,376
            
            $
            14,785Restricted
                investments
            
            
            212
            
            
            214Accounts
                receivable, less allowance for doubtful accounts of $215 and $215,
                respectively
            
            
            1,880
            
            
            1,810Merchandise
                inventories, net
            
            
            5,001
            
            
            4,054Prepaid
                expenses and other current assets
            
            
            839
            
            
            1,189**Total
                Current Assets**
            
            
            17,308
            
            
            22,052**Property
                and Equipment, net**
            
            
            800
            
            
            924**Purchased
                Intangible Assets, net**
            
            
            242
            
            
            602**Total
                Assets**
            
            $
            18,350
            
            $
            23,578**Liabilities
                and Shareholders' Equity****Current
                Liabilities**Flooring
                facility
            
            $
            642
            
            $
            152Accounts
                payable
            
            
            3,539
            
            
            2,239Accrued
                expenses:Advertising
            
            
            511
            
            
            428Other
            
            
            946
            
            
            1,024**Total
                Current Liabilities**
            
            
            5,638
            
            
            3,843******Shareholders'
                Equity**Common
                stock, $.001 par value (200,000,000 shares authorized; 18,197,783
                and
                20,333,333 issued and outstanding, respectively)
            
            
            20
            
            
            20Treasury
                stock, 2,135,550 shares of common stock and 580,937 warrants at
                cost
            
            
            (2,242
            )
            
            -Stock
                warrants
            
            
            8,086
            
            
            8,086Additional
                paid-in-capital
            
            
            37,213
            
            
            36,848Accumulated
                deficit
            
            
            (30,365
            )
            
            (25,219
            )**Total
                Shareholders' Equity**
            
            
            12,712
            
            
            19,735**Total
                Liabilities and Shareholders' Equity**
            
            $
            18,350
            
            $
            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 September 30,**
            
            **Nine Months Ended September 30,**2007
            
            2006
            
            2007
            
            2006Net
                Revenues
            
            $
            9,720
            
            $
            14,366
            
            $
            32,990
            
            $
            53,551Cost
                of Revenues
            
            
            7,533
            
            
            12,425
            
            
            25,382
            
            
            46,583Gross
                Profit
            
            
            2,187
            
            
            1,941
            
            
            7,608
            
            
            6,968Operating
                ExpensesGeneral
                and administrative
            
            
            3,313
            
            
            3,454
            
            
            9,661
            
            
            10,439Sales
                and marketing
            
            
            1,117
            
            
            1,160
            
            
            3,317
            
            
            4,122Total
                operating expenses
            
            
            4,430
            
            
            4,614
            
            
            12,978
            
            
            14,561Loss
                From Operations
            
            
            (2,243
            )
            
            (2,673
            )
            
            (5,370
            )
            
            (7,593
            )Interest
                Expense
            
            
            (83
            )
            
            (110
            )
            
            (294
            )
            
            (267
            )Interest
                Income
            
            
            133
            
            
            122
            
            
            458
            
            
            475Other
                Income, net
            
            
            -
            
            
            -
            
            
            60
            
            
            -Net
                Loss
            
            $
            (2,193
            )
            $
            (2,661
            )
            $
            (5,146
            )
            $
            (7,385
            )Net
                Loss per share - Basic and Diluted
            
            $
            (0.12
            )
            $
            (0.13
            )
            $
            (0.27
            )
            $
            (0.37
            )Weighted
                Average Shares - Basic and Diluted
            
            
            18,197,783
            
            
            20,333,333
            
            
            19,089,551
            
            
            20,213,589





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





4




**uBid.com
      Holdings, Inc.**


**Consolidated
      Condensed Statement of Shareholders' Equity**


**(Dollars
      in Thousands)**


**(Unaudited)**





**Common
                Stock**
            
            **Stock**
            
            **Paid-in**
            
            **Treasury
                Stock**
            
            **Accumulated****Shares**
            
            **Dollars**
            
            **Warrants**
            
            **Capital**
            
            **Shares**
            
            **Dollars**
            
            **Deficit**
            
            **Total**Balance,
                December 31, 2006
            
            
            20,333,333
            
            $
            20
            
            $
            8,086
            
            $
            36,848
            
            
            —
            
            $
            —
            
            $
            (25,219
            )
            $
            19,735Stock
                compensation expense
            
            
            —
            
            
            —
            
            
            —
            
            
            365
            
            
            —
            
            
            —
            
            
            —
            
            
            365Common
                stock and warrants repurchase
            
            
            
            
            
            
            
            
            —
            
            
            —
            
            
            2,135,550
            
            
            (2,242
            )
            
            —
            
            
            (2,242
            )Net
                Loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (5,146
            )
            
            (5,146
            )Balance,
                September 30, 2007
            
            
            18,197,783
            
            $
            20
            
            $
            8,086
            
            $
            37,213
            
            
            2,135,550
            
            $
            (2,242
            )
            $
            (30,365
            )
            $
            12,712





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)**





**Nine
                Months Ended September 30,****2007**
            
            **2006****Cash
                Flows From Operating Activities**Net
                loss
            
            $
            (5,146
            )
            $
            (7,385
            )Adjustments
                to reconcile net loss to net cash used inOperating
                activitiesDepreciation
                and amortization
            
            
            642
            
            
            253Non-cash
                stock compensation expense
            
            
            365
            
            
            666Changes
                in assets and liabilities:Accounts
                receivable
            
            
            (70
            )
            
            (461
            )Merchandise
                inventories
            
            
            (947
            )
            
            (866
            )Prepaid
                expenses and other current assets
            
            
            350
            
            
            (225
            )Accounts
                payable
            
            
            1,300
            
            
            (2,388
            )Accrued
                expenses
            
            
            5
            
            
            (2,252
            )**Net
                cash used in operating activities**
            
            
            (3,501
            )
            
            (12,658
            )**Cash
                Flows From Investing Activities**Capital
                expenditures
            
            
            (158
            )
            
            (541
            )Purchase
                Intangible assets
            
            
            -
            
            
            (746
            )Change
                in restricted investments
            
            
            2
            
            
            6,790**Net
                cash (used in) provided by investing activities**
            
            
            (156
            )
            
            5,503**Cash
                Flows From financing Activities**Change
                in flooring facility
            
            
            490
            
            
            (1,254
            )Proceeds
                from sale of common stock and warrants
            
            
            -
            
            
            12,000Redemption
                of common stock
            
            
            -
            
            
            (12,000
            )Common
                stock and warrant repurchase
            
            
            (2,242
            )
            
            -Other
                financing activities
            
            
            -
            
            
            (308
            )**Net
                cash used in financing activities**
            
            
            (1,752
            )
            
            (1,562
            )**Net
                Decrease in Cash and Cash Equivalents**
            
            
            (5,409
            )
            
            (8,717
            )**Cash
                and Cash Equivalents, beginning of period**
            
            
            14,785
            
            
            21,176**Cash
                and Cash Equivalents, end of period**
            
            $
            9,376
            
            $
            12,459**Supplemented
                Cash Flow Disclosure**Cash
                paid for interest
            
            $
            205
            
            $
            333Warrants
                issued in second offering
            
            $
            -
            
            $
            1,560Warrants
                and stock issued as stock issuance costs
            
            $
            -
            
            $
            204




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**


**September** **30, 2007**


**Dollars
      in Thousands except share and 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, house wares, watches, jewelry, travel, sporting goods, home improvement
      products and collectibles. The Company’s marketplace employs a combination of
      auction style and fixed price formats.





The
      Company’s unaudited consolidated condensed financial statements reflect normal
      recurring adjustments that are necessary to present fairly the Company’s
      financial position and results of operations on a basis consistent with that
      of
      the prior audited consolidated financial statements. As permitted by rules
      and
      regulations of the Securities and Exchange Commission applicable to quarterly
      reports on Form 10-Q, the Company has condensed or omitted certain information
      and disclosures normally included in financial statements prepared in accordance
      with accounting principles generally accepted in the United States of America
      (“GAAP”). Results for interim periods are not necessarily indicative of the
      results that may be expected for a full year. These interim financial statements
      should be read along with the audited consolidated financial statements included
      in our Form 10-K for the year ended December 31, 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
      nine months ended September 30, 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 September 30, 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 September 30, 2007 and 2006 was
      approximately $0 and $206, respectively. The total compensation expense related
      to the stock option plan for the nine months ended September 30, 2007 and 2006
      was approximately $365 and $666, 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
      September 2006, the FASB issued SFAS No. 157, “Fair Value
      Measurements” (“SFAS 157”). SFAS 157 provides guidance for using fair
      value to measure assets and liabilities. It also responds to investors’ requests
      for expanded information about the extent to which companies measure assets
      and
      liabilities at fair value, the information used to measure fair value, and
      the
      effect of fair value measurements on earnings. SFAS 157 applies whenever
      other standards require (or permit) assets or liabilities to be measured at
      fair
      value, and does not expand the use of fair value in any new circumstances.
      SFAS 157 is effective for financial statements issued for fiscal years
      beginning after November 15, 2007 and is required to be adopted by the
      Company in the first quarter of 2008. The Company is currently evaluating the
      effect that the adoption of SFAS 157 will have on its consolidated results
      of operations and financial condition but does not expect it to have a material
      impact.





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.




**September
                30,**
            
            **2007**
            
            **2006**Shares
                subject to stock warrants
            
            
            3,232,939
            
            
            3,813,336Shares
                subject to stock options
            
            
            1,924,800
            
            
            1,863,7005,157,739
            
            
            5,677,036





**4.
      Merger and Private Offerings**





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





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





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





9




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





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 18,197,783 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.





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





**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 September 30, 2007 and 2006, the Company had options
      to purchase 1,924,800 and 1,863,700 shares, respectively, of common stock
      outstanding to certain officers and other employees. The compensation costs
      charged against income was $0 and $206 for the three months ended September
      30,
      2007 and 2006, respectively. The compensation costs charged was $365 and $666
      for the nine months ended September 30, 2007 and 2006, respectively.
      Compensation costs are included in General and Administrative Expenses in the
      Consolidated Condensed Statement of Operations.




10




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





The
      fair
      value of the options awarded for the three months and nine months ended
      September 30, 2007 and 2006, were estimated using the Black-Scholes option
      pricing model with the following weighted average assumptions:





****
            
            **Three months ended**
              **September 30,**
            
            **Nine months ended**
              **September 30,****2007**
            
            
            **2006**
            
            
            
            **2007**
            
            
            **2006**Risk
                -free interest rate
            
            
            5.0
            %
            
            5.0
            %
            
            
            5.0
            %
            
            5.0
            %Dividend
                yield
            
            
            0.0
            %
            
            0.0
            %
            
            
            0.0
            %
            
            0.0
            %Expected
                volatility
            
            
            68.0
            %
            
            68.0
            %
            
            
            68.0
            %
            
            68.0
            %Expected
                life (years)
            
            
            6.0
            
            
            6.0
            
            
            
            6.0
            
            
            6.0Weighted
                average grant date fair value
            
            $
            0.71
            
            $
            3.02
            
            
            $
            0.77
            
            $
            3.75Estimated
                forfeiture rate
            
            
            31.8
            %
            
            14.6
            %
            
            
            31.8
            %
            
            14.6
            %




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.




11




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





**Shares under**
              **option**
            
            **Weighted-**
              **average**
              **exercise price per**
              **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
            
            4.08Granted
            
            120,000
            
            1.68Exercised
            
            
            -
            
            
            -Surrendered
            
            
            (36,700
            )
            
            5.12Outstanding
                at June 30, 2007
            
            
            1,762,200
            
            
            3.96Granted
            
            
            688,000
            
            
            1.17Exercised
            
            
            -
            
            
            -Surrendered
            
            
            (525,400
            )
            
            4.43Outstanding
                at September 30, 2007
            
            
            1,924,800
            
            $
            2.77Exercisable
                at September 30, 2007
            
            
            122,700
            
            $
            3.78





As
      of
      September 30, 2007 there was $1,834 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 2.8 year remaining vesting
      period of the nonvested option awards. The total fair value of the option awards
      that vested during the three months and nine months ended September 30, 2007
      was
      $10 and $96, respectively.





The
      following summarizes information about stock options at September 30,
      2007:




**Outstanding**
              
              **Exercisable****Exercise**
                **Price**
              
              ******Number**
                **Outstanding at**
                **September 30, 2007**
              
              **Weighted**
                **Average**
                **Remaining**
                **Contractual**
                **Life**
              
              **Weighted**
                **Average**
                **Exercise**
                **Price**
              
              **Number**
                **Exercisable at**
                **September 30, 2007**
              
              **Weighted**
                **Average**
                **Exercise**
                **Price**.01
                  - 2.00
              
              
              1,037,600
              
              
              9.8
              
              $
              1.46
              
              
              34,375
              
              $
              1.492.01
                  - 4.00
              
              
              72,900
              
              
              9.7
              
              $
              3.02
              
              
              9,750
              
              $
              2.934.01
                  - 6.00
              
              
              746,400
              
              
              8.3
              
              $
              4.50
              
              
              61,600
              
              $
              4.56.01+
              
              
              67,900
              
              
              8.4
              
              $
              6.26
              
              
              16,975
              
              $
              6.261,924,800
              
              
              
              
              $
              2.77
              
              
              122,700
              
              $
              3.78




The
      aggregate intrinsic value of the outstanding options (the difference between
      the
      closing stock price on the last trading day of the period ended September 30,
      2007 of $1.30 per share and the exercise price, multiplied by the number of
      in-the-money options) was $101. This amount will change based on changes in
      the
      fair market value of the Company’s common stock.




12




**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 annual interest of $120. The Company, as of September 30, 2007, had
      $59
      in deferred financing fees being amortized over the life of the Credit
      Agreement. As of September 30, 2007, the effective loan rate was 8.25% and
      the
      Company had no outstanding balance and was in compliance with all the loan
      covenants.





**7.
      Segment Information**





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





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





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





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





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




13




**(Dollars
                in Thousands)****Three months
                Ended September 30,**
            
            **Nine
                months Ended September 30,**Net
                Revenue
            
            
            **2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Direct
            
            $
            7,008
            
            $
            9,395
            
            $
            23,778
            
            $
            40,648UCM
            
            
            1,447
            
            
            1,138
            
            
            4,244
            
            
            3,206Business
                to Business
            
            
            973
            
            
            3,642
            
            
            4,069
            
            
            9,321Other
            
            
            292
            
            
            191
            
            
            899
            
            
            376Total
            
            $
            9,720
            
            $
            14,366
            
            $
            32,990
            
            $
            53,551Gross
                ProfitDirect
            
            $
            358
            
            $
            330
            
            $
            1,991
            
            $
            2,645UCM
            
            
            1,447
            
            
            1,138
            
            
            4,244
            
            
            3,206Business
                to Business
            
            
            90
            
            
            282
            
            
            474
            
            
            741Other
            
            
            292
            
            
            191
            
            
            899
            
            
            376Total
            
            $
            2,187
            
            $
            1,941
            
            $
            7,608
            
            $
            6,968Gross
                Profit %Direct
            
            
            5.1
            %
            
            3.5
            %
            
            8.4
            %
            
            6.5
            %UCM
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Business
                to Business
            
            
            9.2
            %
            
            7.7
            %
            
            11.6
            %
            
            7.9
            %Other
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Total
            
            
            22.5
            %
            
            13.5
            %
            
            23.1
            %
            
            13.0
            %


14




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





The
      following discussion and analysis of our financial condition and results of
      operations should be read in conjunction with our consolidated condensed
      financial statements and related notes included in Item 1 of Part 1 of this
      Quarterly Report and the audited consolidated financial statements and notes
      thereto and Management’s Discussion and Analysis of Financial Condition and
      Results of Operations contained in the Company’s Annual Report on Form 10-K for
      the fiscal year ended December 31, 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 subsidiaries.





Information
      in the following Management's Discussion and Analysis of Financial Condition
      and
      Results of Operations and elsewhere in this quarterly report contains
      forward-looking statements within the meaning of Section 27A of the Securities
      Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
      Forward-looking statements provide current expectations or forecasts of future
      events and can be identified by the use of terminology such as “believe,”
“estimate,” “expect,” “intend,” “may,” “could,” “will,” and similar words or
      expressions. Any statement that is not a historical fact, including statements
      regarding estimates, projections, future trends and the outcome of events that
      have not yet occurred, is a forward-looking statement. Actual results could
      differ materially from those projected in the forward-looking statements as
      a
      result of a number of factors, including but not limited to the risk factors
      detailed in our filings with the SEC, including our Annual Report on Form 10-K
      for the year ended December 31, 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, house wares, watches, jewelry, travel, sporting goods, home improvement
      products and collectibles.





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




Our
      business model consists of 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.




15




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




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





**Recent
      Developments**




On
      September 20, 2007, Robert H. Tomlinson Jr. resigned as the Company’s Chief
      Executive Officer. Mr. Tomlinson had informed the Board of Directors on March
      26, 2007 that he would not be renewing his employment agreement that terminated
      on December 29, 2007. The Board of Directors appointed Mr. Jeffrey D. Hoffman
      as
      the successor Chief Executive Officer. Mr. Hoffman’s employment with the Company
      commenced effective September 21, 2007.





**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.




16




***Approved
      UCM Program Vendors***


Vendors
      that have gone through the approval process to sell merchandise through our
      website.





**(In
                Thousands except Average Order Value and Approved UCM
                Vendors)****Q3**
              **2007**
            
            **Q22007**
            
            **Q1****2007**
            
            **Q4****2006**
            
            **Q3****2006**
            
            **Q2****2006**
            
            **Q1****2006**
            
            **Q4****2005****Measure**GMS
                (in thousands)
            
            $
            23,704
            
            $
            26,368
            
            $
            23,402
            
            $
            26,276
            
            $
            26,528
            
            $
            30,286
            
            $
            31,167
            
            $
            31,035Number
                of orders (in thousands)Direct
            
            
            20
            
            
            29
            
            
            21
            
            
            24
            
            
            23
            
            
            37
            
            
            36
            
            
            43uBid
                Certified Merchant
            
            
            101
            
            
            98
            
            
            104
            
            
            99
            
            
            89
            
            
            88
            
            
            87
            
            
            93Total
                orders
            
            
            121
            
            
            127
            
            
            125
            
            
            123
            
            
            112
            
            
            125
            
            
            123
            
            
            136Average
                Order ValueDirect
            
            $
            355
            
            $
            336
            
            $
            390
            
            $
            424
            
            $
            424
            
            $
            416
            
            $
            465
            
            $
            398uBid
                Certified Merchant
            
            $
            129
            
            $
            119
            
            $
            120
            
            $
            126
            
            $
            128
            
            $
            110
            
            $
            107
            
            $
            108Visitors
                (in thousands)
            
            
            7,224
            
            
            6,901
            
            
            6,744
            
            
            6,529
            
            
            6,488
            
            
            7,215
            
            
            6,369
            
            
            7,051Bidders
                (in thousands)
            
            
            218
            
            
            231
            
            
            235
            
            
            239
            
            
            211
            
            
            255
            
            
            241
            
            
            267Bidders
                to Visitors Percentage
            
            
            3.0
            %
            
            3.3
            %
            
            3.5
            %
            
            3.7
            %
            
            3.3
            %
            
            3.5
            %
            
            3.8
            %
            
            3.8
            %Approved
                UCM Vendors
            
            
            3,321
            
            
            2,873
            
            
            2,513
            
            
            2,049
            
            
            1,716
            
            
            1,307
            
            
            949
            
            
            628





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





Our
      revenue is dependent in part on sales of products produced by or purchased
      from
      Sony Electronics, Inc. (“Sony”), Hewlett-Packard Company (“HP”), Recoupit,
      Inc.(“Recoupit”), Electronic Hardware Services (“EHS”) and Always at Market,
      Inc.(“Always at Market”). The following table represents the respective vendors’
percentage of sales for the three and nine months ended September 30, 2007
      and
      September 30, 2006. No other supplier represented more than 5% of our net
      revenues for any period presented.





****
            
            **Three
                months endedSeptember 30,**
            
            **Nine
                months endedSeptember 30,****2007**
            
            **2006**
            
            **2007**
            
            **2006****Vendor**HP
            
            
            28.0
            %
            
            16.8
            %
            
            24.6
            %
            
            13.6
            %Recoupit
            
            
            8.4
            %
            
            6.2
            %
            
            7.8
            %
            
            5.0
            %EHS
            
            
            6.4
            %
            
            4.6
            %
            
            3.0
            %
            
            6.0
            %Sony
            
            
            6.1
            %
            
            15.3
            %
            
            11.9
            %
            
            15.1
            %Always
                at Market
            
            
            4.9
            %
            
            6.8
            %
            
            5.5
            %
            
            6.3
            %




***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.





17




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


18





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





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





**(Dollars
                in Thousands)****Three
                months ended September 30,**
            
            **Nine
                months ended September 30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**Net
                Revenues:Direct
            
            $
            7,008
            
            
            72.1
            %
            $
            9,395
            
            
            65.4
            %
            $
            23,778
            
            
            72.1
            %
            $
            40,648
            
            
            75.9
            %UCM
            
            
            1,447
            
            
            14.9
            %
            
            1,138
            
            
            7.9
            %
            
            4,244
            
            
            12.9
            %
            
            3,206
            
            
            6.0
            %Business
                to Business
            
            
            973
            
            
            10.0
            %
            
            3,642
            
            
            25.4
            %
            
            4,069
            
            
            12.3
            %
            
            9,321
            
            
            17.4
            %Other
            
            
            292
            
            
            3.0
            %
            
            191
            
            
            1.3
            %
            
            899
            
            
            2.7
            %
            
            376
            
            
            0.7
            %Total
                Net Revenues
            
            
            9,720
            
            
            100
            %
            
            14,366
            
            
            100
            %
            
            32,990
            
            
            100
            %
            
            53,551
            
            
            100
            %Gross
                Profit:Direct
            
            
            358
            
            
            3.7
            %
            
            330
            
            
            2.3
            %
            
            1,991
            
            
            6.0
            %
            
            2,645
            
            
            4.9
            %UCM
            
            
            1,447
            
            
            14.9
            %
            
            1,138
            
            
            7.9
            %
            
            4,244
            
            
            12.9
            %
            
            3,206
            
            
            6.0
            %Business
                to Business
            
            
            90
            
            
            0.9
            %
            
            282
            
            
            2.0
            %
            
            474
            
            
            1.4
            %
            
            741
            
            
            1.4
            %Other
            
            
            292
            
            
            3.0
            %
            
            191
            
            
            1.3
            %
            
            899
            
            
            2.7
            %
            
            376
            
            
            0.7
            %Total
                Gross Profit
            
            
            2,187
            
            
            22.5
            %
            
            1,941
            
            
            13.5
            %
            
            7,608
            
            
            23.1
            %
            
            6,968
            
            
            13.0
            %General
                and administrative
            
            
            3,313
            
            
            34.1
            %
            
            3,454
            
            
            24.0
            %
            
            9,661
            
            
            29.3
            %
            
            10,439
            
            
            19.5
            %Sales
                and marketing
            
            
            1,117
            
            
            11.5
            %
            
            1,160
            
            
            8.1
            %
            
            3,317
            
            
            10.1
            %
            
            4,122
            
            
            7.7
            %Total
                operating expenses
            
            
            4,430
            
            
            45.6
            %
            
            4,614
            
            
            32.1
            %
            
            12,978
            
            
            39.3
            %
            
            14,561
            
            
            27.2
            %Loss
                from operations
            
            
            (2,243
            )
            
            (23.1
            )%
            
            (2,673
            )
            
            (18.6
            )%
            
            (5,370
            )
            
            (16.3
            )%
            
            (7,593
            )
            
            (14.2
            )%Interest
                Income / (Expense) & Other, Net
            
            
            50
            
            
            0.5
            %
            
            12
            
            
            0.1
            %
            
            164
            
            
            0.5
            %
            
            208
            
            
            0.4
            %Other
                Income / (Expense)
            
            
            -
            
            
            -
            %
            
            -
            
            
            -
            %
            
            60
            
            
            -
            %
            
            -
            
            
            -
            %Net
                Loss
            
            $
            (2,193
            )
            
            (22.6
            )%
            $
            (2,661
            )
            
            (18.5
            )%
            $
            (5,146
            )
            
            (15.6
            )%
            $
            (7,385
            )
            
            (13.8
            )%





**Comparison
      of Three Months ended September 30, 2007 and** **September** **30, 2006**





Net
      loss
      for the three months ended September 30, 2007
      was $2,193 or $0.12 basic and diluted loss per share. For the three months
      ended September 30,
      2006, the loss was $2,661 or $0.13 basic and diluted loss per share. The loss
      decreased by $468 or 17.6% from the same period in the prior year.




***Direct
      Channel:*** Direct
      channel sales decreased $2,387 or 25.4% to $7,008 for the three months ended September 30, 2007
      compared to $9,395 in the same period last year. In the current period the
      number of Direct orders decreased 3,000 or 13.0% and the average order value
      decreased $69.00 or 16.3% to $355.00 per order. The
      decline in the number of direct orders is primarily due to a shift from the
      Direct channel sales to the UCM platform in which only commission revenue is
      recorded and an improved effort in managing product posted for
      auction. The
      decrease in the average order value was primarily due to decreased selling
      prices for desktop computers. The decrease was partially offset by increases
      in
      sales of notebook computers and improved average order values in video and
      digital cameras.





The
      Direct channel gross profit increased $28 or 8.5% for the three months ended September 30, 2007
      compared to the same period in the prior year. The Direct channel gross profit
      percentage increased 1.4% to 3.7% for the three months ended September 30, 2007
      compared to 2.3% for the three months ended September 30,
      2006. The increase was a result of an
      improved effort in managing product posted for auction.  The
      decreased order volume resulted in lower distribution and variable operating
      costs which offset the margin dollar loss and improved the overall
      profitability. Negatively impacting gross profit was an inventory write-down
      of
      $137 for the three months ended September 30, 2007 compared to a write-down
      of
      $804 in the same period of the prior year.




***UCM
      Channel:*** ** UCM
      revenues and gross profit increased $309 or 27.2% to $1,447 for the three months
      ended September 30, 2007
      compared to revenue and gross profit of $1,138 in the same period of the prior
      year. In the current period the number of UCM orders increased 12,000 or 13.5%
      and the average order value increased $1.00 or 0.8% to $129.00 per order. The
      number of UCM vendors increased 1,605 or 93.5% to 3,321 vendors compared to
      1,716 at September 30,
      2006. The increase in UCM orders and the average order value is primarily due
      to
      the shift of revenue and volume from the Direct sales channel to the UCM channel
      along with an increase in the number of UCM vendors.





19




***Business
      to Business:*** Business
      to Business revenues decreased $2,669 or 73.3% for the three months ended September 30, 2007
      compared to the same period in the prior year. Gross profit decreased $192
      or
      68.1% to $90 for the quarter ended September 30, 2007
      compared to $282 for the quarter ended September 30,
      2006. The gross profit percentage decreased to 0.9% for the three months ended September 30, 2007
      compared to 2.0% in the same period of the prior year. Business to Business
      channel revenue and gross profit decreased due to lower availability of
      opportunistic purchases in the current quarter and the restructure of the Dibu
      Trading sales force in the fourth quarter of 2006.





***Other
      Revenue:*** Other
      revenue and gross profit primarily comprised of online advertising revenue
      increased $101 or 52.9% for the three months ended September 30,
      2007. The increase resulted from the enlistment of several new advertising
      customers on our website.


20




***Sales
      and Marketing, General and Administrative Expenses:*** SG&A
      expenses for the quarter ended September 30, 2007 were $4,430, a decrease of
      $184 or 4.0%, compared to the quarter ended September 30, 2006.





**(Dollars
                in Thousands)****Three
                Month Period Ended****SG&A
                Expenses:**
            
            **September 30, 2007**
            
            **September 30, 2006**
            
            **Increase (Decrease)**Advertising
            
            $
            977
            
            $
            977
            
            $
            -Salary
                and benefits
            
            
            1,629
            
            
            1,846
            
            
            (217
            )Stock-based
                compensation
            
            
            -
            
            
            206
            
            
            (206
            )Facilities
            
            
            111
            
            
            159
            
            
            (48
            )Warehouse
            
            
            189
            
            
            235
            
            
            (46
            )Credit
                card fees
            
            
            516
            
            
            462
            
            
            54Telecommunications,
                hardware and storage
            
            
            150
            
            
            162
            
            
            (12
            )Legal,
                audit, insurance, and other regulatory fees
            
            
            423
            
            
            198
            
            
            225Depreciation
                & amortization
            
            
            233
            
            
            110
            
            
            123Consulting
                and outside services
            
            
            141
            
            
            129
            
            
            12Other
                SG&A
            
            
            61
            
            
            130
            
            
            (69
            )$
            4,430
            
            $
            4,614
            
            $
            (184
            )




Advertising
      expense was unchanged and visitor traffic increased 736,000 or 11.3% as we
      continued to eliminate the least effective marketing efforts to optimize
      profitable online campaigns in addition to television and print campaigns.
      The
      cost per visitor decreased to $0.14 per visitor from $0.15 per visitor in the
      same period of the prior year. The conversion rate declined .3% to 3.0% in
      the
      three months ended September 30, 2007 compared to 3.3% for the three months
      ended September 30, 2006. The decline in the conversion rate was primarily
      due
      to a pay per visitor Direct TV campaign that generated an increase in visitor
      traffic to the website but resulted in visitors that did not convert to bidders
      at the same rate as traditional online campaigns. The pay per visitor Direct
      TV
      campaign differed from previous Direct TV campaigns which ran in the first
      six
      months of 2007 whereby selected air time slots were purchased.





Salary
      and benefits expense decreased $217 or 11.8% as a result of eliminating certain
      positions in the third quarter 2006. Stock compensation decreased $206 due
      to
      the increased number of forfeited stock options during the three months ended
      September 30, 2007. Partially offsetting the decrease in Salary and benefits
      was
      $125 in recruiting fees, $100 in relocation expense and $95 in severance expense
      incurred in the quarter ended September 30, 2007 for the transition and
      replacement of the Chief Executive Officer position.





Facilities
      expense decreased $48 or 30.2% due to the relocation of both our corporate
      office and the customer service center to new facilities with decreased lease
      costs.





Warehouse
      expense decreased $46 or 19.6% due to the lower direct sales
      volume.





Telecommunications,
      hardware and storage expenses decreased $12 as a result of negotiating new
      maintenance contracts with favorable rates.





The
      decreases in expenses were offset by the following increases:





Depreciation
      and amortization increased by $123 or 111.8% as a result of the purchase of
      intangible assets and computer equipment.





Legal,
      audit, insurance and other regulatory fees increased $225 or 113.6% primarily
      due to expenses associated with the implementation of a Sarbanes Oxley
      compliance program.





Consulting
      and outside services expense increased $12 or 9.3% as temporary help was brought
      in to the advertising department to help with several projects.




21




Credit
      card fees increased $54 or 11.7%. The increase is primarily attributable to
      a
      $40 increase in processing due to processing rate increases and a $14 increase
      in chargeback’s primarily related to fraud.





***Other
      Expense:*** Net
      interest income was $50 for the quarter ended September 30, 2007 compared to
      interest income of $12 for the quarter ended September 30, 2006. The increase
      in
      net interest income is attributed to decreased interest expense relating to
      borrowing costs under the terms of the credit facility. The Company retired
      all
      debt after receiving the capital raised on December 29, 2005.





***Net
      Losses:*** The
      Company experienced a net loss of $2,193 or $0.12 per share for the quarter
      ended September 30, 2007 compared to a net loss of $2,661 or $0.13 per share
      for
      the quarter ended September 30, 2006.





**Comparison
      of Nine Months ended** **September** **30, 2007 and September 30, 2006**





Net
      loss
      for the nine months ended September 30,
      2007, was $5,146 or $0.27 basic and diluted loss per share. For the nine months
      ended September 30,
      2006, the loss was $7,385 or $0.37 basic and diluted loss per share. The loss
      decreased by $2,239 or 30.3% from the same period in the prior
      year.





***Direct
      Sales:*** Direct
      channel sales decreased $16,870 or 41.5% to $23,778 for the nine months ended September 30, 2007
      compared to Direct sales of $40,648 in the same period of the prior year. In
      the
      current period the number of direct orders decreased 26,000 or 27.1% and the
      average order value decreased by $75.00 or 17.2% per order. The
      decline in the number of direct orders continues to be due to a shift from
      the
      Direct channel sales to the UCM platform in which only commission revenue is
      recorded and an improved effort in managing product posted for
      auction. The
      decrease in the average order value was due primarily to decreases in video,
      portable audio and desktop computers. This decrease was offset by an increase
      in
      sales of portable computers and digital cameras.





The
      Direct channel gross profit decreased by $654 or 24.7% for the nine months
      ended September 30, 2007
      compared to the same period of the prior year. The Direct channel gross profit
      percentage increased 1.1% to 6.0% for the nine months ended September 30, 2007
      compared to 4.9% for the nine months ended September 30,
      2006. The increase was a result of an
      improved effort in managing product posted for auction. Negatively
      impacting gross profit were inventory write-downs of $331 for the nine months
      ended September 30, 2007 compared to write-downs of $1,374 for the same period
      of the prior year .





***UCM
      Channel:*** UCM
      revenues and gross profit increased $1,038 or 32.4% to $4,244 for the nine
      months ended September 30, 2007
      compared to revenue and gross profit of $3,206 in the same period of the prior
      year. In the current period the number of UCM orders increased 39,000 or 14.8%
      and the average order value increased $8.00 or 6.7% per order. The UCM orders
      and the average order value increased primarily due to the shift of revenue
      and
      volume from the Direct sales channel to the UCM channel along with the increase
      in the number of UCM vendors.





***Business
      to Business:*** Business
      to Business revenues decreased $5,252 or 56.3% for the nine months ended September 30, 2007
      compared to the same period in the prior year. For the nine months ended
      September 30, 2007 we had sales of $4,069 compared to $9,321 in the same period
      of the prior year primarily due to a restructuring and reduction of the Business
      to Business sales force in the fourth quarter of 2006.





***Other
      Revenue:*** Other
      revenue and gross profit primarily comprised of online advertising revenue
      increased $523 or 139.1% for the nine months ended September 30,
      2007. The increase resulted from the enlistment of several new advertising
      customers on our website.





Total
      Gross profit increased $640 or 9.2% to $7,608 for the nine months ended September 30, 2007
      compared to $6,968 for the nine months ended September 30,
      2006. The gross profit percentage increased to 23.1% for the nine months ended September 30, 2007
      compared to 13.0% in the same period of the prior year.





22





***Sales
      and Marketing, General and Administrative Expenses:*** SG&A
      expenses for the nine months ended September 30, 2007 were $12,978, a decrease
      of $1,583 or 10.9%, compared to the nine months ended September 30, 2006.





**(Dollars
                in Thousands)****Nine
                Month Period Ended****SG&A
                Expenses:**
            
            **September 30, 2007**
            
            **September 30, 2006**
            
            **Increase (Decrease)**Advertising
            
            $
            2,938
            
            $
            3,595
            
            $
            (657
            )Salary
                and benefits
            
            
            4,151
            
            
            4,959
            
            
            (808
            )Stock-based
                compensation
            
            
            365
            
            
            666
            
            
            (301
            )Facilities
            
            
            376
            
            
            474
            
            
            (98
            )Warehouse
            
            
            549
            
            
            824
            
            
            (275
            )Credit
                card fees
            
            
            1,559
            
            
            1,746
            
            
            (187
            )Telecommunications,
                hardware and storage
            
            
            474
            
            
            577
            
            
            (103
            )Legal,
                audit, insurance, and other regulatory fees
            
            
            846
            
            
            729
            
            
            117Depreciation
                & amortization
            
            
            642
            
            
            253
            
            
            389Bad
                debt
            
            
            352
            
            
            -
            
            
            352Consulting
                and outside services
            
            
            484
            
            
            359
            
            
            125Related
                party management fees
            
            
            -
            
            
            30
            
            
            (30
            )Other
                SG&A
            
            
            242
            
            
            349
            
            
            (107
            )$
            12,978
            
            $
            14,561
            
            $
            (1,583
            )




Advertising
      expense decreased $657 or 18.3% as we continued to eliminate the least effective
      marketing efforts to optimize profitable online campaigns, television and print
      campaigns. The cost per visitor decreased to $0.14 per visitor from $0.18 per
      visitor in the same period of the prior year.





Salary
      and benefits expense decreased $808 or 16.3% as a result of eliminating certain
      positions in the third quarter 2006. This reduction in positions also led to
      a
      $301 or 45.2% decrease in stock based compensation. Partially offsetting the
      decrease in Salary and benefits was $125 in recruiting fees, $100 in relocation
      expense and $95 in severance expense incurred in the quarter ended September
      30,
      2007 for the transition and replacement of the Chief Executive Officer
      position.





Facilities
      expense decreased $98 or 20.7% due to the relocation of both our corporate
      office and the customer service center to new facilities with decreased lease
      costs.





Warehouse
      expense and credit card fees decreased $275 or 33.4% and $187 or 10.7%,
      respectively, primarily due to lower Direct channel sales volume.





Telecommunications,
      hardware and storage expenses decreased $103 as a result of negotiating new
      maintenance contracts with favorable rates.





The
      decreases in expenses were offset by the following increases:





Legal,
      audit, insurance and other regulatory fees increased $117 or 16.0 % primarily
      as
      a result of the initial costs of a Sarbanes Oxley compliance program.





Depreciation
      and amortization increased $389 or 153.8% primarily as a result of the purchase
      of intangible assets and computer equipment.





Bad
      debt
      increased $352 or 100% attributable to a bad debt incurred by Dibu Trading
      corp., our Business to Business unit, for partial settlement of an aged
      debt.





23




Consulting
      and outside services increased $125 or 34.8% as temporary help was brought
      in to
      facilitate the completion of several projects and initiatives.




***Other
      Expense:*** Net
      interest income was $164 for the year to date as of September 30, 2007 compared
      to interest income of $208 for the same period 2006. The decrease in net
      interest income is attributed to increased interest expense relating to
      borrowing costs 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 $5,146 or $0.26 per share for year to date
      as
      of September 30, 2007 compared to a net loss of $7,385 or $0.37 per share for
      the same period 2006.




***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 the nine months ended September 30, 2007 was
      $3,501 compared to $12,658 used in the nine months ended September 30, 2006.
      The
      net cash used in operating activities in 2007 was primarily the result of our
      net loss and a $947 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 increased $70 primarily due to increased open account terms
      in the business to business sales channel. Prepaid expenses and other current
      assets decreased $350 from the year ended December 31, 2006 as interest
      receivable of $114 was collected. In addition, a $50 rent deposit for the
      customer service center facility was returned to the Company. The decrease
      in
      accrued expenses of $5 was primarily the result of lower payroll accruals due
      to
      the reduced staffing and lower freight costs due to lower Direct channel sales
      volumes.





Net
      cash
      used in investing activities was $156 for the nine months ended September 30,
      2007 due primarily to the purchase of property and equipment. Net cash provided
      by investing activities was $5,503 for the period ended September 30, 2006
      primarily from a decrease in restricted investments as a result of the
      expiration of letters of credit that were no longer required as restricted
      collateral.





Net
      cash
      used by financing activities was $1,752 for the nine months ended September
      30,
      2007, compared to a cash outflow of $1,562 for the same period last year. The
      cash outflow in 2007 is due to the stock repurchase offset by the decrease
      in
      inventory financed through the flooring facility. 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 from a private investor. The
      repurchase represents 11% of the common stock and warrants currently
      outstanding.




For
      the period ended September 30, 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 to the consolidated
      condensed financial statements in this report 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 to the consolidated condensed financial statements
      in this report. The second part of the private offering resulted in no net
      cash
      proceeds being retained by the Company.




24





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 annual interest of $120. The Company as of September 30, 2007 had $59
      in
      deferred financing fees being amortized over the life of the Credit Agreement.
      As of September 30, 2007, the effective loan rate was 8.25% and the Company
      had
      no outstanding balance and was in compliance with all the loan
      covenants.





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 third quarter of fiscal year 2007
      that have materially affected, or are reasonably likely to materially affect,
      our internal control over financial reporting.




25




**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.




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





For
      the
      nine months ended September 30, 2007, options to purchase an aggregate of
      688,000 shares of our common stock were granted to individuals, all employees
      of
      uBid. Options to purchase an aggregate of 600,000 shares at $1.14 per share
      were
      granted on September 21, 2007. The options have a term of ten years and vest
      over a three to four year period either quarterly or annually beginning on
      the
      first quarter or year respectively after the date of grant. The option grants
      were exempt from registration under Section 4(2) of the Securities Act of 1933,
      as amended, which provides an exemption for transactions not involving a public
      offering.





**ITEM
      3. DEFAULT UPON SENIOR SECURITIES**





None




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




None





**ITEM
      5. OTHER INFORMATION**





None





**ITEM
      6. EXHIBITS**





See
      Exhibit Index on the following page.


26





**ExhibitNo.**
            
            **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.




27


**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 November 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)




28