##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    May 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    000-50973
  CELEBRATE EXPRESS,
    INC.
 (Exact name of registrant as
    specified in its charter)
   Washington

91-1644428(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   11232 
    120th
    Avenue NE, Kirkland, Washington 98033
 (Address of principal executive
    offices)
  Registrants telephone number, including area code:
 (425) 250-1061
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.001 par value

The Nasdaq Stock Market, Inc.   o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
   o o þ
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 



CELEBRATE
    EXPRESS, INC.
  ANNUAL
    REPORT ON
    FORM 10-K
 FOR THE
    FISCAL YEAR ENDED MAY 31, 2007
  TABLE OF
    CONTENTS
  PagePART IItem 1


Business


3Item 1A


Risk
    Factors


11Item 1B


Unresolved Staff
    Comments


22Item 2


Properties


22Item 3


Legal
    Proceedings


22Item 4


Submission of
    Matters to a Vote of Security Holders


22PART IIItem 5


Market for
    Registrants Common Equity and Related Stockholder
    Matters


22Item 6


Selected Financial
    Data


24Item 7


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


26Item 7A


Quantitative and
    Qualitative Disclosures About Market Risk


34Item 8


Financial
    Statements and Supplementary Data


35Item 9


Changes In and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


55Item 9A


Controls and
    Procedures


55Item 9B


Other
    Information


55PART IIIItem 10


Directors and
    Executive Officers of the Registrant


55Item 11


Executive
    Compensation


55Item 12


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


55Item 13


Certain
    Relationships and Related Transactions


55Item 14


Principal
    Accountant Fees and Services


55PART IVItem 15


Exhibits and
    Financial Statement Schedules


56Signatures


58EXHIBIT 10.16EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   2




---



##### Table of Contents



PART I  Item 1.
    Business.  This report contains forward-looking statements that involve
    many risks and uncertainties. These statements relate to future
    events and our future performance that are based on current
    expectations, estimates, forecasts and projections about the
    industry in which we operate and the beliefs and assumptions of
    our management. In some cases, you can identify forward-looking
    statements by terms such as would,
    could, may, will,
    should, expect, intend,
    plan, anticipate, believe,
    estimate, predict,
    potential, targets, seek, or
    continue, the negative of these terms or other
    variations of such terms. In addition, any statements that refer
    to projections of our future financial performance, our
    anticipated growth and trends in our business and other
    characterizations of future events or circumstances, are
    forward-looking statements. These statements are only
    predictions based upon assumptions made that are believed to be
    reasonable at the time, and are subject to risk and
    uncertainties. Therefore, actual events or results may differ
    materially and adversely from those expressed in any
    forward-looking statement. In evaluating these statements, you
    should specifically consider the risks described under
    Item 1A Risk Factors and elsewhere in this
    report. These factors may cause our actual results to differ
    materially from any forward-looking statements. Except as
    required by law, we undertake no obligation to publicly update
    or revise any forward-looking statements, whether as a result of
    new information, future events or otherwise.
  Overview
    dress-up
     3




---



##### Table of Contents



Our
    Approach
      Broad
    Merchandising Assortment
    Comprehensive
    Product Information
    Detailed Online Information.
  Knowledgeable Online and Phone Sales Staff.
   4




---



##### Table of Contents



Convenient
    Shopping Environment
    Product
    Availability and Customization
      Rapid
    Time to Market
      Our
    Growth Strategy
    Build
    Brand Awareness and Expand Our Customer Base
    Continue
    to Add New Brands
   5




---



##### Table of Contents



Increase
    Sales Per Customer
    Expand
    Our Product Offerings
    Our
    Brands and Product Offerings
    Birthday
    Express
      Costume
    Express
  dress-up
  Storybook
    Heirlooms
   6




---



##### Table of Contents



Product
    Development and Sourcing
      Marketing
    and Customer Acquisition
      Online Marketing and Promotion.
  
    Email Marketing
    Search Marketing
    Affiliates Program  Offline Marketing and Promotion.
  Customer
    Support
    Online Customer Support.
 7




---



##### Table of Contents



Customer Support Center.
    Fulfillment
    and Shipping
  two-day, three-day
  Technology
    Systems
       8




---



##### Table of Contents



Competition
        Intellectual
    Property
       9




---



##### Table of Contents



Government
    Regulation
          Employees
   10




---



##### Table of Contents



Item 1A.
    Risk
    Factors.  Factors
    That May Affect Future Operating Results
  You should carefully consider the risks described below
    together with all of the other information included in this
    report. If any of the following risks actually occurs, our
    business, financial condition or results of operations could
    suffer. In that case, the trading price of our common stock
    could decline and you may lose all or part of your
    investment.
  Failure
    to successfully manage our fulfillment and distribution
    operations could cause us to incur increased costs or lose
    customers.
    We
    have incurred net losses in recent quarters and may not be able
    to return to or sustain profitability in the
    future.
    
    expand into new product categories;
    continue with our marketing efforts to build our brand names;
    expand our customer base;
    upgrade our operational and financial systems, procedures and
    controls;
    invest in and upgrade our distribution center; and
    retain existing personnel and hire additional personnel,
    including senior management.    If we
    do not successfully expand sales into other product categories
    beyond party goods, we may not be able to achieve our desired
    revenue growth.
   11




---



##### Table of Contents




    improve the efficiency of our distribution center;
    successfully design, produce and market new products;
    identify and introduce new product categories;
    maintain our gross margins with respect to new product
    categories;
    provide a satisfactory mix of merchandise that is responsive to
    the needs of our customers;
    broaden consumer awareness of our existing and future brands;
    manage our selling, marketing and fulfillment costs; and
    manage our dual-channel direct marketing model.      The
    loss of our senior management or other key personnel could harm
    our current and future operations and prospects.
      We
    must compete with other party goods and costume retailers and
    mass merchandisers on the selection, quality and price of our
    products, and failure to do so successfully could negatively
    affect our stock price.
   12




---



##### Table of Contents



Childrens
    tastes change and are often difficult to predict, and any
    failure by us to correctly identify and react appropriately to
    these changing preferences could hurt our sales and gross
    margins and render a portion of our inventory
    obsolete.
      If we
    fail to promote and maintain our brands effectively, we may not
    be able to compete successfully with better-known
    competitors.
    If we
    do not successfully maintain and expand our customer and
    prospect databases our sales volume could suffer and our
    marketing costs could increase.
    Our
    operating results could suffer if we are unable to successfully
    manage the costs of our catalog operations or if our catalogs
    fail to produce sales at satisfactory levels.
    
    effective management of costs associated with the production and
    distribution of our catalogs;
    achievement of adequate response rates to our mailings;
    displaying a mix of merchandise in our catalogs that is
    attractive to our customers; and
    timely delivery of catalog mailings to our customers. 13




---



##### Table of Contents



Increased
    product returns, or a failure by us to accurately predict the
    level of product returns, could harm our business.
    We may
    not be able to compete successfully against current and future
    competitors.
      We
    depend on search engines to attract customers to our website,
    and losing these customers would adversely affect our revenues
    and financial results.
   14




---



##### Table of Contents



Because
    we do not have long-term contracts for third-party products, we
    may not have continued access to popular products.
    If we
    are unable to maintain or acquire licenses to intellectual
    property, we may have fewer proprietary products and our sales
    may decline.
    Because
    we do not have long-term contracts with our suppliers, we may
    not have continued access to necessary materials and our sales
    may suffer.
    Our
    reliance on smaller or independent vendors and suppliers and
    manufacturers located abroad exposes us to various risks
    including disruption in product supply.
    
    work stoppages;
    transportation delays and interruptions;
    political instability;
    foreign currency fluctuations;
    changing economic conditions;
    an increased likelihood of counterfeit, knock-off or gray market
    goods; 15




---



##### Table of Contents




    product liability claims;
    expropriation, nationalization, imposition of tariffs, import
    and export controls and other non-tariff barriers, including
    quotas and restrictions on the transfer of funds;
    environmental regulation; and
    other changes in governmental policies.    We may
    face product liability claims that are costly and create adverse
    publicity.
    Failure
    of third parties to deliver our products efficiently and in a
    timely manner could cause us to lose customers.
    Fluctuations
    in commodity prices may increase our operating costs and make
    our expenses difficult to predict.
    We may
    consider acquisitions as part of our growth strategy, and
    failure to adequately evaluate or integrate any acquisitions
    could harm our business.
   16




---



##### Table of Contents



Our
    business involves the extensive use of intellectual property,
    and related claims against us could be costly or force us to
    abandon popular products.
    If the
    protection of our trademarks and proprietary rights is
    inadequate, our brands and reputation could be impaired and we
    could lose customers.
    If we
    cannot maintain and protect our existing domain names or acquire
    suitable new domain names as needed, we may not be able to
    successfully build our brands.
    Capacity
    constraints, systems failures or security breaches could prevent
    access to our website, which could lower our sales and harm our
    reputation.
  and/or and/or
 17




---



##### Table of Contents



If we
    are unable to provide satisfactory telephone-based customer
    support, we could lose customers.
    Temporary
    or permanent disruption at our fulfillment facility could
    prevent timely shipment of customer orders and hurt our
    sales.
    
    a failure to maintain or renew our existing lease agreement;
    a power, telecommunications or other systems failure;
    an employee strike or other labor stoppage;
    terrorist attacks, acts of war or break-ins;
    a disruption in the transportation infrastructure including air
    traffic and roads; or
    fire, flood, hurricane or other disaster.  back-up
 18




---



##### Table of Contents



We may
    incur significant costs or experience product availability
    delays in complying with regulations applicable to the sale of
    our manufactured products.
    If use
    of the Internet, particularly with respect to online commerce,
    does not continue to increase as rapidly as we anticipate, our
    sales may not grow to desired levels.
      
    actual or perceived lack of security of information or privacy
    protection;
    possible disruptions, computer viruses or other damage to the
    Internet servers or to users computers; and
    excessive governmental regulation.    Risks
    related to the Internet, including security and reliability
    issues, are largely outside our control and may hurt our
    reputation or sales.
   19




---



##### Table of Contents



Government
    regulation of database use in direct marketing and Internet and
    online commerce is evolving. Unfavorable changes in these
    regulations could substantially harm our business and results of
    operations.
    Our
    failure to protect confidential information of our customers and
    our network against security breaches could damage our
    reputation and brands and subject us to legal
    liability.
    Our
    failure to address risks associated with credit card fraud and
    bad debt could damage our reputation, brands and results of
    operations.
    Our
    sales may decrease if we are required to collect taxes on
    purchases.
     20




---



##### Table of Contents



Failure
    to rapidly respond to technological change could result in our
    services or systems becoming obsolete.
    Future
    sales of our common stock may depress our stock
    price.
    Our
    directors, executive officers and significant shareholders hold
    a substantial portion of our stock, which may lead to conflicts
    with other shareholders over corporate transactions and other
    corporate matters.
    We
    will need to implement additional finance and accounting
    systems, procedures and controls as we grow our business and
    organization and to satisfy new reporting
    requirements.
   21




---



##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.    Item 3.
    Legal
    Proceedings.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Market
    for Registrants Common Equity
      High


LowFiscal Year 2007:First Quarter

$
13.65


$
10.10Second Quarter

$
13.25


$
12.08Third Quarter

$
13.00


$
9.25Fourth Quarter

$
10.88


$
8.16Fiscal Year 2006:First Quarter

$
15.20


$
11.50Second Quarter

$
14.50


$
12.19Third Quarter

$
15.39


$
11.00Fourth Quarter

$
13.80


$
11.43    22




---



##### Table of Contents



Performance
    Graph
    
  Securities
    Authorized for Issuance Under Equity Compensation
    Plans
  Form 10-K
  Use of
    Proceeds
  Form S-1 No. 333-117459)
   23




---



##### Table of Contents



Item 6.
    Selected
    Financial Data.  Form 10-K.
  Form 10-K. Form 10-K.
  Fiscal Year Ended May 31,2007


2006


2005


2004


2003(In thousands, except share and per share data)Statement of Operations
    Data:Net sales

$
85,243


$
87,016


$
69,138


$
51,939


$
37,811Cost of sales


40,821



44,244



33,987



26,574



19,483Gross margin


44,422



42,772



35,151



25,365



18,328Operating expensesFulfillment


11,501



11,617



8,039



6,627



5,371Selling and marketing


23,640



22,076



16,787



12,834



9,913General and administrative


10,715



8,476



6,482



4,636



4,112Severance and related costs(2)






1,179











Total operating expenses


45,856



43,348



31,308



24,097



19,396Income (loss) from operations


(1,434
)


(576
)


3,843



1,268



(1,068
)Other income (expense), net


1,561



1,231



131



(788
)


(521
)Net income (loss) before income
    taxes


127



655



3,974



480



(1,589
)Income tax benefit (expense)(1)


(84
)


(250
)


(1,489
)


9,013



Net income (loss)


43



405



2,485



9,493



(1,589
)Accretion to preferred stock
    redemption value










(102
)


(266
)


(265
)Net income (loss) available for
    common shareholders

$
43


$
405


$
2,383


$
9,227


$
(1,854
)Net income (loss) per share:Basic

$
0.01


$
0.05


$
0.46


$
6.39


$
(1.34
)Diluted

$
0.01


$
0.05


$
0.35


$
1.85


$
(1.34
)Cash Dividends Declared Per Share:

$
1.25















     (1)
    
    In our fiscal year ended May 31, 2004, we recorded a net
    income tax benefit of $9,013 primarily as a result of the
    reversal of a valuation allowance on our deferred tax assets.(2)
    
    In our fiscal year ended May 31, 2006, we recorded
    severance and related costs of $1,179 related to the termination
    of certain officers of the corporation in July 2005.  24




---



##### Table of Contents



May 31,2007


2006


2005


2004


2003(In thousands)Balance Sheet Data:Cash and cash equivalents

$
21,224


$
31,327


$
30,769


$
2,243


$
1,672Working capital


29,394



37,373



38,076



6,041



2,733Total assets


48,120



57,200



53,057



20,482



8,988Long-term debt, less current
    portion














4,953



2,807Mandatorily redeemable convertible
    preferred stock














28,044



27,212Mandatorily redeemable convertible
    preferred stock warrants














1,056



1,622Total shareholders equity
    (deficit)


41,720



50,077



48,000



(18,084
)


(27,515
)  25




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Form 10-K. Form 10-K,
  Overview
    dress-up
      Fiscal
    Year
   26




---



##### Table of Contents



Results
    of Operations
    Fiscal Year Ended May 31,2007


2006


2005Statement of Operations
    Data:Net sales


100.0
%


100.0
%


100.0
%Cost of sales


47.9



50.9



49.2Gross margin


52.1



49.1



50.8Operating expensesFulfillment


13.5



13.3



11.6Selling and marketing


27.7



25.4



24.3General and administrative


12.6



9.7



9.4Severance and related expenses






1.4



Total operating expenses


53.8



49.8



45.3Income from operations


(1.7
)


(0.6
)


5.5Other income (expense), net


1.8



1.4



0.2Net income (loss) before income
    taxes


0.1



0.8



5.7Income tax benefit (expense)


(0.1
)


(0.3
)


(2.1
)Net income


0.0
%


0.5
%


3.6
%   Additional
    Operating Data
    Fiscal Year Ended May 31,2007


2006


2005(In thousands, except net sales per order data)Additional Operating
    Data:Total number of customers in our
    database


3,416



2,841



2,280Percentage of sales from repeat
    customers


45
%


46
%


51
%Number of orders shipped


1,087



1,060



851Net sales per order

$
77.87


$
82.12


$
81.27   Comparison
    of Fiscal Years Ended May 31, 2007 and May 31,
    2006
  Net
    Sales
   27




---



##### Table of Contents



Gross
    Margin
    Fulfillment
    Selling
    and Marketing
   28




---



##### Table of Contents



General
    and Administrative
    Severance
    and Related Costs
    Other
    Income (Expense), Net
    Income
    Taxes
     29




---



##### Table of Contents



Comparison
    of Fiscal Years Ended May 31, 2006 and May 31,
    2005
  Net
    Sales
    Gross
    Margin
    Fulfillment
    Selling
    and Marketing
   30




---



##### Table of Contents



General
    and Administrative
    Other
    Income (Expense), Net
    Income
    Taxes
    Liquidity
    and Capital Resources
              Payments Due by PeriodTotal


Less Than 1 Year


1-3 Years


3-5 Years(In thousands)Description of Contractual
    Obligations:Operating lease obligations

$
1,718


$
814


$
894


$
10Total

$
1,718


$
814


$
894


$
10  31




---



##### Table of Contents



Critical
    Accounting Policies
    Revenue
    Recognition
    Income
    Taxes
    Stock-based
    compensation
    Share-Based Payment
 32




---



##### Table of Contents



Stock Based Compensation,
  Inventories
    New
    Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement No. 109 Accounting for Income Taxes
  No. 06-03, How Sales Taxes Collected from Customers and Remitted to
    Governmental Authorities Should Be Presented in the Income
    Statement (that is, Gross Versus Net Presentation). EITF 06-03 EITF 06-03
  Fair Value Measurements
  The Fair Value Option for Financial Assets and Financial
    Liabilities
  Organization of Business and Summary of Significant
    Accounting Policies
 33




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.  Interest
    Rate Risk
    Foreign
    Currency Risk
   34




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data.  CELEBRATE
    EXPRESS, INC.
  Index to
    Financial Statements
  PageReport of Grant
    Thornton LLP, Independent Registered Public Accounting
    Firm


36Balance Sheets as
    of May 31, 2007 and 2006


37Statements of
    Operations For the Years Ended May 31, 2007, 2006, and
    2005


38Statement of
    Shareholders Equity (Deficit) For the Years Ended
    May 31, 2007, 2006 and 2005


39Statements of Cash
    Flows For the Years Ended May 31, 2007, 2006 and
    2005


40Notes to Financial
    Statements


41  35




---



##### Table of Contents



Report
    of Independent Registered Public Accounting Firm           Share-based Payments
  Considering the
    Effects of Prior Year Misstatements when Quantifying
    Misstatements in Current Year Financial Statements
  
    36




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  BALANCE SHEETS
  May 31,


May 31,2007


2006ASSETSCurrent assets:Cash and cash equivalents

$
21,224,178


$
31,326,804Accounts receivable, net


1,490,383



338,772Inventories


9,039,029



8,333,503Prepaid expenses


3,692,573



4,097,548Deferred income taxes


347,019



399,627Total current assets


35,793,182



44,496,254Fixed assets, net


4,453,476



4,662,439Deferred income taxes


7,771,657



7,939,639Other assets, net


101,186



101,892Total assets

$
48,119,501


$
57,200,224LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
2,751,155


$
3,151,082Accrued liabilities


3,648,457



3,971,903Total current liabilities


6,399,612



7,122,985Commitments and contingencies






Shareholders equity:Common stock, $0.001 par
    value and additional paid-in
    capital  authorized, 10,000,000 shares;
    issued and outstanding, 7,953,724 shares at May 31,
    2007; 7,785,899 shares at May 31, 2006


67,122,392



65,495,253Unearned stock-based compensation






(213,206
)Accumulated deficit


(25,402,503
)


(15,204,808
)Total shareholders equity


41,719,889



50,077,239Total liabilities and
    shareholders equity

$
48,119,501


$
57,200,224    37




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  STATEMENTS OF
    OPERATIONS
 Years Ended May 31, 2007, 2006 and 2005
  2007


2006


2005Net sales

$
85,243,093


$
87,016,029


$
69,138,081Cost of sales(1)


40,820,671



44,243,944



33,987,083Gross margin


44,422,422



42,772,085



35,150,998Operating expenses:Fulfillment(1)


11,501,109



11,617,406



8,039,145Selling and marketing(1)


23,639,950



22,075,784



16,787,231General and administrative(1)


10,715,276



8,476,068



6,481,551Severance and related expenses






1,178,978



Total operating expenses


45,856,335



43,348,236



31,307,927Income (loss) from operations


(1,433,913
)


(576,151
)


3,843,071Other income (expense), net;Interest income (expense), net


1,560,807



1,230,755



131,036Net income before income taxes


126,894



654,604



3,974,107Income tax (expense) benefit


(83,789
)


(249,378
)


(1,489,259
)Net income


43,105



405,226



2,484,848Accretion to preferred stock
    redemption value










(102,271
)Net income available for common
    shareholders

$
43,105


$
405,226


$
2,382,577Net income per share:Basic

$
0.01


$
0.05


$
0.46Diluted

$
0.01


$
0.05


$
0.35Weighted average shares
    outstanding:Basic


7,849,842



7,671,733



5,152,155Diluted


7,954,523



7,939,638



7,027,002   (1)
    Stock-based compensation is included in the expense line items
    above in the following amounts:  Cost of Sales

$
28,272


$
20,973


$
20,112Fulfillment


57,539



21,854



19,608Selling and marketing


198,307



62,458



183,868General and administrative


1,021,213



73,413



71,822$
1,305,331


$
178,698


$
295,410    38




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  STATEMENT OF SHAREHOLDERS EQUITY (DEFICIT)
 Years Ended May 31, 2007, 2006 and 2005
  ContributedCapital-Common








TotalCommon Stock and Additional Paid-in-Capital


Stock


Unearned


Accumulated


ShareholdersShares


Amount


Warrants


Compensation


Deficit


Equity (Deficit)BALANCE  May 31,
    2004


1,635,365


$
878,539


$
66,803


$
(934,350
)

$
(18,094,882
)

$
(18,083,890
)Exercise of common stock options


120,102



81,511















81,511Accretion of preferred stock
    discount






(102,271
)














(102,271
)Issuance of common stock in
    connection with employee stock purchase plan


7,945



104,715















104,715Conversion of mandatorily
    redeemable convertible preferred stock


3,138,175



28,146,053















28,146,053Conversion of mandatorily
    redeemable convertible preferred stock warrants










199,439











199,439Proceeds from issuance of common
    stock, net of offering costs


2,465,651



34,011,674















34,011,674Exercise of preferred stock warrants


146,766



856,905















856,905Exercise of common stock warrants


8,708



272,234



(266,242
)










5,992Unearned stock-based compensation






191,822







(191,822
)






Cancellation of stock options






(104,556
)






104,556







Amortization of stock-based
    compensation














295,410







295,410Net Income


















2,484,848



2,484,848BALANCE  May 31,
    2005


7,522,712


$
64,336,626






$
(726,206
)

$
(15,610,034
)

$
48,000,386Exercise of common stock options


255,678



386,988















386,988Issuance of common stock in
    connection with employee stock purchase plan


7,509



85,809















85,809Cancellation of stock options






(354,668
)






354,668







Tax effect of stock option exercises






1,020,132















1,020,132Amortization of stock-based
    compensation














158,332







158,332Restricted stock grant






20,366















20,366Net income


















405,226



405,226BALANCE  May 31,
    2006


7,785,899


$
65,495,253






$
(213,206
)

$
(15,204,808
)

$
50,077,239Adjustment to beginning accumulated
    deficit (see Note 1)


















(299,223
)


(299,223
)Exercise of common stock options
    and issuance of restricted stock


160,188



252,989















252,989Issuance of common stock in
    connection with employee stock purchase plan


7,637



64,736















64,736Tax effect of stock option exercises






217,289















217,289Stock-based compensation






1,305,331















1,305,331Dividends paid


















(9,941,577
)


(9,941,577
)Reversal of unearned compensation






(213,206
)






213,206







Net income


















43,105



43,105BALANCE  May 31,
    2007


7,953,724


$
67,122,392






$



$
(25,402,503
)

$
41,719,889    39




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  STATEMENTS OF CASH
    FLOWS
 Years Ended May 31, 2007, 2006 and 2005
  2007


2006


2005Cash flows from operating
    activities:Net income

$
43,105


$
405,226


$
2,484,848Adjustments to reconcile net
    income to net cash provided by operating activities:Deferred income taxes


138,656



204,269



1,489,259Depreciation and amortization


1,602,357



1,505,695



709,485Stock-based compensation


1,305,331



178,698



295,410Excess tax benefit from exercise
    of stock options


(217,289
)






Amortization of deferred financing
    costs










23,958Accretion of debt discount










70,012Changes in operating assets and
    liabilities:Accounts receivable


(1,151,611
)


(125,407
)


(44,766
)Inventories


(705,526
)


62,503



(2,469,719
)Prepaid expenses and other assets


404,974



(626,166
)


(1,510,803
)Accounts payable


(399,927
)


182,536



(61,871
)Accrued liabilities


(323,446
)


1,901,103



623,567Net cash provided by operating
    activities


696,624



3,688,457



1,609,380Cash flows from investing
    activities:Payments for purchases of fixed
    assets


(1,392,687
)


(3,586,042
)


(2,247,324
)Purchase of marketable securities










(61,050,000
)Maturities of marketable securities










8,950,000Sale of marketable securities










52,100,000Net cash used in investing
    activities


(1,392,687
)


(3,586,042
)


(2,247,324
)Cash flows from financing
    activities:Dividends paid


(9,941,577
)






Principal payments on capital
    lease obligations






(17,102
)


(34,562
)Principal payments on notes payable










(5,000,000
)Net proceeds from sale of common
    stock, net of issuance costs










34,011,674Proceeds from shares issued under
    the employee stock purchase plan


64,736



85,809



104,715Proceeds from exercise of stock
    options


252,989



386,988



81,511Excess tax benefit from exercise
    of stock options


217,289







Net cash provided by (used in)
    financing activities


(9,406,563
)


455,695



29,163,338Net increase (decrease) in cash
    and cash equivalents


(10,102,626
)


558,110



28,525,394Cash and cash equivalents:Beginning of year


31,326,804



30,768,694



2,243,300End of year

$
21,224,178


$
31,326,804


$
30,768,694Supplemental disclosures of cash
    flow information:Cash paid for interest

$



$
445


$
213,707Supplemental disclosures of
    noncash financing activities:Conversion of mandatorily
    redeemable convertible preferred stock and preferred stock
    warrants

$



$



$
28,345,492Net exercise of common stock
    warrants










272,234Net exercise of preferred stock
    warrants










856,905Cancellation of unvested stock
    options






354,668



104,556Accretion of preferred stock
    discounts










102,271Tax effect of stock option
    exercises






1,020,132



    40




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements
  1.
    Organization
    of Business and Summary of Significant Accounting
    Policies  Description of Business 
  Basis of Presentation 
  Use of Estimates 
  Concentrations of Risk 
    Segments Disclosure about Segments of an Enterprise and
    Related Information,
  Cash and Cash Equivalents 
  Accounts Receivable 
  Inventories  first-in
 41




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements  (Continued)
    May 31,2007


2006Finished goods

$
8,706,354


$
7,986,237Raw materials


332,675



347,266$
9,039,029


$
8,333,503   Prepaid Expenses 
  Fixed Assets 
  Capitalized Software  98-1, Accounting for Costs of Computer Software Developed or
    Obtained for Internal Use No. 00-2, Accounting for Website Development Costs
  Long-Lived Assets 
  Fair Value of Financial Instruments 
  Revenue Recognition 
  Cost of Sales 
  Shipping and Handling Charges 
 42




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements  (Continued)
  Advertising 
  Income Taxes 
  Stock-Based Compensation 
  Accounting for Stock Issued to Employees Accounting for
    Stock-based Compensation
   43




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements  (Continued)
    Year Ended May 31,2007Impact of AdoptingAs Reported


FAS 123R(1)Cost of sales

$
40,820,671


$
10,620Fulfillment


11,501,109



28,946Selling and marketing


23,639,950



151,485General and administrative


10,715,276



944,645Net income


43,105



(749,559
)Basic net income per share

$
0.01


$
(0.09
)Diluted net income per share

$
0.01


$
(0.09
)     (1)
    
    Incremental stock-based compensation resulting from the adoption
    of FAS 123R, which excludes stock-based compensation that
    would have been recognized under APB 25 for options granted with
    exercise prices below market value on the date of grant prior to
    adoption of FAS 123R.    Year Ended May 31,2006


2005Net income available for common
    sharehoders, as reported

$
405,226


$
2,382,577Add: Stock-based employee
    compensation expense, as reported


178,698



295,410Deduct: Stock-based employee
    compensation expense determined under the fair-value-based method


(444,766
)


(634,610
)Pro forma net income available for
    common shareholders  basic

$
139,158


$
2,043,377Add: Accretion to preferrred stock
    redemption value






102,271Pro Forma net income available for
    common shareholders  diluted

$
139,158


$
2,145,648Total weighted average shares
    outstanding in in computing pro forma net income per shareBasic


7,671,733



5,152,155Diluted


7,945,135



6,892,204Net income per share:Basic  as reported

$
0.05


$
0.46Diluted  as reported

$
0.05


$
0.35Basic  FAS 123 pro
    forma

$
0.02


$
0.40Diluted  FAS 123
    pro forma

$
0.02


$
0.31     Initial Adoption of Staff Accounting
    Bulletin No. 108  Considering the Effects of Prior Year
    Misstatements when Quantifying Misstatements
 44




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements  (Continued)
  in Current Year Financial Statements
  Accumulated deficit, May 31,
    2006, as reported

$
(15,205
)Cumulative effect adjustment


(299
)Accumulated deficit, May 31,
    2006, as restated

$
(15,504
)   New Accounting Pronouncements  Accounting for
    Uncertainty in Income Taxes  an interpretation of
    FASB Statement No. 109 Accounting for Income Taxes
  No. 06-03, How Sales Taxes Collected from Customers and Remitted to
    Governmental Authorities Should Be Presented in the Income
    Statement (that is, Gross Versus Net Presentation). EITF 06-03 EITF 06-03
  Fair Value Measurements
  The Fair Value Option for Financial Assets and Financial
    Liabilities
 45




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements  (Continued)
  2.
    Initial
    Public Offering    1-for-1.51
    3.
    Fixed
    Assets    2007


2006Equipment

$
4,128,445


$
4,195,958Computers and software


3,220,134



5,788,136Furniture and fixtures


2,900,731



2,739,402Leasehold improvements


1,070,071



1,096,05011,319,381



13,819,546Accumulated depreciation


(6,865,905
)


(9,157,107
)$
4,453,476


$
4,662,439       4.
    Income
    Taxes    Years Ended May 31,2007


2006


2005Current income tax expense

$
25,822


$
45,109


$
Deferred income tax expense

$
57,967


$
204,269


$
1,489,259Total income tax expense

$
83,789


$
249,378


$
1,489,259  46




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements  (Continued)
    2007


2006


2005Federal income tax expense at
    statutory rate

$
43,144



34.0
%

$
222,566



34.0
%

$
1,351,196



34.0
%Permanent differences &
    other


5,694



4.5
%


9,933



1.5
%


91,547



2.3
%State income taxes, net of federal
    effect


3,133



2.4
%


9,320



1.4
%


46,516



1.2
%Stock compensation


31,818



25.1
%


7,559



1.2
%






0.0
%Income tax expense

$
83,789



66.0
%

$
249,378



38.1
%

$
1,489,259



37.5
%     2007


2006Deferred tax assets:Current:Reserves and allowances

$
252,748


$
289,557Accrued liabilities


94,271



110,070Noncurrent:Net operating loss carryforwards


7,327,120



7,419,469Fixed assets and intangible assets


50,131



517,888Stock-based compensation


394,406



2,282Net deferred tax asset

$
8,118,676


$
8,339,266     5.
    Commitments
    and Contingencies   47




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements  (Continued)
    Operating Leases2008

$
814,1462009


632,6422010


241,4232011


19,9642012


10,130$
1,718,305   Contingencies 
  6.
    Stockholders
    Equity    7.
    Income
    Per Share   48




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements  (Continued)
    2007


2006


2005Net income available for common
    shareholders  basic

$
43,105


$
405,226


$
2,382,577Add: Accretion to preferred stock
    redemption value






0



102,271Net income available for common
    shareholders  diluted

$
43,105


$
405,226


$
2,484,848Weighted average common shares
    outstanding


7,849,842



7,671,733



5,152,155Basic net income per share

$
0.01


$
0.05


$
0.46Common share equivalents:Dilutive effect of common stock
    options


104,681



267,906



579,514Dilutive effect of common and
    preferred stock warrants










65,856Dilutive effect of mandatorily
    redeemable convertible preferred stock










1,229,477Weighted average common shares and
    common share equivalents


7,954,523



7,939,639



7,027,002Diluted net income per share

$
0.01


$
0.05


$
0.35     Year Ended May 31,2007


2006


2005Restricted stock


2,728



2,643



Common stock options


634,401



194,030



23,589637,129



196,673



23,589   8.
    Stock
    Based Compensation       49




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements  (Continued)
  Determining
    Fair Value
    Years Ended May 31,2007

2006

2005Expected dividend rate

0%

0%

0%Expected volatility

58.3%

56.6%

92.5%Expected term (in years)

5.6

4.3

3.9Risk-free interest rate

5.0%

4.4%

4.3%Weighted average fair value

$6.92

$6.54

$9.87   Expected Volatility.
  Expected Term.
  Risk-Free Interest Rate.
  Expected Dividend.
    Stock
    Compensation Expense
   50




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements  (Continued)
    Years Ended May 31,2007


2006


2005Cost of sales

$
28,272


$
20,973


$
20,112Fulfillment


57,539



21,854



19,608Selling and marketing


198,307



62,458



183,868General and administrative


1,021,213



73,413



71,822$
1,305,331


$
178,698


$
295,410       Stock
    Option Activity
    2007


2006


2005Weighted-Average





Weighted-Average





Weighted-AverageShares


Exercise Price


Shares


Exercise Price


Shares


Exercise PriceOutstanding, beginning of year


512,260


$
9.33



757,584


$
4.86



702,588


$
1.36Granted


483,240



11.97



209,556



13.47



288,055



14.36Exercised


(155,496
)


1.73



(255,677
)


1.51



(120,103
)


0.68Cancelled or expired


(122,258
)


12.99



(199,203
)


6.45



(112,956
)


11.87Outstanding, end of year


717,746



12.07



512,260



9.33



757,584



4.86Exercisable, end of year


170,370



11.71



256,864



5.88



395,331



2.35      51




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements  (Continued)
      Weighted-AverageNumber


Remaining Contractual


NumberRange of Exercise Prices

Outstanding


Life (in Years)


Exercisable$  0.41 - 0.53


14,860



5.62



13,2861.66 -
    1.72


5,300



6.65



3,8297.55 -
    9.12


43,115



4.95



18,11511.69 - 12.91


489,329



8.48



67,55513.05 - 14.72


139,396



7.61



48,85516.06 - 18.75


25,746



7.53



18,730717,746







170,370   9.
    Employee
    Stock Purchase Plan        10.
    Employee
    Benefit Plan    11.
    Severance
    and Related Costs   52




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements  (Continued)
    12.
    Quarterly
    Financial Data (Unaudited)    2007 Quarter EndedAug. 31


Nov. 30


Feb. 28


May 31(In thousands, except per share amounts)Net sales

$
19,942


$
28,511


$
16,680


$
20,109Cost of sales


9,944



14,193



7,582



9,101Gross margin


9,998



14,318



9,098



11,008Operating expenses:Fulfillment


2,979



3,433



2,495



2,594Selling and marketing


5,318



7,751



4,714



5,857General and administrative


2,442



2,801



2,491



2,982Total operating expenses


10,739



13,985



9,700



11,433Income (loss) from operations


(741
)


333



(602
)


(425
)Other income, net:Interest income, net


383



427



400



351Net income (loss) before income
    taxes


(358
)


760



(202
)


(74
)Income tax benefit (expense)


32



(192
)


65



12Net income (loss)


(326
)


568



(137
)


(62
)Net income (loss) per share:Basic

$
(0.04
)

$
0.07


$
(0.02
)

$
(0.01
)Diluted

$
(0.04
)

$
0.07


$
(0.02
)

$
(0.01
)   53




---



##### Table of Contents



CELEBRATE
    EXPRESS, INC.
  Notes to
    financial Statements  (Continued)
  2006 Quarter EndedAug. 31


Nov. 30


Feb. 28


May 31(In thousands, except per share amounts)Net sales

$
17,928


$
26,129


$
18,786


$
24,173Cost of sales


8,917



13,113



9,788



12,426Gross margin


9,011



13,016



8,998



11,747Operating expenses:Fulfillment


2,310



2,857



3,001



3,449Selling and marketing


4,022



6,403



4,927



6,724General and administrative


1,820



2,247



2,008



2,401Severance and related expenses(1)






1,179







Total operating expenses


8,152



12,686



9,936



12,574Income (loss) from operations


859



330



(938
)


(827
)Other income, net:Interest income, net


242



304



323



362Net income (loss) before income
    taxes


1,101



634



(615
)


(465
)Income tax benefit (expense)


(401
)


(207
)


217



141Net income (loss)


700



427



(398
)


(324
)Net income (loss) per share:Basic

$
0.09


$
0.06


$
(0.05
)

$
(0.04
)Diluted

$
0.09


$
0.05


$
(0.05
)

$
(0.04
)     (1)
    
    In our second quarter ended November 30, 2005, we recorded
    severance and related costs of $1,179 related to the termination
    of certain officers of the corporation in July 2005. 54




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.        Item 9B.
    Other
    Information.   PART III  Proxy
    Statement 2007 Annual Meeting of Shareholders
  Item 10.
    Directors
    and Executive Officers of the Registrant.  Compliance with
    Section 16(a) of the Exchange Act
  Code of Ethics. th
  Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.    Item 13.
    Certain
    Relationships and Related Transactions.    Item 14.
    Principal
    Accountant Fees and Services.   55




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules.        3
.1(1)

Amended and Restated Articles of
    Incorporation of Celebrate Express, Inc.3
.2(1)

Amended and Restated Bylaws of
    Celebrate Express, Inc.3
.3(2)

Amendments to Sections 2.1,
    2.2 and 3.3 of the Amended and Restated Bylaws of Celebrate
    Express, Inc.3
.4(3)

Amendments to Sections 3.9
    and 11.1 of the Amended and Restated Bylaws of Celebrate
    Express, Inc.3
.5(4)

Amendment to Section 11.1 of
    the Amended and Restated Bylaws of Celebrate Express, Inc.4
.1(1)

Specimen Common Stock Certificate4
.2(1)

Amended and Restated
    Investors Rights Agreement dated November 15, 2001,
    by and among the Company and the investors named therein4
.3(5)

Preferred Shares Rights Agreement,
    dated July 25, 20054
.4(5)

Form of Preferred Shares Rights
    Certificate10
.1(1)*

Form of Indemnity Agreement
    entered into by the Registrant and each of its directors and
    executive officers10
.2(1)*

2004 Amended and Restated Equity
    Incentive Plan and forms of agreements thereunder10
.3(1)*

Employee Stock Purchase Plan10
.4(1)

Lease agreement between Registrant
    and Highwoods Realty Limited Partnership dated November 12,
    199910
.5(1)

First Amendment to Lease between
    Registrant and Highwoods Realty Limited Partnership dated
    June 14, 200410
.6(6)

Second Amendment to Lease
    Agreement between the Company and Highwoods Realty Limited
    Partnership, dated as of December 15, 2004.10
.7(1)

Lease agreement between Registrant
    and Queen Investment Company dated October 1, 200310
.8(1)

Lease Amendment No. 1 between
    Registrant and Queen Investment Company dated March 3, 200410
.9(7)

Lease agreement between Registrant
    and Queen Investment Company dated June 8, 200610
.10(8)

Third Amendment to Lease Agreement
    between the Company and Highwoods Realty Limited Partnership,
    dated as of April 18, 200710
.11(9)*

Employment offer letter with
    Mr. Dennis Everhart, dated July 28, 2006.10
.12(9)*

Employment offer letter with
    Ms. Lisa Tuttle, dated August 30, 2006.10
.13(9)*

Severance and Change in Control
    Agreement with Mr. Darin White, dated September 18,
    200610
.14(10)*

Employment offer letter with
    Ms. Beth Sommers dated November 27, 200610
.15(11)*

Celebrate Express Fiscal 2007
    Bonus Program Summary10
.16*

Employment offer letter with
    Mr. Michael Eisenberg, dated May 14, 200723
.1

Consent of Grant Thornton LLP,
    Independent Registered Public Accounting Firm31
.1

Rule 13a-14(a)
    Certification (CEO)31
.2

Rule 13a-14(a)
    Certification (CFO)32
.1

Section 1350 Certification
    (CEO)32
.2

Section 1350 Certification
    (CFO)     (1)
    
    Incorporated by reference to Registrants Registration
    Statement on
    Form S-1
    (File
    No. 333-117459),
    as amended, initially filed with the Securities and Exchange
    Commission on July 16, 2004. 56




---



##### Table of Contents



(2)
    
    Incorporated by reference to Registrants Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    July 11, 2006(3)
    
    Incorporated by reference to Registrants Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    July 20, 2006(4)
    
    Incorporated by reference to Registrants Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    March 9, 2007.(5)
    
    Incorporated by reference to Registrants Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    July 25, 2006.(6)
    
    Incorporated by reference to Registrants Quarterly Report
    on
    Form 10-Q
    filed with the Securities & Exchange Commission on
    April 14, 2005.(7)
    
    Incorporated by reference to Registrants Annual Report on
    Form 10-K
    for the year ended May 31, 2006.(8)
    
    Incorporated by reference to Registrants Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    April 24, 2007.(9)
    
    Incorporated by reference to Registrants Quarterly Report
    on
    Form 10-Q
    filed with the Securities & Exchange Commission on
    October 13, 2006.(10)
    
    Incorporated by reference to Registrants Quarterly Report
    on
    Form 10-Q
    filed with the Securities & Exchange Commission on
    January 12, 2007(11)
    
    Incorporated by reference to Registrants Quarterly Report
    on
    Form 10-Q
    filed with the Securities & Exchange Commission on
    April 13, 2007.*
    
    Management compensatory plans, contract or arrangement required
    to be filed as exhibits to this report. 57




---



##### Table of Contents



SIGNATURES      By:
    /s/  Kevin
    A. Green       By:
    /s/  Darin
    L. White       POWER OF
    ATTORNEY
    Signature

Title

Date/s/  Kevin
    A. GreenKevin
    A. Green

President and Chief Executive
    Officer (Principal Executive Officer)

August 17, 2007/s/  Darin
    L. WhiteDarin
    L. White

Vice President, Finance and
    Secretary (Principal Financial and 
    Accounting Officer)

August 17, 2007/s/  Keith
    CrandellKeith
    Crandell

Director

August 17, 2007/s/  Estelle
    DeMuesyEstelle
    DeMuesy

Director

August 17, 2007/s/  Donald
    R. HughesDonald
    R. Hughes

Director

August 17, 2007/s/  Jean
    ReynoldsJean
    Reynolds

Director

August 17, 2007/s/  Stephen
    RosemanStephen
    Roseman

Director

August 17, 2007/s/  Kenneth
    A. Shubin SteinKenneth
    A. Shubin Stein

Director

August 17, 2007  58




---



##### Table of Contents



EXHIBIT INDEX
  Exhibit No.

Description3
.1(1)

Amended and Restated Articles of
    Incorporation of Celebrate Express, Inc.3
.2(1)

Amended and Restated Bylaws of
    Celebrate Express, Inc.3
.3(2)

Amendments to Sections 2.1,
    2.2 and 3.3 of the Amended and Restated Bylaws of Celebrate
    Express, Inc.3
.4(3)

Amendments to Sections 3.9
    and 11.1 of the Amended and Restated Bylaws of Celebrate
    Express, Inc.3
.5(4)

Amendment to Section 11.1 of
    the Amended and Restated Bylaws of Celebrate Express, Inc.4
.1(1)

Specimen Common Stock Certificate4
.2(1)

Amended and Restated
    Investors Rights Agreement dated November 15, 2001,
    by and among the Company and the investors named therein4
.3(5)

Preferred Shares Rights Agreement,
    dated July 25, 20054
.4(5)

Form of Preferred Shares Rights
    Certificate10
.1(1)*

Form of Indemnity Agreement
    entered into by the Registrant and each of its directors and
    executive officers10
.2(1)*

2004 Amended and Restated Equity
    Incentive Plan and forms of agreements thereunder10
.3(1)*

Employee Stock Purchase Plan10
.4(1)

Lease agreement between Registrant
    and Highwoods Realty Limited Partnership dated November 12,
    199910
.5(1)

First Amendment to Lease between
    Registrant and Highwoods Realty Limited Partnership dated
    June 14, 200410
.6(6)

Second Amendment to Lease
    Agreement between the Company and Highwoods Realty Limited
    Partnership, dated as of December 15, 2004.10
.7(1)

Lease agreement between Registrant
    and Queen Investment Company dated October 1, 200310
.8(1)

Lease Amendment No. 1 between
    Registrant and Queen Investment Company dated March 3, 200410
.9(7)

Lease agreement between Registrant
    and Queen Investment Company dated June 8, 200610
.10(8)

Third Amendment to Lease Agreement
    between the Company and Highwoods Realty Limited Partnership,
    dated as of April 18, 200710
.11(9)*

Employment offer letter with
    Mr. Dennis Everhart, dated July 28, 2006.10
.12(9)*

Employment offer letter with
    Ms. Lisa Tuttle, dated August 30, 2006.10
.13(9)*

Severance and Change in Control
    Agreement with Mr. Darin White, dated September 18,
    200610
.14(10)*

Employment offer letter with
    Ms. Beth Sommers dated November 27, 200610
.15(11)*

Celebrate Express Fiscal 2007
    Bonus Program Summary10
.16*

Employment offer letter with
    Mr. Michael Eisenberg, dated May 14, 200723
.1

Consent of Grant Thornton LLP,
    Independent Registered Public Accounting Firm31
.1

Rule 13a-14(a)
    Certification (CEO)31
.2

Rule 13a-14(a)
    Certification (CFO)32
.1

Section 1350 Certification
    (CEO)32
.2

Section 1350 Certification
    (CFO)     (1)
    
    Incorporated by reference to Registrants Registration
    Statement on
    Form S-1
    (File
    No. 333-117459),
    as amended, initially filed with the Securities and Exchange
    Commission on July 16, 2004.(2)
    
    Incorporated by reference to Registrants Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    July 11, 2006(3)
    
    Incorporated by reference to Registrants Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    July 20, 2006 59




---



##### Table of Contents



(4)
    
    Incorporated by reference to Registrants Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    March 9, 2007.(5)
    
    Incorporated by reference to Registrants Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    July 25, 2006.(6)
    
    Incorporated by reference to Registrants Quarterly Report
    on Form 10-Q
    filed with the Securities & Exchange Commission on
    April 14, 2005.(7)
    
    Incorporated by reference to Registrants Annual Report on
    Form 10-K
    for the year ended May 31, 2006.(8)
    
    Incorporated by reference to Registrants Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    April 24, 2007.(9)
    
    Incorporated by reference to Registrants Quarterly Report
    on Form 10-Q
    filed with the Securities & Exchange Commission on
    October 13, 2006.(10)
    
    Incorporated by reference to Registrants Quarterly Report
    on Form 10-Q
    filed with the Securities & Exchange Commission on
    January 12, 2007(11)
    
    Incorporated by reference to Registrants Quarterly Report
    on Form 10-Q
    filed with the Securities & Exchange Commission on
    April 13, 2007.*
    
    Management compensatory plans, contract or arrangement required
    to be filed as exhibits to this report. 60