##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 x
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
   o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
   Odimo Incorporated
 (Exact name of registrant as specified in its charter)
 Delaware
    
    22-3607813(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 14051 N.W. 14th Street, Sunrise, Florida
    
    33323(Address of principal executive offices)
    
    (Zip Code)
 (954) 835-2233  (Registrants telephone number, including area code)
 ý o
  o o x
 o x




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##### 



ODIMO INCORPORATED
 TABLE OF CONTENTS
 PART I. FINANCIAL INFORMATION
    
    
    3ITEM 1. Financial Statements
    
    
    3ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    33ITEM 4. CONTROLS AND PROCEDURES
    
    
    33PART II. OTHER INFORMATION
    
    
    34ITEM 1. LEGAL PROCEEDINGS
    
    
    34ITEM 1A. RISK FACTORS
    
    
    34ITEM 6. EXHIBITS
    
    
    35SIGNATURES
    
    
    39Section 302 Certification of CEOSection 302 Certification of CFOSection 906 Certification of CEOSection 906 Certification of CFO
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 ODIMO INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
 (Unaudited)March 31,
    
    
    December 31,2006
    
    
    2005ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    570
    
    
    $
    3,831Deposits with credit card processing company
    
    
    758
    
    
    
    755Accounts receivable
    
    
    333
    
    
    
    308Inventories
    
    
    5,599
    
    
    
    10,244Prepaid expenses and other current assets
    
    
    1,286
    
    
    
    657Total current assets
    
    
    8,546
    
    
    
    15,795PROPERTY AND EQUIPMENT  net
    
    
    6,984
    
    
    
    6,927INTANGIBLE AND OTHER ASSETS  net
    
    
    1,354
    
    
    
    2,008TOTAL
    
    $
    16,884
    
    
    $
    24,730LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    7,862
    
    
    $
    7,883Accounts payable to related parties
    
    
    
    
    
    
    3,329Accrued liabilities
    
    
    498
    
    
    
    2,170Bank credit facility
    
    
    1,000
    
    
    
    Total liabilities
    
    
    9,360
    
    
    
    13,382COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    STOCKHOLDERS EQUITY:Preferred stock, $0.001 par value 50
million shares authorized, none issued and outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value, 300 million
shares authorized, 7,162 shares issued and
outstanding
    
    
    7
    
    
    
    7Additional paid-in capital
    
    
    103,705
    
    
    
    103,705Accumulated deficit
    
    
    (96,188
    )
    
    
    (92,364
    )Total stockholders equity
    
    
    7,524
    
    
    
    11,348TOTAL
    
    $
    16,884
    
    
    $
    24,730
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ODIMO INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
 Three months endedMarch 31, 2006
    
    
    March 31, 2005NET SALES
    
    $
    10,387
    
    
    $
    12,784COST OF SALES
    
    
    8,164
    
    
    
    9,532Gross profit
    
    
    2,223
    
    
    
    3,252OPERATING EXPENSES:Fulfillment
    
    
    758
    
    
    
    888Marketing
    
    
    1,541
    
    
    
    1,718General and administrative
    
    
    2,859
    
    
    
    2,467Depreciation and amortization
    
    
    879
    
    
    
    852Total operating expenses
    
    
    6,037
    
    
    
    5,925LOSS FROM OPERATIONS
    
    
    (3,814
    )
    
    
    (2,673
    )INTEREST EXPENSE, Net
    
    
    (10
    )
    
    
    (76
    )NET LOSS
    
    
    (3,824
    )
    
    
    (2,749
    )DIVIDENDS TO PREFERRED STOCKHOLDERS
    
    
    ( -
    )
    
    
    (832
    )NET LOSS ATTRIBUTABLE TO COMMON
STOCKHOLDERS
    
    $
    (3,824
    )
    
    $
    (3,581
    )Net loss per common share
attributable to common
stockholders:Basic and diluted
    
    $
    (0.53
    )
    
    $
    (0.97
    )Weighted average number of shares:Basic and diluted
    
    
    7,162
    
    
    
    3,677
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ODIMO INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 Three months ended March 31,2006
    
    
    2005OPERATING ACTIVITIES:Net loss
    
    $
    (3,824
    )
    
    $
    (2,749
    )Adjustments to reconcile net loss to net cash used in provided by operating activities:Depreciation and amortization
    
    
    879
    
    
    
    852Amortization of supply agreement
    
    
    206
    
    
    
    36Changes in operating assets and liabilities:(Increase) Decrease in operating assets:Deposits with credit card processing company
    
    
    (4
    )
    
    
    (93
    )Accounts receivable
    
    
    (25
    )
    
    
    27Inventories
    
    
    1,317
    
    
    
    1,351Deposits with vendors
    
    
    
    
    
    
    (541
    )Prepaid expenses and other current assets
    
    
    (631
    )
    
    
    (481
    )Other assets
    
    
    
    
    
    
    2,565Increase (Decrease) in operating liabilities:Accounts payable
    
    
    (20
    )
    
    
    (2,931
    )Accounts payable to related parties
    
    
    
    
    
    
    (3,730
    )Accrued liabilities
    
    
    (1,673
    )
    
    
    (2,019
    )Net cash used in provided by operating activities
    
    
    (3,775
    )
    
    
    (7,713
    )INVESTING ACTIVITIES Purchase of property and equipment
    
    
    (486
    )
    
    
    (732
    )FINANCING ACTIVITIES:Net(repayments of) borrowings under bank credit facility
    
    
    1,000
    
    
    
    (9,282
    )Proceeds from exercise of warrants
    
    
    
    
    
    
    1,349Proceeds from issuance of common stock, net of expenses
    
    
    
    
    
    
    22,342Net cash provided by used in financing activities
    
    
    1,000
    
    
    
    14,409INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (3,261
    )
    
    
    5,964CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    3,831
    
    
    
    1,663CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    570
    
    
    $
    7,627SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:Interest paid
    
    $
    10
    
    
    $
    76
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ODIMO INCORPORATED AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Business www.diamond.com, www.ashford.com www.worldofwatches.com.
 Basis
of Presentation
  Use of Estimates
 Cash and Cash Equivalents
 Deposits with Credit Card Processing Company
 Software and Website Development Costs Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use Accounting for Web Site Development Costs
 2. GOING CONCERN CONSIDERATIONS
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3. INVENTORIES
  March 31,
    
    
    December 31,2006
    
    
    2005Diamonds
    
    $
    75
    
    
    $
    4,148Fine jewelry
    
    
    2,190
    
    
    
    2,422Watches
    
    
    2,493
    
    
    
    2,592Luxury goods
    
    
    841
    
    
    
    1,082Total inventories
    
    $
    5,599
    
    
    $
    10,244
 4. PROPERTY AND EQUIPMENT
  EstimatedUseful Lives
    
    March 31,
    
    
    December 31,(in Years)
    
    2005
    
    
    2005Computers, software and equipment
    
    3
    
    $
    13,817
    
    
    $
    12,846Leasehold improvements
    
    4
    
    
    1,043
    
    
    
    1,196Furniture and fixtures
    
    5
    
    
    596
    
    
    
    596Automobiles
    
    4
    
    
    43
    
    
    
    4315,499
    
    
    
    14,681Less: accumulated depreciation
    
    
    
    
    (8515
    )
    
    
    (8,516
    )6,984
    
    
    
    6,165Software development in process
    
    
    
    
    
    
    
    
    762Property and equipment  net
    
    
    
    $
    6,984
    
    
    $
    6,927
   5. BANK CREDIT FACILITY
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6. STOCK OPTION PLAN
 Accounting for Stock Issued to Employees Accounting for Certain Transactions involving Stock
Compensation, an interpretation of APB Opinion No. 25
 Accounting for Stock-Based Compensation Share-Based Payments
  March 31, 2006WeightedAverageExerciseOptions
    
    
    PriceOutstanding at beginning of year
    
    
    404
    
    
    $
    9.90Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Canceled
    
    
    (8
    )
    
    
    12.65Outstanding at March 31, 2006
    
    
    396
    
    
    $
    9.48Options exercisable at
March 31, 2006
    
    
    396
    
    
    $
    9.48
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7. RELATED PARTY TRANSACTIONS
 Stock
Purchase and Supply Agreement 
 8.
LEGAL PROCEEDINGS
  9. SUBSEQUENT EVENTS
 Non-Compliance
Notification from NASDAQ 
 Sale
of Diamond.com URL and Certain Assets 
   Condensed Balance Sheet as of March 31, 2006 (1)
 SubsequentHistorical
    
    
    Event
    
    
    Pro-FormaCURRENT ASSETS:Cash and cash equivalents
    
    $
    1,328
    
    
    $
    9,463
    
    
    $
    10,791Inventories
    
    
    5,599
    
    
    
    (1,963
    )
    
    
    3,636Other current assets
    
    
    1,619
    
    
    
    
    
    
    
    1,619Total current assets
    
    
    8,546
    
    
    
    7,500
    
    
    
    16,046PROPERTY AND EQUIPMENT  net
    
    
    6,984
    
    
    
    
    
    
    
    6,984INTANGIBLE AND OTHER ASSETS  net
    
    
    1,354
    
    
    
    
    
    
    
    1,354TOTAL
    
    $
    16,884
    
    
    $
    7,500
    
    
    $
    24,384CURRENT LIABILITIES:Accounts payable and accrued liabilities
    
    $
    8,360
    
    
    
    750
    
    
    $
    9,110Bank credit facility
    
    
    1,000
    
    
    
    (1,000
    )
    
    
    Total liabilities
    
    
    9,360
    
    
    
    (250
    )
    
    
    9,110Total stockholders equity
    
    
    7,524
    
    
    
    7,750
    
    
    
    15,274TOTAL
    
    $
    16,884
    
    
    $
    7,500
    
    
    $
    24,384
 
 (1)
    
    The above pro-forma presentation includes costs associated
with this transaction, currently estimated to be $750,000, but does
not include any restructuring charges that may be determined to be
recorded as a result of the transaction, including severance costs and
other related payroll costs and impairment expenses related to the
computer equipment and software used in the jewelry and diamond
business, which cannot be reasonably estimated at this time. 9




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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion should be read in conjunction with Odimo Incorporateds (Odimo, the
Company, we, our, us,) Condensed Consolidated Financial Statements and the related Notes
contained elsewhere in this quarterly report on Form 10-Q . All statements in the following
discussion that are not reports of historical information or descriptions of current accounting
policy are forward-looking statements. Please consider our forward-looking statements in light of
the factors that may affect operating results set forth herein.
 Recent Events
 www.diamond.com
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Overview
 www.ashford.com www. worldofwatches.com
 www.diamond.com www.diamond.com www.
worldofwatches.com
   Key Business Metrics
  Number of Orders
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Average Order Value
  Product Mix
  Quarter Ended March 31,Measure
    
    2006
    
    
    2005Number of orders
    
    
    29,624
    
    
    
    36,081Average order value
    
    $
    385
    
    
    $
    396Product Mix:Watches
    
    
    36.6
    %
    
    
    33.9
    %Diamonds
    
    
    32.6
    %
    
    
    34.3
    %Jewelry
    
    
    23.3
    %
    
    
    19.0
    %Luxury goods
    
    
    7.5
    %
    
    
    12.8
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
  Basis of Presentation
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Results of Operations
  Quarter Ended March 31,(in thousands, except percentage data)2006
    
    
    % of Net Sales
    
    
    2005
    
    
    % of Net SalesNet sales
    
    $
    10,387
    
    
    
    100.0
    %
    
    $
    12,784
    
    
    
    100.0
    %Cost of sales
    
    
    8,164
    
    
    
    78.6
    
    
    
    9,532
    
    
    
    74.6Gross profit
    
    
    2,223
    
    
    
    21.4
    
    
    
    3,252
    
    
    
    25.4Operating expenses:Fulfillment
    
    
    758
    
    
    
    7.3
    
    
    
    888
    
    
    
    6.9Marketing
    
    
    1,541
    
    
    
    14.8
    
    
    
    1,718
    
    
    
    13.4General and administrative
    
    
    2,859
    
    
    
    27.5
    
    
    
    2,467
    
    
    
    19.3Depreciation and amortization
    
    
    879
    
    
    
    8.5
    
    
    
    852
    
    
    
    6.7Total operating expenses
    
    
    6,037
    
    
    
    58.1
    
    
    
    5,925
    
    
    
    46.3Loss from operations
    
    
    (3,814
    )
    
    
    (36.7
    )
    
    
    (2,673
    )
    
    
    (20.9
    )Interest expense, net
    
    
    (10
    )
    
    
    (0.1
    )
    
    
    (76
    )
    
    
    (0.6
    )Net loss
    
    $
    (3,824
    )
    
    
    (36.8
    )%
    
    $
    (2,749
    )
    
    
    (21.5
    )%
 Comparison of Quarter Ended March 31, 2006 to Quarter Ended March 31, 2005
 Net Sales. www.diamond.com,
  14




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Gross Profit. www.ashford.com
 Fulfillment.
 Marketing.
 General and Administrative Expenses.
 Depreciation and Amortization.
 15




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Interest Expense, Net.
 Net Loss.
 Liquidity and Capital Resources
  Discussion of Cash Flows
    www.ashford.com
 Liquidity Sources
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Contractual Obligations
  Payments Due by PeriodLess ThanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years(In thousands)Bank Credit Facility
    
    
    1,000
    
    
    
    1,000
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    1,154
    
    
    
    182
    
    
    
    486
    
    
    
    486Total
    
    
    2,154
    
    
    
    1,182
    
    
    
    486
    
    
    
    486
 Off Balance Sheet Arrangements
  17




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Outstanding Stock Options
  Critical Accounting Policies and Estimates
   Revenue Recognition
   Inventories
  18




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Goodwill and Other Long-Lived Assets
 Goodwill and Other Intangible Assets
 Accounting for the Impairment or Disposal
of Long-Lived Assets
 Income Taxes
  Stock-Based Compensation
 Accounting for Stock Issued to Employees Accounting for Certain Transactions involving Stock
Compensation, an interpretation of APB Opinion No. 25
 Accounting for Stock-Based Compensation
 19




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Share-Based Payments
 Recently Issued Accounting Standards
   Cautionary Note Regarding Forward-Looking Statements
   20




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Risk Factors
 Some of the statements in this report and in particular, statements found in Managements
Discussion and Analysis of Financial Condition and Results of Operations, that are not historical
in nature may constitute forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are often identified by the words will, should,
anticipate, believe, expect, intend, estimate, hope, or similar expressions. These
statements reflect managements current views with respect to future events and are subject to
risks and uncertainties. There are important factors that could cause actual results to differ
materially from those in forward-looking statements, many of which are beyond our control. These
factors, risks and uncertainties include, but are not limited to, the factors described below.
 Our actual results, performance or achievement could differ materially from those expressed
in, or implied by, these forward-looking statements, and accordingly, we can give no assurances
that any of the events anticipated by the forward-looking statements will transpire or occur, or if
any of them do so, what impact they will have on our results of operations or financial condition.
In view of these uncertainties, investors are cautioned not to place undue reliance on these
forward-looking statements. We expressly disclaim any obligation to publicly revise any
forward-looking statements that have been made to reflect the occurrence of events after the date
hereof.
 You should carefully consider the risks and uncertainties described below, together with all
other information included in this report, including the consolidated financial statements and the
related notes herein, as well as in our other public filings, before making any investment decision
regarding our stock. If any of the following risks actually occurs, our business, financial
condition, results of operations and future prospects would likely be materially and adversely
affected. In that event, the market price of our stock could decline and you could lose all or part
of your investment.
 Risks Related to Our Business and Industry
 We have incurred operating losses since our inception and anticipate incurring operating losses at
least through 2006. We need additional capital to meet our future cash requirements and execute our
business strategy.
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
    
    marketing, advertising and other promotional activities; and
    
    the continued development of our websites and our computer network.
   In order to decrease our losses, we must attract customers in a cost-effective manner.
  Because we do not have a predictable or guaranteed supply of merchandise, we may lose customers and
sales if we are unable to meet our customers demand for particular products.
  We acquire most of the brand name watches and luxury goods we sell through the parallel market, or
grey market as it is also called, which increases the risk that we may inadvertently sell
counterfeit or stolen goods or merchandise which is physically materially different from
merchandise acquired from channels authorized by the brand owners, which could expose us to
liability for intellectual property infringement claims and damage our reputation.
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If brand owners take action to limit or prevent us from acquiring their products in the parallel
market, we may not be able to find alternative sources of supply for such products at satisfactory
prices or at all, which would result in reduced sales.
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If it is determined that our sales of decoded watches violate state laws, we would be subject to
claims for damages, fines or other penalties or be unable to sell decoded watches in such states.
   If we fail to identify and rapidly respond to fashion trends, we may be forced to absorb excess
inventory or lower the sales prices for our goods.
  24




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Our net sales and operating results are volatile and difficult to predict, which may adversely
affect the
trading price of our common stock.
  Competition from traditional and online retail companies with greater brand recognition and
resources may adversely affect our sales.
  
    
    independent and chain stores and online retailers that sell watches or other luxury products;
    
    department stores;
    
    boutiques and websites operated by brand owners;
    
    mass retailers and warehouse clubs that sell watches or other luxury products;
    
    catalog and television shopping retailers; and
    
    online auction houses and closeout retailers.
  If our advertising relationships with Internet portals and other websites fail to create consumer
awareness of our websites and product offerings, our sales may suffer.
  25




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If online advertising rates continue to rise, we may purchase less advertising and our sales could
decrease.
  Because we carry almost all of our brand name watches and luxury goods in inventory, if we are
unable to accurately predict and plan for changes in consumer demand, our net sales and gross
margins may decrease.
  Our operating results are subject to seasonal fluctuations, and adverse results in our fourth
quarter will have a disproportionate impact on our results of operations for the year.
  We may not be able to increase capacity or respond to rapid technological changes in a timely
manner or without service interruptions, which may cause customer dissatisfaction.
  26




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Our costs have increased because we are a public company.
   All of our operations are located at our Sunrise, Florida facility, and disruptions at this
facility could prevent us from receiving orders or fulfilling orders for our customers in a timely
manner.
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Increased product returns and the failure to accurately predict product returns could reduce our
gross margins and result in excess inventory.
  If we attain specified levels of financial performance, we are obligated to make earn-out payments
to one of our stockholders.
  Other online retailers may use domain names that are similar to ours. If customers associate these
websites with us, our brands may be harmed and we may lose sales.
  We do not intend to pay dividends on our common stock, and, consequently, your only opportunity to
achieve a return on your investment is if the price of our common stock appreciates.
  28




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Legal claims against us could be costly and result in substantial liabilities or the loss of
significant rights.
  Risks Relating to Doing Business on the Internet
 If we are required to collect sales and use taxes on the products we sell in jurisdictions outside
of Florida, we may be subject to liability for past sales and our future sales may decrease.
  Various legal rules and regulations related to privacy and the collection, dissemination and
security of personal information may adversely affect our marketing efforts.
  Consumers may prefer to purchase brand name watches and luxury good, from traditional retailers,
which would adversely affect our sales.
  
    
    concerns about buying expensive products without a physical storefront,
face-to-face interaction with sales personnel and the ability to physically handle and examine
products;
 29




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
    
    concerns over counterfeit or substandard goods;
    
    delivery times associated with Internet orders;
    
    product offerings that do not reflect consumer tastes and preferences;
    
    pricing that does not meet consumer expectations;
    
    concerns about the security of online transactions and the privacy of personal information;
    
    delayed shipments, theft or shipments of incorrect or damaged products; and
    
    inconvenience associated with returning or exchanging purchased items.
 If the Internet infrastructure fails to grow or deteriorates, our ability to grow our business will
be impaired.
  Risks Related to the Securities Markets and Ownership of Our Common Stock
 Our stock price has been and may continue to be volatile.
  
    
    actual or anticipated fluctuations in our results of operations;
    
    variance in our financial performance from the expectations of market analysts;
    
    developments with respect to intellectual property rights;
    
    announcements by us or our competitors of new product and service offerings,
significant contracts, acquisitions or strategic relationships;
    
    our involvement in litigation;
    
    our sale of common stock or other securities in the future;
    
    market conditions in our industry;
    
    recruitment or departure of key personnel;
    
    changes in market valuation or earnings of our competitors;
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
    
    the trading volume of our common stock;
    
    changes in the estimation of the future size and growth rate of our markets; and
    
    general economic or market conditions and other factors, including factors
unrelated to our operating performance or the operating performance of our competitors.
 Future sales of our common stock may cause our stock price to decline.
   We received a non-compliance notification from Nasdaq and although our common stock has been listed
for public trading for a short time and an active trading market may not be sustained and we may be
delisted from Nasdaq.
  Anti-takeover provisions in our organizational documents and Delaware law may discourage or prevent
a change in control, even if an acquisition would be beneficial to our stockholders, which could
affect our stock price adversely and prevent attempts by our stockholders to replace or remove our
current management.
  
    
    Our board of directors has the exclusive right to elect directors to fill a
vacancy created by the expansion of the board of directors or the resignation, death or removal of
a director, which prevents stockholders from being able to fill vacancies on our board of
directors.
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##### Table of Contents




    
    Our stockholders may not act by written consent. As a result, a holder or holders
controlling a majority of our capital stock would be able to take certain actions only at a
stockholders meeting.
    
    No stockholder may call a special meeting of stockholders. This may make it more
difficult for stockholders to take certain actions.
    
    Our stockholders may not remove a director without cause, and our certificate of
incorporation provides for a classified board of directors with staggered, three-year terms. As a
result, it could take up to three years for stockholders to replace the entire board.
    
    Our certificate of incorporation does not provide for cumulative voting in the
election of directors. This limits the ability of minority stockholders to elect director
candidates.
    
    Stockholders must provide advance notice to nominate individuals for election to
the board of directors or to propose matters that can be acted upon at a stockholders meeting.
These provisions may discourage or deter a potential acquirer from conducting a solicitation of
proxies to elect the acquirers own slate of directors or otherwise attempting to obtain control of
our company.
    
    Our board of directors may issue, without stockholder approval, shares of
undesignated preferred stock. The ability to authorize undesignated preferred stock makes it
possible for our board of directors to issue preferred stock with voting or other rights or
preferences that could impede the success of any attempt to acquire us.
  If our officers, directors and principal stockholders choose to act together, they may be able to
control our management and operations, acting in their best interests and not in the best interests
of other stockholders.
  32




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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
  
 ITEM 4. Controls and Procedures
    33




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
     
 ITEM 1A. Risk Factors
  34




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##### Table of Contents



ITEM 6. Exhibits
 (a) Exhibits
 ExhibitNumber
    
    Description2.1
    (1)
    
    Asset Purchase Agreement among registrant and Ashford.com, Inc. dated
December 6, 2002.3.1
    (1)
    
    Amended and Restated Certificate of Incorporation3.2
    (1)
    
    Amended and Restated Bylaws4.1
    (1)
    
    Form of Specimen Stock Certificate4.2.1
    (1)
    
    Investors Rights Agreement dated November 18, 1999 by and between the
registrant and certain holders of the registrants capital stock4.2.2
    (1)
    
    Amended and Restated Registration Rights Agreement dated March 30, 2004 by
and between the registrant and certain holders of the registrants capital
stock10.1.1
    (1)
    
    Odimo Incorporated Amended and Restated Stock Incentive Plan10.1.2
    (1)
    
    Form of Stock Option Agreement pursuant to the Odimo Incorporated Stock
Incentive Plan10.2
    (1)
    
    Amended and Restated Series C Convertible Preferred Stock Purchase Agreement
dated as of March 30, 2004 between the registrant and SDG Marketing, Inc.10.3.1
    (1)
    
    Promissory Note dated December 6, 2002 by the registrant in favor of GSI
Commerce Solutions, Inc.10.3.2
    (1)
    
    Security Agreement dated December 6, 2002 between the registrant and GSI
Commerce Solutions, Inc., as assignee10.3.3
    (1)
    
    Patents, Trademarks, Copyrights and Licenses Security Agreement dated
December 6, 2002 between the registrant and GSI Commerce Solutions, Inc., as
assignee10.4.1
    (1)
    
    Lease Agreement dated December 14, 1999 between the registrant and MDR
Fitness Corp.10.4.2
    (1)
    
    Lease Amendment and Extension Agreement dated January 8, 2003 between the
registrant and MDR Fitness Corp.10.5.1
    (1)
    
    Employment Agreement dated July 12, 2004 between the registrant and Alan
Lipton10.5.2
    (1)
    
    Employment Agreement dated July 12, 2004 between the registrant and Jeff
Kornblum10.5.3
    (1)
    
    Employment Agreement dated July 12, 2004 between the registrant and Amerisa
Kornblum10.5.4
    (1)
    
    Employment Agreement dated July 12, 2004 between the registrant and George
Grous10.5.5
    (1)
    
    Lock-up Agreement dated July 12, 2004, between the registrant and Alan Lipton10.5.6
    (1)
    
    Lock-up Agreement dated July 12, 2004, between the registrant and Jeff
Kornblum10.5.7
    (1)
    
    Lock-up Agreement dated July 12, 2004, between the registrant and Amerisa
Kornblum
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##### Table of Contents



ExhibitNumber
    
    Description10.5.8
    (1)
    
    Lock-up Agreement dated July 12, 2004, between the registrant and George
Grous10.5.9
    (1)
    
    Lock-up Agreement dated July 12, 2004, between the registrant and Michael
DellArciprete10.5.10
    (1)
    
    Amended and Restated Employment Agreement dated August 27, 2004 between the
registrant and Alan Lipton10.5.11
    (5)
    
    Amendment No. 1 to Employment Contract dated as of May 11, 2006 between Jeff
Kornblum and the registrant10.6
    (1)
    
    Form of Indemnification Agreement between the registrant and each of its
directors and executive officers10.7
    (1)
    
    Supply Agreement dated March 30, 2004 between the registrant and SDG
Marketing, Inc.10.8.1
    (1)
    
    Loan and Security Agreement dated as of July 31, 2004 by and among Silicon
Valley Bank, the registrant and its subsidiaries Ashford.com, Inc. and
D.I.A. Marketing, Inc.10.8.2
    (1)
    
    Revolving Promissory Note dated as of July 31, 2004 in favor of Silicon
Valley Bank, by the registrant and its subsidiaries Ashford.com, Inc. and
D.I.A. Marketing, Inc.10.8.3
    (1)
    
    Intellectual Property Security Agreements dated as of July 31, 2004 in favor
of Silicon Valley Bank, by each of the registrant and Ashford.com, Inc.10.8.4
    (1)
    
    Unconditional Guaranties dated as of July 31, 2004 of Softbank Capital LP,
Softbank Capital Partners LP and Softbank Capital Advisors Fund LP10.9
    (1)
    
    Commercial Lease dated as of January 1, 2006 between the registrant and IBB
Realty, LLC10.10
    (1)
    
    First Loan Modification Agreement dated as of November 13, 2004 by and among
Silicon Valley Bank, the registrant and its subsidiaries Ashford.com, Inc.
and D.I.A. Marketing, Inc.10.11
    (1)
    
    First Amended and Restated Note dated as of November 13, 2004 in favor of
Silicon Valley Bank by the registrant and its subsidiaries Ashford.com, Inc.
and D.I.A. Marketing, Inc.10.12
    (1)
    
    Amendment and Reaffirmation of Guaranty dated as of November 13, 2004 of
Softbank Capital, LP, Softbank Capital Partners, LP and Softbank Capital
Advisors Fund LP.10.13
    (1)
    
    Second Loan Modification Agreement dated as of January 7, 2005 by and among
Silicon Valley Bank, the registrant and its subsidiaries Ashford.com, Inc.
and D.I.A. Marketing, Inc.10.14
    (1)
    
    Second Amended and Restated Note dated as of January 7, 2005 in favor of
Silicon Valley Bank, by the registrant and its subsidiaries Ashford.com,
Inc. and D.I.A. Marketing, Inc.10.15
    (1)
    
    Second Amendment and Reaffirmation of Guaranty dated as of January 7, 2005
of Softbank Capital, L.P., Softbank Capital Partners, LP and Softbank
Capital Advisors Fund LP10.16
    (1)
    
    Confirmation letter dated January 7, 2005 from Softbank Capital Partners LP,
regarding financial support10.17
    (4)
    
    Termination Agreement dated March 29, 2006 by and between the registrant and
SDG Marketing, Inc.
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##### Table of Contents



ExhibitNumber
    
    Description10.18
    (4)
    
    Third Amendment to Loan and Security Agreement dated March 30, 2006 by and
among Silicon Valley Bank the registrant and its subsidiaries Ashford.com,
Inc. and D.I.A. Marketing, Inc.10.19
    (5)
    
    Asset Purchase Agreement dated as of May 11 , 2006 by and among the
registrant, Ice.com, Inc. and Ice Acquisition, LLC10.20
    (5)
    
    Transition Services Agreement dated as of May11 , 2006 by and among the
registrant, Ice.com, Inc. and Ice Acquisition, LLC10.21
    (5)
    
    Separation Agreement dated as of May 11,, 2006 between Alan Lipton and the
registrant14.1
    (2)
    
    Code of Business Conduct and Ethics16.1
    (3)
    
    Letter of Deloitte & Touche LLP dated September 2, 200516.2
    (3)
    
    Letter of Rachlin Cohen & Holtz LLP dated September 2, 200521.1
    (1)
    
    Subsidiaries of Odimo Incorporated23.1
    (4)
    
    Consent of Deloitte & Touche LLP23.2
    (4)
    
    Consent of Rachlin Cohen & Holtz LLP31.1*
    
    
    Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and
15d-14(a) promulgated pursuant to the Securities Exchange Act of 1934, as
amended31.2*
    
    
    Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and
15d-14(a) promulgated pursuant to the Securities Exchange Act of 1934, as
amended32.1*
    
    
    Certification of Chief Executive Officer pursuant to Section 906 of t he
Sarbanes-Oxley Act of 200232.2*
    
    
    Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 
 *
    
    Filed herewith(1)
    
    This exhibit was previously filed as an exhibit to the Registration
Statement on Form S-1 (File No. 333-117400) originally filed with the
Securities and Exchange Commission on July 16, 2004, as amended
thereafter, and is incorporated herein by reference.(2)
    
    This exhibit was previously filed as an exhibit to the Annual Report
on Form 10-K for the year ended December 31, 2004 filed with the
Securities and Exchange Commission on March 31, 2005 and is
incorporated herein by reference.(3)
    
    This exhibit was previously filed as an exhibit to the Form 8-K dated
August 31, 2005 filed with the Securities and Exchange Commission on
September 2, 2005 and is incorporated herein by reference.(4)
    
    This exhibit was previously filed as an exhibit to the Annual Report
on Form 10-K for the year ended December 31, 2005 filed with the
Securities and Exchange Commission on March 30, 2006 and is
incorporated herein by reference.(5)
    
    This exhibit was previously filed as an exhibit to the Form 8-K dated
May 12, 2006 filed with the Securities and Exchange Commission on May
11, 2006 and is incorporated herein by reference. 37




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SIGNATURES
  ODIMO INCORPORATED
RegistrantDate: May 15, 2006
    /s/ Amerisa KornblumAmerisa KornblumChief Financial Officer(Principal Financial Officer
and Duly Authorized Officer) 39