##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 000-51161
 Odimo Incorporated
 (Exact name of registrant as specified in its charter)
 Delaware
    
    22-3607813(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)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)
 þ o
  o o þ
 o þ




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##### Table of Contents



ODIMO INCORPORATED
TABLE OF CONTENTS
 PART I. FINANCIAL INFORMATION
    
    
    1ITEM 1. Financial Statements
    
    
    1ITEM 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    9ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    27ITEM 4. CONTROLS AND PROCEDURES
    
    
    27PART II. OTHER INFORMATION
    
    
    28ITEM 1. LEGAL PROCEEDINGS
    
    
    28ITEM 1A. RISK FACTORS
    
    
    28ITEM 6. EXHIBITS
    
    
    28SIGNATURES
    
    
    32EX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements




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Odimo, Incorporated and Subsidiaries
   June 30,
    
    
    December 31,2006
    
    
    2005(Unaudited)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    1,133
    
    
    $
    3,831Deposits with credit card processing company
    
    
    606
    
    
    
    755Escrow deposit
    
    
    502
    
    
    
    Accounts receivable
    
    
    153
    
    
    
    308Inventories
    
    
    2,774
    
    
    
    10,244Prepaid expense and other current assets
    
    
    1,354
    
    
    
    657Total current assets
    
    
    6,522
    
    
    
    15,795Property and Equipment, Net
    
    
    6,532
    
    
    
    6,927Intangible and Other Assets, Net
    
    
    860
    
    
    
    2,008Total
    
    $
    13,914
    
    
    $
    24,730LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    1,873
    
    
    $
    7,883Accounts payable to related parties
    
    
    743
    
    
    
    3,329Accrued liabilities
    
    
    128
    
    
    
    2,170Total liabilities
    
    
    2,744
    
    
    
    13,382Commitments and ContingenciesStockholders 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
    
    
    (92,542
    )
    
    
    (92,364
    )Total stockholders equity
    
    
    11,170
    
    
    
    11,348Total
    
    $
    13,914
    
    
    $
    24,730
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Odimo, Incorporated and Subsidiaries
  
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net Sales
    
    $
    4,368
    
    
    $
    11,451
    
    
    $
    14,755
    
    
    $
    24,235Cost of Sales
    
    
    3,288
    
    
    
    8,638
    
    
    
    11,452
    
    
    
    18,170Gross Margin
    
    
    1,080
    
    
    
    2,813
    
    
    
    3,303
    
    
    
    6,065Operating Expenses:Fulfillment
    
    
    311
    
    
    
    805
    
    
    
    1,069
    
    
    
    1,693Marketing
    
    
    570
    
    
    
    1,847
    
    
    
    2,112
    
    
    
    3,565General and administrative
    
    
    2,421
    
    
    
    2,586
    
    
    
    5,279
    
    
    
    5,053Depreciation and amortization
    
    
    1,021
    
    
    
    858
    
    
    
    1,900
    
    
    
    1,710Total operating expenses
    
    
    4,323
    
    
    
    6,096
    
    
    
    10,360
    
    
    
    12,021Loss from Operations
    
    
    (3,243
    )
    
    
    (3,283
    )
    
    
    (7,057
    )
    
    
    (5,956
    )Other Income (Expense):Gain on sale of diamond and jewelry business assets
    
    
    6,904
    
    
    
    
    
    
    
    6,904
    
    
    
    Interest expense, net
    
    
    (14
    )
    
    
    25
    
    
    
    (24
    )
    
    
    (51
    )6,890
    
    
    
    25
    
    
    
    6,880
    
    
    
    (51
    )Net Income (Loss)
    
    
    3,647
    
    
    
    (3,258
    )
    
    
    (177
    )
    
    
    (6,007
    )Dividends to Preferred Stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (832
    )Net Income (Loss) Attributable to Common Stockholders
    
    $
    3,647
    
    
    $
    (3,258
    )
    
    $
    (177
    )
    
    $
    (6,839
    )Net Income (Loss) per Common Share Attributable
to Common Stockholders:Basic and diluted
    
    $
    0.51
    
    
    $
    (0.46
    )
    
    $
    (0.02
    )
    
    $
    (1.26
    )Weighted Average Number of Shares:Basic and diluted
    
    
    7,162
    
    
    
    7,162
    
    
    
    7,162
    
    
    
    5,429
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Odimo, Incorporated and Subsidiaries
  
 Six Months EndedJune 30,2006
    
    
    2005Cash Flows from Operating Activities:Net loss
    
    $
    (177
    )
    
    $
    (6,007
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation and amortization
    
    
    1,900
    
    
    
    1,710Gain on sale of diamond and jewelry business assets
    
    
    (6,904
    )
    
    
    Amortization of supply agreement
    
    
    206
    
    
    
    72Changes in operating assets and liabilities:(Increase) decrease in:Deposits with credit card processing company
    
    
    149
    
    
    
    (87
    )Escrow deposit
    
    
    (502
    )
    
    
    Accounts receivable
    
    
    155
    
    
    
    (142
    )Inventories
    
    
    4,142
    
    
    
    273Deposits with vendors
    
    
    
    
    
    
    (572
    )Prepaid expenses and other current assets
    
    
    (698
    )
    
    
    (146
    )Other assets
    
    
    41
    
    
    
    2,557Increase (decrease) in:Accounts payable
    
    
    (6,010
    )
    
    
    (3,881
    )Accounts payable to related parties
    
    
    743
    
    
    
    (1,582
    )Accrued liabilities
    
    
    (2,042
    )
    
    
    (2,506
    )Net cash used in operating activities
    
    
    (8,997
    )
    
    
    (10,311
    )Cash Flows from Investing Activities:Proceeds from sale of diamond and jewelry business assets, net of expenses
    
    
    6,904
    
    
    
    Purchase of property and equipment
    
    
    (605
    )
    
    
    (1,855
    )Net cash provided by (used in) investing activities
    
    
    6,299
    
    
    
    (1,855
    )Cash Flows from Financing Activities:Net repayments under bank credit facility
    
    
    
    
    
    
    (9,282
    )Proceeds from exercise of warrants
    
    
    
    
    
    
    1,349Proceeds from issuance of common stock, net of expenses
    
    
    
    
    
    
    22,285Net cash provided by financing activities
    
    
    
    
    
    
    14,352Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    (2,698
    )
    
    
    2,186Cash and Cash Equivalents, Beginning
    
    
    3,831
    
    
    
    1,663Cash and Cash Equivalents, Ending
    
    $
    1,133
    
    
    $
    3,849Supplemental Disclosures of Cash Flow Information:Cash paid during the period for:Interest
    
    $
    24
    
    
    $
    76Supplemental Schedule of Non-Cash Investing and Financing Activities:Conversion of preferred stock into common stock
    
    $
    
    
    
    $
    3
  -4-




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ODIMO INCORPORATED AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Business www.ashford.com www.worldofwatches.com.
 Basis of Presentation
 Use of Estimates
 Cash and Cash Equivalents
 Deposits with Credit Card Processing Company
 Deposits with Vendors
 Software and Website Development Costs Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use Accounting for Web Site Development Costs
 Recently Issued Accounting Standards
   -5-




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2. GOING CONCERN CONSIDERATIONS
    3. SALE OF DIAMOND AND JEWELRY BUSINESS ASSETS
 www.diamond.com
 www.ashford.com www.worldofwatches.com
   -6-




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4. INVENTORIES
  June 30,
    
    
    December 31,2006
    
    
    2005Diamonds
    
    $
    
    
    
    $
    4,148Fine jewelry
    
    
    
    
    
    
    2,422Watches
    
    
    2,120
    
    
    
    2,592Luxury goods
    
    
    524
    
    
    
    1,082Other
    
    
    130
    
    
    
    Total inventories
    
    $
    2,774
    
    
    $
    10,244
 5. PROPERTY AND EQUIPMENT
  EstimatedUseful Lives
    
    June 30,
    
    
    December 31,(in Years)
    
    2006
    
    
    2005Computers, software and equipment
    
    3
    
    $
    13,925
    
    
    $
    12,846Leasehold improvements
    
    4
    
    
    1,053
    
    
    
    1,196Furniture and fixtures
    
    5
    
    
    596
    
    
    
    596Automobiles
    
    4
    
    
    43
    
    
    
    4315,617
    
    
    
    14,681Less: accumulated depreciation
    
    
    
    
    (9,085
    )
    
    
    (8,516
    )6,532
    
    
    
    6,165Software development in process
    
    
    
    
    
    
    
    
    762Property and equipment  net
    
    
    
    $
    6,532
    
    
    $
    6,927
   6. STOCK OPTION PLAN
 Accounting for Stock Issued to Employees Accounting for Certain Transactions involving Stock
Compensation, an interpretation of APB Opinion No. 25
 -7-




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Accounting for Stock-Based Compensation Share-Based Payments
  June 30, 2006WeightedAverageExerciseOptions
    
    
    PriceOutstanding at beginning of year
    
    
    404
    
    
    $
    9.90Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Canceled
    
    
    (241
    )
    
    
    8.45Outstanding at June 30, 2006
    
    
    163
    
    
    $
    11.61Options exercisable at June 30, 2006
    
    
    163
    
    
    $
    11.61
  7. INCOME TAXES
  8. NOTICE OF DELISTING FROM NASDAQ
  -8-




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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
 www.ashford.com www.worldofwatches.com
    Overview
 www.ashford.com www. worldofwatches.com
 9




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www.diamond.com www.diamond.com www.ashford.com www. worldofwatches.com
  Key Business Metrics
  Number of Orders
  Average Order Value
  Product Mix
  10




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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,Measure
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Number of orders
    
    
    14,941
    
    
    
    32,780
    
    
    
    44,543
    
    
    
    68,861Average order value
    
    $
    318
    
    
    $
    405
    
    
    $
    363
    
    
    $
    403Product Mix:Watches
    
    
    59.8
    %
    
    
    36.8
    %
    
    
    43.1
    %
    
    
    35.3
    %Diamonds*
    
    
    17.6
    %
    
    
    32.5
    %
    
    
    28.2
    %
    
    
    33.4
    %Jewelry*
    
    
    14.9
    %
    
    
    18.6
    %
    
    
    20.8
    %
    
    
    18.8
    %Luxury goods
    
    
    8.7
    %
    
    
    12.1
    %
    
    
    7.9
    %
    
    
    12.5
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 
 *  Through May 11, 2006.  Basis of Presentation
      11




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Results of Operations
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,(in thousands, except percentage data)
    
    
    (in thousands, except percentage data)% of Net
    
    
    
    
    
    
    % of Net
    
    
    
    
    
    
    % of Net
    
    
    
    
    
    
    % of Net2006
    
    
    Sales
    
    
    2005
    
    
    Sales
    
    
    2006
    
    
    Sales
    
    
    2005
    
    
    SalesNet sales
    
    $
    4,368
    
    
    
    100.0
    %
    
    $
    11,451
    
    
    
    100.0
    %
    
    $
    14,755
    
    
    
    100.0
    %
    
    $
    24,235
    
    
    
    100.0Cost of sales
    
    
    3,288
    
    
    
    75.3
    
    
    
    8,638
    
    
    
    75.4
    
    
    
    11,452
    
    
    
    77.6
    
    
    
    18,170
    
    
    
    75.0Gross profit
    
    
    1,080
    
    
    
    24.7
    
    
    
    2,813
    
    
    
    24.6
    
    
    
    3,303
    
    
    
    22.4
    
    
    
    6,065
    
    
    
    25.0Operating expenses:Fulfillment
    
    
    311
    
    
    
    7.1
    
    
    
    805
    
    
    
    7.0
    
    
    
    1,069
    
    
    
    7.2
    
    
    
    1,693
    
    
    
    7.0Marketing
    
    
    570
    
    
    
    13.0
    
    
    
    1,847
    
    
    
    16.1
    
    
    
    2,112
    
    
    
    14.3
    
    
    
    3,565
    
    
    
    14.7General and
administrative
    
    
    2,421
    
    
    
    55.4
    
    
    
    2,586
    
    
    
    22.6
    
    
    
    5,279
    
    
    
    35.8
    
    
    
    5,053
    
    
    
    20.9Depreciation and
amortization
    
    
    1,021
    
    
    
    23.4
    
    
    
    858
    
    
    
    7.5
    
    
    
    1,900
    
    
    
    12.9
    
    
    
    1,710
    
    
    
    7.1Total operating expenses
    
    
    4,323
    
    
    
    99.0
    
    
    
    6,096
    
    
    
    53.2
    
    
    
    10,360
    
    
    
    70.2
    
    
    
    12,021
    
    
    
    49.6Loss from operations
    
    
    (3,243
    )
    
    
    (74.2
    )
    
    
    (3,283
    )
    
    
    (28.7
    )
    
    
    (7,057
    )
    
    
    (47.8
    )
    
    
    (5,956
    )
    
    
    (24.6
    )Gain on sale of diamond and
jewelry business assets
    
    
    6,904
    
    
    
    158.1
    
    
    
    
    
    
    
    
    
    
    
    6,904
    
    
    
    100.0Interest (expense) income,
net
    
    
    (14
    )
    
    
    (0.3
    )
    
    
    25
    
    
    
    0.2
    
    
    
    (24
    )
    
    
    (0.2
    )
    
    
    (51
    )
    
    
    (0.2
    )Net income (loss)
    
    $
    3,647
    
    
    
    83.5
    %
    
    $
    (3,258
    )
    
    
    (28.5
    )%
    
    $
    (177
    )
    
    
    (1.2
    )%
    
    $
    (6,007
    )
    
    
    (24.8
    )%
 Comparison of Three Months Ended June 30, 2006 to Three Months Ended June 30, 2005
 Net Sales. www.diamond.com,
  Gross Profit.
 Fulfillment.
 Marketing.
 12




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General and Administrative Expenses.
 Depreciation and Amortization.
 Interest Expense, Net.
 Net Income (Loss).
 Comparison of Six Months Ended June 30, 2006 to Six Months Ended June 30, 2005
 Net Sales. www.diamond.com
  Gross Profit.
 Fulfillment.
 Marketing.
 General and Administrative Expenses.
 13




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Depreciation and Amortization.
 Interest Expense, Net.
 Net Loss.
 Liquidity and Capital Resources
  Discussion of Cash Flows
    www.ashford.com
 Liquidity Sources
   14




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Contractual Obligations
  Payments Due by PeriodLessThanTotal
    
    1 Year
    
    1-3 Years
    
    3-5 Years(In thousands)Operating lease obligations
    
    $
    1,093
    
    
    $
    121
    
    
    $
    486
    
    
    $
    486Total
    
    $
    1,093
    
    
    $
    121
    
    
    $
    486
    
    
    $
    486
 Off Balance Sheet Arrangements
  Outstanding Stock Options
  Critical Accounting Policies and Estimates
  15




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Revenue Recognition
   Inventories
  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
 16




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Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB
Opinion No. 25
 Accounting for Stock-Based Compensation Share-Based Payments
 Recently Issued Accounting Standards
    Cautionary Note Regarding Forward-Looking Statements
   17




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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.
  
    
    marketing, advertising and other promotional activities; and
    
    the continued development of our websites and our computer network.
   18




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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 or if we are unable to
acquire inventory on terms offered by our suppliers.
  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.
   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.
  19




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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.
  20




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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.




Due to our limited cash availability, if online advertising rates continue to rise, we may purchase
less advertising and our sales could decrease.


21




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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.






Our costs have increased because we are a public company.




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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.
  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.
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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.
  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 goods 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;
    
    concerns over counterfeit or substandard goods;
    
    delivery times associated with Internet orders;
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
    
    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 common stock was recently delisted from Nasdaq and is currently quoted for trading on the Over
the Counter Bulletin Board which may adversely impact the liquidity of our shares and reduce the
value of an investment in our 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;
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##### Table of Contents




    
    market conditions in our industry;
    
    recruitment or departure of key personnel;
    
    changes in market valuation or earnings of our competitors;
    
    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.
   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.
    
    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.
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##### Table of Contents




    
    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.
  
 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
  
 ITEM 4. Controls and Procedures
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PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
     
 ITEM 1A. Risk Factors
  
 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 Plan
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##### Table of Contents



ExhibitNumber
    
    Description10.1.2(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 Kornblum10.5.8(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.
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##### Table of Contents



ExhibitNumber
    
    Description10.8.4(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.10.18(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 amended
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ExhibitNumber
    
    Description32.1*
    
    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. 31




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SIGNATURES
  ODIMO INCORPORATED
RegistrantDate: August 14, 2006
    
    /s/ Amerisa Kornblum

Amerisa KornblumChief Financial Officer(Principal Financial Officer and Duly Authorized
Officer)
 32