**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-K**




**(Mark
                One)**x
            
            **ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934****For
                the fiscal year ended December 31, 2007****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 No.** **0-21061**





**ORGANIC
      TO GO FOOD**


**CORPORATION**


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





**Delaware**
              **(State
                or other jurisdiction**
              **of
                incorporation or organization)**
            
            **58-2044990**
              **(I.R.S.
                Employer**
              **Identification
                No.)**





**3317
      Third Avenue South**


**Seattle,
      Washington 98134**


**(Address
      principal executive offices)**





**Securities
      registered pursuant to Section 12(b) of the Act:**





**None**





**Securities
      registered pursuant to Section 12(g) of the Act:**





**Common
                Stock, $0.001 par value****Title
                of class**





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act


Yes o No x





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Exchange Act.


Yes o No x





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the
      registrant was required to file such reports), and (2) has been subject to
      such filing requirements for the past 90 days.


Yes x No o




1




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this Form 10-K.


o





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





Large
                accelerated filero
            
            Accelerated
                fileroNon-accelerated
                filero
              (Do
                not check if a smaller reporting company)
            
            Smaller
                reporting companyx





Indicate
      by check mark whether the registrant is a shell company (as defined in
      Rule 12b-2 of the Exchange Act).


Yes o No x





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the registrant, based upon the closing sale price of the
      common stock on June 29, 2007, was $37,235,981. Shares of common stock held
      by
      officers, directors and by each person that owned more than 5% of the
      outstanding common stock have been excluded in that such persons may be deemed
      to be affiliates. This determination of affiliate status is not necessarily
      conclusive for other purposes.





As
      of March 11, 2008, there were issued and outstanding 36,329,755 shares of the
      registrant’s common stock.





**DOCUMENTS
      INCORPORATED BY REFERENCE**





The
      information required by Part III (Items 10, 11, 12, 13 and 14) is
      incorporated by reference from the registrant’s definitive proxy statement for
      its 2008 Annual Meeting of Stockholders (to be filed pursuant to
      Regulation 14A).




2




**TABLE
      OF CONTENTS**




**Item**
            
            **Description**
            
            **Page**PART IItem 1.
            
            Business
            
            1Item
                1A.
            
            Risk
                Factors
            
            5Item
                1B.
            
            Unresolved
                Staff Comments
            
            11Item 2.
            
            Properties
            
            11Item 3.
            
            Legal
                Proceedings
            
            12Item 4.
            
            Submission
                of Matters to a Vote of Security Holders
            
            12PART IIItem 5.
            
            Market
                for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                Purchases of Equity Securities
            
            13Item 6.
            
            Selected
                Financial Data
            
            15Item 7.
            
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operation
            
            15Item 7A.
            
            Quantitative
                and Qualitative Disclosures About Market Risk
            
            19Item
                8.
            
            Financial
                Statements and Supplementary Data
            
            20Item
                9.
            
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            
            20Item
                9A.
            
            Controls
                and Procedures
            
            20Item
                9B.
            
            Other
                Information
            
            20PART IIIItem
                10.
            
            Directors,
                Executive Officers and Corporate Governance
            
            21Item
                11.
            
            Executive
                Compensation
            
            21Item
                12.
            
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            
            21Item
                13.
            
            Certain
                Relationships and Related Transactions, and Director
                Independence
            
            21Item
                14.
            
            Principal
                Accounting Fees and Services
            
            21PART IVItem
                15.
            
            Exhibits,
                Financial Statement Schedules
            
            22Signatures
            
            II-1









**Forward-Looking
      Statements**




*The
      following discussion contains forward-looking statements, within the meaning
      of
      Section 27A of the Securities Act of 1933, as amended (the “Securities
      Act”) and Section 21E of the Securities Exchange Act of 1934, as
      amended (the “Exchange Act”) which involve risks and uncertainties.
      Forward-looking statements generally include words such as “anticipate,”
“estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,”
“may,” “will,” “should,” “could,” and words of similar import as well as the
      negative of those terms. In addition, any statements that refer to expectations,
      projections or other characterizations of future events or circumstances,
      including any underlying assumptions, are forward-looking statements. All
      forward-looking statements included in this Annual Report on Form 10-K are
      based
      on current expectations and are subject to important factors that could cause
      actual results to differ materially from those projected in the forward-looking
      statements. Such important factors include, but are not limited to, those
      discussed below under “Risk Factors” and elsewhere in this Annual Report and in
      other documents we file with the Securities and Exchange Commission (the
“SEC”).*





**PART
      I**





**Item
      1. Business.**





**Our
      Company**





We
      were
      incorporated in Florida on March 16, 1994 and reincorporated in Delaware on
      September 26, 2000. For the years ended December 31, 2006, 2005 and
      2004, we were a non-operating shell company and our business operations were
      limited to sustaining a public shell vehicle.





On
      February 12, 2007, we acquired Organic Holding Company, Inc., an organic food
      services company, through a reverse merger with our wholly owned subsidiary.
      As
      a result of the merger, Organic Holding Company, Inc. became our wholly owned
      subsidiary and was renamed “Organic To Go, Inc.” On
      May
      16, 2007, our stockholders approved an amendment to our Amended and Restated
      Certificate of Incorporation to change our name from SP Holding Corporation
      to
      Organic To Go Food Corporation.





Our
      principal executive offices are located at 3317 Third Avenue South, Seattle,
      Washington 98134 and our telephone number is (206) 838-4670.





**Overview**  **of
      Our Business**





We
      prepare and serve classic American cuisine. We use organic ingredients when
      possible and always natural ingredients without pesticides and other harmful
      additives. Customers can get our food at our convenient USDA certified
      Retail Cafés, through our Delivery/Casual Catering Services and at specific
      locations where our “grab-and-go” meals are sold via a wholesale relationship.
      Our target customers are white collar office workers as well as students
      and employees of colleges and universities. We currently maintain twenty-six
      Retail Cafés in the Seattle, Washington, Los Angeles, California, and San Diego,
      California vicinities. We have an agreement with Compass Group, Inc., pursuant
      to which Compass Group, Inc. maintains twenty three of our “grab-and-go”
locations on the Microsoft Corporate Campus near Seattle, Washington. We also
      provide sandwiches and other “grab-and-go” food to independent coffee vendors at
      the Los Angeles International Airport. We operate “grab-and-go” locations at
      universities in the Seattle, Washington and Los Angeles, California areas,
      including the University of Washington Medical Center, the University of
      Southern California and the University of California, Los Angeles.




1





**Our
      Product**





We
      provide a delicious and healthy alternative to typical fast food options,
      lunch box deliveries and casual catering. We serve a wide range of organic,
      natural and wholesome meals, which include everything from ham and cheese
      sandwiches to deli-style roast beef sandwiches and veggie packed salads. We
      proactively source producers and manufacturers who use sustainable farming
      and/or production practices as an integral part of our overall mission to
      provide wholesome “clean” food from farm to table. We also use alternative
      packaging such as biodegradable and recycled plastics, and sugar cane based
      disposable tableware to minimize the environmental impact of convenience
      packaging for “grab-and-go” meals.





We
      offer
      packaged and private label food products from key vendors prepared using our
      specifications, and deliver them directly to our Retail Café and Delivery/Casual
      Catering Services customers. We prepare or assemble our products at one of
      two
      assembly kitchens in Seattle, Washington and Los Angeles, California. Orders
      that we take via the Internet or by telephone are routed to dedicated customer
      service centers in Seattle and Los Angeles and are processed in real time.
      While less than 15% of the orders placed are for “same day” delivery, there is a
      growing need for this service, thus we are increasing our ability to provide
      “same day” delivery, particularly to businesses in proximity to our Retail
      Cafés. Our Retail Cafés generally operate Monday through Friday from 7:00 a.m.
      to 4:30 p.m. We provide delivery and catering services after-hours and on
      weekends.





More
      than
      70% of our products currently offered are organic. When our food is not organic
      it is either something such as water or salt which cannot be certified or is
      made up from all natural ingredients sourced under careful preset guidelines
      to
      insure the highest quality products available. In February 2006, we became
      the
      first fast-casual restaurant and retailer to be USDA certified as “Organic” by
      Quality Assurance International, the leading third-party certification agency
      in
      the organic foods industry.





**Business
      Channels**





We
      offer
      our food products through three primary business channels or units: Retail
      Cafés; Delivery/Casual Catering Services; and Wholesale, which accounted for
      approximately 45%, 41% and 14%, of our total sales, respectively, in 2007.
      Our
      core customer base consists of “white collar” workers, college students and
      employees.




*Retail
      Cafés*





We
      currently operate 26 cafés in the Seattle, Washington, Los Angeles and San
      Diego, California vicinities. We operate Retail Cafés in large multi-tenant
      buildings and on large college campuses. We believe these retail locations
      serve
      as billboards for our Delivery/Casual Catering Services and branded Wholesale
      units.





Comparing
      the 12 months ended December 31, 2007, with the same period in 2006, same store
      (comparable) sales decreased approximately 2% for Retail Cafés open longer than
      a year. The average sales ticket for our Retail Cafés was approximately $6.67 in
      2007 and approximately $5.60 in 2006. The prices of the products we sell in
      our
      Retail Cafés range from $0.49 to $11.99.





*Delivery/Casual
      Catering Services*





We
      also
      distribute our products through delivery and catering services. Customers of
      our
      Delivery/Casual Catering Services unit currently include, among others,
      Starbucks Corporate Headquarters, Microsoft, Westin Hotels, Washington Mutual
      Bank, T-Mobile, NBC, Google, Amazon, Qualcomm and several movie studios.
      Approximately 80% of our delivery orders are repeat orders from customers who
      have ordered five or more times.




2





*Wholesale*





Our
      Wholesale business is growing and we believe that it presents a tremendous
      opportunity to build our brand. Wholesale sales currently represent
      approximately 14% of our revenue. Current Wholesale customers include the
      University of California, Los Angeles, University of Southern California, Cal
      State Pomona, Cal State Long Beach, University of Washington, Children’s
      Hospital of Seattle, Washington, NBC Studios and Euro Coffee at the Los Angeles
      International Airport.





**Industry
      Overview and Market Opportunity**





While
      the
      growth and popularity of natural and organic foods has been evident with the
      rise of grocery stores that sell organic products, such as Whole Foods Market,
      Wild Oats and Trader Joe’s, the food service side of the industry has not been
      as developed. We believe that we are one of the first companies to provide
      services in this area of growing consumer demand.





According
      to the Organic Trade Association’s (OTA) 2007 Manufacturer Survey, the market
      for organic foods grew by 20.9% in 2006. The survey also found that sales of
      organic foods during 2006 totaled $16.7 billion, which constituted 2.8% of
      total
      U.S. food sales. This strong growth is consistent with annual growth rates
      since
      1997, all of which have been between 15% and 21% per year.





The
      OTA
      2007 Survey also estimated that the use of organic products in the United States
      food service industry is increasing annually by a rate of 21% per year.
      According to the survey, as recently as 2004, $330 million in natural/organic
      food sales, or only 5% of all natural/organic sales, were sold into the food
      service channel. Traditionally, retail food sales constitute roughly 70% of
      total food sales and food service sales constitute roughly 30%.





Additional
      industry information is available at the OTA’s website, www.OTA.com or the
      Organic Center’s website, www.Organic-Center.org.





**Competition**





We
      are in
      competition with other food service operations within the same geographical
      areas in which we operate. The Retail Cafés, Delivery/Casual Catering Services
      and Wholesale business channels are highly competitive. Some of our
      competitors are significantly larger than us and have greater access to
      resources. We compete with other organizations primarily through the quality,
      variety and value perception of the food products offered. The number and
      location of units, quality and speed of service, attractiveness of facilities,
      effectiveness of marketing and new product development are also important
      factors. The price charged for each menu item we sell or service we provide
      may
      vary from market to market depending on competitive pricing and the local cost
      structure.





**Expansion
      Plans**





We
      intend
      to grow internally and through acquisitions by adding catering companies
      and café locations that are consistent with our core business focus. In each of
      the markets where we operate, we plan to take advantage of our scalability
      and
      acquire local catering companies with strong ties to the region’s corporate
      community. We also intend to work closely with landlords and property managers
      to upgrade the amenities they offer in their buildings by making our
      Delivery/Casual Catering Services and food products available to their tenants.
      In addition, by the end of the calendar year we expect to grow our Wholesale
      business by strategically aligning with large retail stores. There can be no
      assurance, however, that we will acquire or open such additional café locations
      or catering companies or enter into any such strategic alliances.




3




**Recent
      Acquisitions**





*Acquisition
      of Brother’s Restaurant & Deli*





On
      October 19, 2007, we acquired Brother’s Restaurant & Deli, adding three
      Retail Cafés and two catering facilities in San Diego, California. The purchase
      price was comprised of $2.4 million cash, shares of common stock having a fair
      value of $250,000 based on the closing price as of the date of the agreement,
      $150,000 due 90 days from the closing date and another $150,000 due 120 days
      after the close, and upon the occurrence of certain events, additional shares
      of
      common stock having a fair value of $50,000 based on the closing price as of
      the
      date of the agreement. No liabilities were assumed by us. We also assumed the
      leases for the three locations. Brother’s generated approximately $3.0 million
      in revenue in 2006.




*Acquisition
      of Jackrabbit, LLC*





On
      March
      9, 2007, we acquired substantially all of the assets of Jackrabbit, LLC, a
      Seattle-based catering business for cash of approximately $630,000, a $150,000
      promissory note and 400,000 shares of common stock. Jackrabbit has been serving
      downtown Seattle businesses since 1996 with premium box lunches and casual
      catering. Jackrabbit generated approximately $1.85 million in revenue in
      2006.




*Acquisition
      of Vinaigrettes LLC*




On
      October 27, 2006, we acquired all of the operating assets of Vinaigrettes LLC,
      a
      California limited liability company doing business as “Vinaigrettes Catering
      Company,” for a purchase price of $1.0 million. Vinaigrettes was a 10-year-old
      catering services company with approximately 40 employees and sales of
      approximately $2.5 million per year. Vinaigrettes provided business casual
      catering services, ranging from corporate box lunches to lavish Hollywood
      events.




**Suppliers**





We
      have
      not experienced any material shortages of food, equipment, fixtures or other
      products which are necessary to our operations and we anticipate no such
      shortages of products. Sysco Food Service and Amercian Paper and Plastics are
      our two principal suppliers of food products and paper and packaging supplies.
      Sysco Food Services supplies approximately 27.5% of all products purchased
      and
      American Paper and Plastic supplies approximately14.6% of all products
      purchased. Generally, alternate suppliers are available for all of our raw
      materials and supplies.





**Dependence
      on Major Customers**





We
      are
      not dependent on any major customers. No single customer of ours accounted
      for
      more than 10% of our total sales during 2007.





**Environment
      and Energy**





Various
      federal, state and local agencies have adopted regulations that affect the
      discharge of materials into the environment or which otherwise relate to the
      protection of the environment. We do not believe that such regulations will
      have
      a material effect on our operations, our capital expenditures, earnings or
      our
      competitive position. However, we cannot predict the effect of future
      environmental legislation or regulations.




Companies
      involved in the food industry use significant amounts of energy in their
      operations. Our principal sources of energy for our operations are electricity
      and natural gas. To date, the supply of energy available to us has been
      sufficient to maintain normal operations.




4





**Government
      Regulation**





We
      operate in the perishable food industry. The development, manufacture and
      marketing of products sold by us may be subject to extensive regulation by
      various government agencies, including the U.S. Food and Drug Administration
      and
      the U.S. Federal Trade Commission, as well as various state and local agencies.
      These and other agencies regulate production processes, product attributes,
      packaging, labeling, advertising, storage and distribution and establish and
      enforce standards for safety, purity and labeling. In addition, other
      governmental agencies (including the U.S. Occupational Safety and Health
      Administration), establish and enforce health and safety standards and
      regulations in the workplace, including those in our retail locations. Our
      retail locations are subject to inspection by federal, state, and local
      authorities.





**Information
      Technology**




We
      have
      integrated information technology systems that facilitate efficient and scalable
      operations throughout our operations.




**Employees**





As
      of March 11, 2007, we had a workforce of approximately 316 employees,
      consisting of 251 full-time and 65 part-time employees. None of our
      employees are represented by a collective bargaining agreement, nor have we
      experienced any work stoppages.




**Trademark
      and Website**




We
      have
      registered our stylized logo, and we have registered the Internet domain name
      “www.organictogo.com.”





**Item
      1A. Risk Factors**





*You
      should consider carefully the risks described below, together with all of the
      other information in this Annual Report, in evaluating our company, our business
      and our common stock. If any of the following risks actually occur, our
      business, financial condition, and results of operations could suffer. In this
      case, the trading price of our common stock could decline and you may lose
      all
      or part of your investment.*





**Risks
      Related to Our Company**





**Our
      limited operating history makes it difficult for investors to evaluate our
      business and the risks and uncertainties frequently encountered by new
      companies.**





Our
      current business operations were founded in November 2004, and as a result,
      we
      have a limited operating history. This limited operating history and the
      unpredictability of our industry make it difficult for investors to evaluate
      our
      business and future operating results. An investor in our securities must
      consider the risks, uncertainties and difficulties frequently encountered by
      companies in new and rapidly evolving markets. The risks and difficulties we
      face include challenges in accurate financial planning as a result of limited
      historical data and the uncertainties resulting from having had a relatively
      limited time period in which to implement and evaluate our business strategies
      as compared to older companies with longer operating histories.




5





**If
      we fail to open new Retail Cafés and expand our Delivery/Casual Catering
      Services and Wholesale operations we may not be able to achieve
      profitability.**





Our
      growth strategy requires us to open new Retail Cafés and expand our
      Delivery/Casual Catering Services and Wholesale operations through acquiring
      other companies or in greenfield locations. The success of our planned expansion
      will be dependent upon numerous factors, many of which are beyond our control,
      including the following:





·
            hiring,
                training and retention of qualified operating
                personnel;·
            identification
                and successful negotiation for the purchase of suitable acquisition
                targets;




·
            identification
                and availability of suitable
                properties;




·
            negotiation
                of favorable lease terms;




·
            timely
                development of new Retail Café, Delivery/Casual Catering Services and
                Wholesale operations;




·
            the
                successful integration of the operations of acquired
                companies;·
            management
                of construction and development costs of Retail Café, Delivery/Casual
                Catering Services and Wholesale
                operations;




·
            competition
                in our markets; and




·
            general
                economic conditions.




Delays
      or
      failures in opening new Retail Cafés or in expanding our Delivery/Casual
      Catering Services and Wholesale operations could materially adversely affect
      our
      business, financial condition, operating results or cash flows. Further, any
      new
      Retail Café, Delivery/Casual Catering Services or Wholesale operation we open or
      acquire may not be able to obtain similar operating results to those of our
      existing operations.





**In
      order to support our future expansion and growth plans we may need
      additional financing, which may not be available on satisfactory terms or at
      all.**




We
      may
      need to raise additional funds to support our future expansion and growth plans.
      Our funding requirements may change as a result of many factors, including
      underestimates of budget items, unanticipated cash requirements, future product
      and service opportunities, and future business combinations. Consequently,
      we
      may need to seek additional sources of financing, which may not be available
      on
      favorable terms, if at all, and which may be dilutive to existing
      stockholders.




We
      may
      seek to raise additional financing through equity offerings, debt financings
      or
      additional corporate collaboration and licensing arrangements. To the extent
      we
      raise additional capital by issuing equity securities, our stockholders may
      experience dilution. To the extent that we raise additional capital by issuing
      debt securities, we could incur substantial interest obligations, may be
      required to pledge assets as collateral for the debt and may be constrained
      by
      restrictive financial and/or operational covenants. Debt financing would also
      be
      superior to the stockholders’ interests in bankruptcy or liquidation.




6




**Our
      reliance on our suppliers and distributors subjects us to a number of risks,
      including possible delays or interruptions in supplies, diminished direct
      control over quality and a potential lack of adequate raw material capacity.**





We
      depend
      on our suppliers and distributors for the operation of our business. **** Any
      disruption in the supply of or degradation in the quality of the raw materials
      provided by our suppliers could have a material adverse effect on our business,
      operating results and financial condition. In addition, such disruptions in
      supply or degradations in quality could have a long-term detrimental impact
      on
      our efforts to develop a strong brand identity and a loyal consumer base.
      Although we maintain relationships with a number of suppliers and always attempt
      to have more than one potential supplier for any required item, there can be
      no
      assurance that we will be able to continue to maintain multiple supply sources.
      If any supplier or distributor fails to perform as anticipated, or if there
      is a
      termination or any disruption in any of these relationships for any reason,
      it
      could have a material adverse effect on results of operations.




**We
      could face labor shortages that could slow our growth.**




Our
      success depends in part upon our ability to attract, motivate and retain a
      sufficient number of qualified employees, including managers, chefs and other
      kitchen staff, necessary to keep pace with our expansion schedule. Qualified
      individuals of the requisite caliber and number needed to fill these positions
      are in short supply in some areas. Although we have not experienced any
      significant challenges in recruiting or retaining employees, any future
      inability to recruit and retain sufficient individuals may delay the planned
      openings and development of new Retail Cafés, Delivery/Casual Catering Services
      and Wholesale operations. Any such delays or any material increases in employee
      turnover rates in existing Retail Cafés and in our Delivery/Casual Catering
      Services and Wholesale operations could have a material adverse effect on our
      business, financial condition, operating results or cash flows. Additionally,
      competition for qualified employees could require us to pay higher wages to
      attract sufficient employees, which could result in higher labor
      costs.





**Our
      expansion into new markets may present increased risks due to our unfamiliarity
      with the area.**




From
      July
      through October 2007, we purchased a total of eight stores in San
      Diego, California, in order to facilitate our initial entry into the San Diego
      market. We anticipate that our new Retail Cafés, Delivery/Casual Catering
      Services and Wholesale operations will typically take several months to reach
      budgeted operating levels due to challenges commonly associated with new
      businesses, including lack of market awareness, inability to hire sufficient
      staff and other factors. Although we will attempt to mitigate these factors
      by
      careful attention to training and staffing needs, there is a risk that we will
      not be successful in operating our new Retail Cafés, Delivery/Casual Catering
      Services and Wholesale operations on a profitable basis. New markets that we
      enter may have different competitive conditions, consumer tastes and
      discretionary spending patterns than our existing markets, which may cause
      our
      new Retail Cafés, Delivery/Casual Catering Services and Wholesale operations in
      those new markets to be less successful than those in our existing
      markets.





**Our
      expansion may strain our administrative, financial and informational
      infrastructure, which could slow our development.**




We
      face
      the risk that our existing systems and procedures, financial controls and
      information systems will be inadequate to support our planned expansion. We
      may
      not be able to accurately predict whether we will be able to respond on a timely
      basis to all of the changing demands that our planned expansion will impose
      on
      management and these systems and controls. If we fail to continue to improve
      our
      information systems and financial controls or to manage other factors necessary
      for us to achieve our expansion objectives, our business, financial condition,
      operating results or cash flows could be materially adversely
      affected.





**All
      of our operations are currently located in Washington and California. As a
      result, we are highly sensitive to negative occurrences in those two
      states.**




We
      are
      particularly susceptible to adverse trends and economic conditions in the States
      of Washington and California, including in their labor markets. In addition,
      given our geographic concentration, negative publicity regarding any of our
      operations in the states of Washington or California could have a material
      adverse effect on our business and operations, as could other regional
      occurrences such as local strikes, supply shortages, local economic conditions,
      consumer preferences, earthquakes or other natural disasters.




7





**Our
      operation as a public company subjects us to evolving corporate governance
      and
      public disclosure regulations that result in significant expenses and liability
      exposures.**





As
      a
      public company, we incur significant legal, accounting and other expenses that
      non-public companies may not incur. We incur costs associated with our public
      company reporting requirements. We also incur costs associated with corporate
      governance requirements, including certain requirements under the Sarbanes-Oxley
      Act of 2002, as well as new rules implemented by the SEC and the Financial
      Industry Regulatory Authority. We expect these rules and regulations, to
      increase significantly our legal and financial compliance costs and to make
      some
      activities more time-consuming and costly. Like many smaller public companies,
      we face a significant impact from required compliance with Section 404 of the
      Sarbanes-Oxley Act of 2002. Section 404 requires management of public companies
      to evaluate the effectiveness of internal control over financial reporting
      and
      the independent auditors will eventually have to attest to the effectiveness
      of
      such internal controls and the evaluation performed by management. The SEC
      has
      adopted rules implementing Section 404 for public companies as well as
      disclosure requirements. The Public Company Accounting Oversight Board, or
      PCAOB, has adopted documentation and attestation standards that the independent
      auditors must follow in conducting its attestation under Section 404. We have
      taken action to comply with Section 404; however, there can be no assurance
      that
      we will be able to meet effectively all of the requirements of Section 404
      as
      known to us in the currently mandated timeframe. Any failure to implement
      effectively new or improved internal controls, or to resolve difficulties
      encountered in their implementation, could harm our operating results, cause
      us
      to fail to meet reporting obligations or result in management being required
      to
      give a qualified assessment of our internal controls over financial reporting
      or
      our independent auditors providing an adverse opinion regarding management’s
      assessment. Any such result could cause investors to lose confidence in our
      reported financial information, which could have a material adverse effect
      on
      our stock price.





We
      also
      expect these rules and regulations may make it more difficult and more expensive
      for us to obtain director and officer liability insurance and we may be required
      to accept reduced policy limits and coverage or incur substantially higher
      costs
      to obtain the same or similar coverage. As a result, it may be more difficult
      for us to attract and retain qualified individuals to serve on our Board of
      Directors or as executive officers. We are currently evaluating and monitoring
      developments with respect to these rules, and it is difficult to predict or
      estimate the amount of additional costs we may incur or the timing of such
      costs.





**If
      we fail to maintain the adequacy of our internal controls, our ability to
      provide accurate financial statements and comply with the requirements of the
      Sarbanes-Oxley Act of 2002 could be impaired, which could cause our stock price
      to decrease substantially.**





All
      of
      our current management, other than Andrew Jacobs and Michael Gats, was
      previously the management of our operating subsidiary, Organic To Go, Inc.,
      which we acquired in a reverse merger on February 12, 2007. Prior to that time,
      our subsidiary was a private company without public reporting obligations.
      As a
      result, prior to the merger, our management had committed limited personnel
      and
      resources to the development of the external reporting and compliance
      obligations that would be required of a public company. We have taken and will
      continue to take measures to address and improve our financial reporting and
      compliance capabilities. If our financial and managerial controls, reporting
      systems or procedures fail, we may not be able to provide accurate financial
      statements on a timely basis or comply with the Sarbanes-Oxley Act of 2002
      as it
      applies to us. Any failure of our internal controls or our ability to provide
      accurate financial statements could cause the trading price of our common stock
      to decrease substantially.




8





**We
      depend on our key personnel, and the loss of their services may adversely affect
      our business.**





We
      are
      highly dependent upon the efforts of our senior management team. The death
      or
      departure of any of our key personnel could have a material adverse effect
      on
      our business. In particular, the loss of Jason Brown, our Chief Executive
      Officer and Chairman, could significantly impact our ability to operate and
      grow
      and could cause performance to differ materially from projected results. We
      have
      a $3 million “key man” insurance policy covering Mr. Brown.





**Our
      past activities prior to our merger with Organic Holding Company, Inc., may
      lead
      to future liability for the combined companies.**





Prior
      to
      February 12, 2007, we were engaged in businesses and were managed by parties
      unrelated to that of our new operations. Any liabilities relating to such prior
      business may have a material adverse effect on us.




**Risks
      Related to Our Industry**





**We
      operate in a highly competitive industry where many of our competitors are
      larger and have more resources than we do.**





We
      operate in a highly competitive environment. Many of our competitors are
      substantially larger than us in terms of resources and market share. As a
      result, many of our competitors offer products and services at a lower cost
      to
      consumers. Our success will depend to a significant extent on our ability to
      continue to develop and introduce differentiated products and services and
      deliver them to consumers in a widespread, convenient and cost-effective manner.
      The success of our products and services is dependent on several factors
      including understanding consumer needs, differentiation from competitive
      offerings, market acceptance and lower costs. Although we believe that we can
      take the necessary steps to meet the competitive challenges of the marketplaces
      in which we operate, we may not be successful in differentiating our products
      and services from those of our competitors or meeting consumer
      demand.




**Our
      operations are susceptible to changes in food and supply costs, which could
      adversely affect our margins.**




Our
      profitability depends, in part, on our ability to anticipate and react to
      changes in food and supply costs. Our centralized purchasing staff negotiates
      prices for all of our ingredients and supplies. Any increase in distribution
      costs could cause our food and supply costs to increase. Further, various
      factors beyond our control, including adverse weather conditions and
      governmental regulations, could cause our food and supply costs to increase.
      We
      may not be able to anticipate and react to changing food and supply costs by
      adjusting our purchasing practices in a timely fashion. A failure to do so
      could
      adversely affect our operating results and cash flows.




**Changes
      in consumer preferences or discretionary consumer spending could negatively
      impact our results.**




Our
      Retail Cafés, Delivery/Casual Catering Services and Wholesale operations feature
      various types of organic foods and beverages. Our continued success depends,
      in
      part, upon the popularity of these foods in the future. Shifts in consumer
      preferences away from this cuisine could materially adversely affect our future
      profitability. Also, our success depends on numerous factors affecting
      discretionary consumer spending, including economic conditions, disposable
      consumer income and consumer confidence. Adverse changes in these factors could
      reduce customer traffic or impose practical limits on pricing, either of which
      could materially adversely affect our business, financial condition, operating
      results or cash flows. We can also be materially adversely affected by negative
      publicity concerning food quality, illness, injury, publication of government
      or
      industry findings concerning food products served by us, or other health
      concerns or operating issues stemming from our operations.




9




**Our
      industry is affected by litigation and publicity concerning food quality, health
      and other issues which can cause customers to avoid our cafés and result in
      liabilities.**




We
      could
      become the subject of complaints or litigation from customers or employees
      alleging illness, injury or other food quality, health or operational concerns.
      Adverse publicity resulting from these allegations may materially adversely
      affect us and our Retail Cafés, Delivery/Casual Catering Services and Wholesale
      operations, regardless of whether the allegations are valid or whether we are
      liable.




**Our
      operations are subject to governmental regulation associated with the food
      service industry, the operation and enforcement of which may restrict our
      ability to carry on our business.**




We
      are in
      the perishable food industry. The development, manufacture and marketing of
      products sold by us are subject to extensive regulation by various government
      agencies, including the U.S. Food and Drug Administration and the U.S. Federal
      Trade Commission, as well as various state and local agencies. These agencies
      regulate production processes, product attributes, packaging, labeling,
      advertising, storage and distribution. These agencies establish and enforce
      standards for safety, purity and labeling. In addition, other governmental
      agencies (including the U.S. Occupational Safety and Health Administration),
      establish and enforce health and safety standards and regulations in the
      workplace, including those in our retail locations. Our retail locations will
      be
      subject to inspection by federal, state and local authorities. Although we
      intend to comply at all times with all such laws and regulations, including
      obtaining and maintaining all necessary permits and licenses relating to our
      operations, there is a risk that we may not be able to comply with such laws
      and
      regulations on a timely basis, or at all. Our failure to comply with applicable
      laws and regulations could subject us to civil remedies including fines,
      injunctions, recalls or seizures as well as potential criminal sanctions. In
      addition, compliance or attempted compliance with governmental laws and
      regulations may result in significant time or cost expenditures, which could
      delay or preclude us from marketing our products or continuing or expanding
      our
      operations.





**Risks
      Relating to Ownership of Our Common Stock**




**The
      market price of our common stock may be highly volatile, which may result in
      a
      significant decline in the value of our common stock.**




The
      market price of our common stock may fluctuate significantly in response to
      factors, most of which are beyond our control, such as:




·
            the
                announcement of new products or services by us or our
                competitors;




·
            quarterly
                variations in our and our competitors’ results of
                operations;




·
            changes
                in earnings estimates or recommendations by securities
                analysts;




·
            developments
                in our industry; and




·
            general
                market conditions and other factors, including factors unrelated
                to our
                own operating performance or the condition or prospects of our
                industry.




Further,
      the stock market in general, and securities of small-cap companies in
      particular, have recently experienced extreme price and volume fluctuations.
      Continued market fluctuations could result in extreme volatility in the price
      of
      our common stock, which could cause a decline in its value. You should also
      be
      aware that price volatility might be worse if the trading volume of our common
      stock is low.




10




Although
      our common stock is currently quoted on the OTC Bulletin Board, trading may
      be
      extremely sporadic. A more active market for our common stock may not develop.
      Accordingly, you may have to bear the economic risk of an investment in our
      common stock indefinitely.




**We
      may not be able to list our common stock on a securities exchange, which may
      affect the liquidity of our common stock.**




We
      intend
      to seek to have our common stock listed on the American Stock Exchange or the
      NASDAQ Stock Market as soon as practicable. However, we may not be able to
      initially meet or maintain the listing standards of either of those or any
      other
      stock exchange. In addition, if we fail to meet the listing standards set forth
      by the SEC regulations, various requirements may be imposed on broker-dealers
      who sell our securities to persons other than established customers and
      accredited investors. These requirements may deter broker-dealers from
      recommending or selling our common stock, which may further affect its liquidity
      and make it more difficult for us to raise additional capital.





**We
      have a substantial number of convertible securities outstanding, which if fully
      exercised could require us to issue a significant number of shares of our common
      stock and result in substantial dilution to existing
      stockholders.**




As
      of
      March 11, 2008, we had outstanding options and warrants to purchase up to
      4,914,938 and 12,386,608 shares of common stock, respectively. In the event
      these securities are exercised, you could suffer substantial dilution in terms
      of your percentage ownership of your common stock.





**A
      large number of additional shares may be sold into the public market in the
      near
      future, which may cause the market price of our common stock to decline
      significantly, even if our business is doing well.**




Sales
      of
      a substantial amount of common stock in the public market, or the perception
      that these sales may occur, could adversely affect the market price of our
      common stock. On a fully diluted basis, we had 36,763,476 shares of common
      stock outstanding as of March 11, 2008. If these shares of common stock are
      registered or otherwise become eligible for public sale, the market price of
      our
      common stock could decline significantly.





**We
      have not and do not intend to pay any dividends. As a result, you may only
      be
      able to obtain a return on investment in our common stock if its value
      increases.**




Our
      current management has not paid dividends in the past and does not plan to
      pay
      dividends in the near future. We expect to retain earnings to finance and
      develop our business. In addition, the payment of future dividends will be
      directly dependent upon our earnings, our financial needs and other similarly
      unpredictable factors. As a result, the success of an investment in our common
      stock will depend upon future appreciation in its value. The price of our common
      stock may not appreciate in value or even maintain the price at which you
      purchased our shares.





**Item
      1B. Unresolved Staff Comments.**





Not
      applicable.





**Item
      2. Properties.**





Our
      principal executive offices are located at 3317 Third Avenue South, Seattle,
      Washington 98134. This facility consists of approximately 13,500 square feet
      of
      office space pursuant to a lease that expires on December 31,
      2011.




11





We
      lease
      space for our retail properties as needed for our business operations from
      time
      to time. We believe that we will continue to be able to find and lease the
      properties we need on reasonable terms. However, there can be no assurance
      that
      we will be able to find suitable locations for our planned expansion or for
      continued operations. We believe that the condition of all of the properties
      we
      lease are generally adequate for their respective purposes.





**Item
      3. Legal Proceedings.**





On
      January 8, 2008, Esther Sanchez, a former employee of Organic To Go, Inc.,
      our
      wholly owned subsidiary, brought suit against us seeking damages in the Superior
      Court of the State of California for the County of Los Angeles claiming wrongful
      termination, sexual harassment and related causes of action in connection with
      the termination of Ms. Sanchez’s employment with us. Our employment practices
      liability insurer has agreed to provide a defense on our behalf, subject to
      a
      reservation of rights letter and the terms and conditions of its insurance
      policy.





We
      are
      currently in mediation pursuant to the Standard Form of Agreement with Wheelihan
      Construction, Inc. This matter arose out of tenant improvements made by
      Wheelihan Construction, Inc. and its subcontractors at one of our retail
      locations in San Diego, California. In connection with the matter, four
      subcontractors/suppliers have commenced actions against us, Wheelihan
      Construction, Inc. and other defendants.





From
      time
      to time, we are subject to various legal proceedings and claims that may arise
      in the ordinary course of business. Our management currently believes that
      resolution of such legal matters will not have a material adverse impact on
      us.





**Item
      4. Submission of Matters to a Vote of Security Holders.**





No
      matters were submitted to a vote by security holders during the fourth quarter
      ended December 31, 2007.




12





**PART
      II**





**Item
      5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities.**





**Market
      Information**





Our
      common stock is traded on the OTC Bulletin Board under the symbol
“OTGO.OB.”





The
      following table sets forth, for the periods indicated, the reported high and
      low
      closing bid quotations for our common stock as reported on the OTC Bulletin
      Board. The bid prices reflect inter-dealer quotations, do not include retail
      markups, markdowns or commissions and do not necessarily reflect actual
      transactions.




**Quarter
                Ended**
            
            **High
                Bid ($)**
            
            **Low
                Bid ($)**March
                31, 2006
            
            
            6.00
            
            
            3.50June
                30, 2006
            
            
            5.03
            
            
            3.00September
                30, 2006
            
            
            3.25
            
            
            3.25December
                31, 2006
            
            
            3.25
            
            
            3.25March
                31, 2007
            
            
            11.00
            
            
            2.75June
                30, 2007
            
            
            6.00
            
            
            1.80September
                30, 2007
            
            
            2.25
            
            
            1.65December
                31, 2007
            
            
            2.10
            
            
            1.19





**Holders**




As
      of
      March 11, 2008, there were approximately 245 holders of record of our common
      stock.




**Transfer
      Agent and Registrar**





The
      transfer agent and registrar for our common stock is American Stock Trust &
Transfer Company.





**Dividend
      Policy**




We
      did
      not pay any dividends in the periods indicated in the above table. We do not
      intend to pay cash dividends in the foreseeable future. We intend to retain
      earnings, if any, for future operation and expansion. Any decision to declare
      and pay dividends in the future will be made at the discretion of our Board
      of
      Directors and will depend on, among other things, our results of operations,
      cash requirements, financial condition, contractual restrictions and other
      factors that our Board of Directors may deem relevant.




13





**Equity
      Compensation Plan**





The
      following tables provide information as of December 31, 2007 about our common
      stock that may be issued upon the exercise of options, warrants and rights
      under
      all of our existing equity compensation plans.











**(a)**
            
            **(b)**
            
            **(c)****Plan
                category**
            
            **Number
                of securities to**
              **be
                issued upon exercise**
              **of
                outstanding options,**
              **warrants
                and rights**
            
            **Weighted-average**
              **exercise
                price of**
              **outstanding
                options,**
              **warrants
                and rights**
            
            **Number
                of securities remaining available**
              **for
                future issuance under equity**
              **compensation
                plans (excluding securities**
              **reflected
                in column (a))**Equity
                compensation plans approved by security holders (1)
            
            1,
                266,601
            
            $2.09
            
            2,333,399Equity
                compensation plans not approved by security holders (2)
            
            1,784,337
            
            $1.08
            
            N/ATotal
            
            3,050,938
            
            $1.50
            
            2,333,399





(1)  On
      May 16, 2007, our stockholders approved the adoption of the 2007 Equity
      Participation Plan of Organic To Go Food Corporation. Under the plan, we are
      authorized to grant options and restricted stock to our employees, directors
      and
      consultants. The maximum number of shares of common stock that may be granted
      as
      restricted stock or issued upon the exercise of options pursuant to the plan
      is
      3,600,000 shares. As of December 31, 2007, no shares of restricted stock were
      issued under the plan. As of that same date, options to purchase
      1,266,601  shares
      of
      common stock have been issued under the plan. None of the options issued under
      the plan have been exercised.





(2)
      In
      connection with our merger with Organic Holding Company, Inc. on February 12,
      2007, we issued options to purchase shares of our common stock in exchange
      for
      outstanding options to purchase shares of Organic Holding Company, Inc. common
      stock that were issued to directors, officers, employees and consultants of
      Organic Holding Company, Inc. prior to the merger. The following table
      summarizes the number and average weighted exercise price of Organic Holding
      Company, Inc. options that were outstanding on a pre-merger basis and the
      equivalent information with respect to options to purchase our common stock
      that
      were exchanged for such Organic Holding Company, Inc. options on a post-merger
      basis.





**Pre
                Merger**
            
            **Post
                Merger**Number
                of Shares of Organic
              Holding
                Company, Inc. Common
              Stock
                Underlying Options
            
            Weighted
                Average
              Exercise
                Price
              of
                Options
            
            Number
                of Shares
              of
                our Common Stock
              Underlying
                Options
            
            Weighted
                Average
              Exercise
                Price
              of
                Options (1)939,432
            
            $
            0.38
            
            
            655,545
            
            $
            0.54





(1)
      The
      options issued in connection with the merger generally expire 10 years from
      the
      date of grant and have vesting schedules ranging from immediately exercisable,
      to fully exercisable by July 2011.





Effective
      upon the closing of the merger, Jason Brown received options to purchase
      1,246,674 shares of our common stock, which represented an amount equal to
      approximately 5% of the outstanding shares of our common stock as of the closing
      date of the merger determined on a fully-diluted basis. The options granted
      to
      Mr. Brown at closing have an exercise price of $1.38 per share and expire on
      February 11, 2016. Except in connection with a “Change in Control” (as defined
      in Mr. Brown’s employment agreement), 25% of such options vest after 12 months
      of employment, with the remainder vesting over the next 36 months, for a total
      vesting period of 48 months. All of the options vest immediately if, within
      12 months after a “Change in Control,” Mr. Brown is terminated for any reason
      other than “Cause” or if Mr. Brown terminates his employment for “Good Reason”
(each as defined in Mr. Brown’s employment agreement).




14




**Item
      6. Selected Financial Data.**





Not
      applicable.





**Item
      7. Management’s Discussion and Analysis of Financial Condition and Results of
      Operation.**





*The
      following discussion and analysis of the results of operations and financial
      condition of Organic To Go Food Corporation for the years ended December 31,
      2007 and 2006 should be read in conjunction with our financial statements and
      the notes to those financial statements that are included elsewhere in this
      Form
      10-K. This discussion includes forward-looking statements based upon current
      expectations that involve risks and uncertainties, such as plans, objectives,
      expectations and intentions. Actual results and the timing of events could
      differ materially from those anticipated in these forward-looking statements
      as
      a result of a number of factors. Words such as “anticipate,” “estimate,” “plan,”
“continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,”
“could,” and similar expressions are used to identify forward-looking
      statements.*





**Overview**





*Organization
      and Business -* Organic
      Holding Company, Inc., d/b/a Organic To Go, whose name was changed to Organic
      To
      Go, Inc. effective February 27, 2007, is a wholly owned subsidiary of Organic
      To
      Go Food Corporation and was incorporated in the state of Delaware in February
      2004. We provide convenient cafés which prepare and serve “grab and go” lunch,
      dinner, and breakfast foods and beverages prepared using organic ingredients,
      whenever possible. We also distribute our products through delivery, catering
      and select wholesale accounts. In October 2006, we expanded our catering
      operations in the California area by acquiring the assets of a catering
      operation headquartered in Los Angeles, California. In March 2007, we expanded
      our catering operations by acquiring the assets of a catering operation located
      in Seattle, Washington, and in July, September and October 2007 we further
      expanded our operations by acquiring the assets of six retail and catering
      stores in San Diego, California. In February 2007, we completed a reverse merger
      with SP Holding Corporation, a public shell company. At December 31, 2007,
      we
      operated five stores in Washington and eighteen stores in California, with
      central kitchens in each market.





Management
      believes we have the opportunity to capture increasing market share in all
      three
      of our business channels: Delivery/Catering, Retail, and Wholesale “grab &
go” convenience foods, by providing customers with delicious, healthy, wholesome
      and organic food choices. Management is focused in the near and long term on
      the
      challenges and risks that we face in expanding our business. These include
      our
      ability to obtain retail, catering and wholesale locations, building a
      sufficient infrastructure to support our expansion, and obtaining a customer
      base and margin improvement sufficient to achieve and sustain profitability.





*Basis
      of Presentation and Liquidity -* Since
      our
      inception, we have funded operations and business development and growth through
      debt and equity financings. In this regard, during 2006, we raised approximately
      $8.1 million pursuant to sales of debt and equity securities in connection
      with
      our private placement and subordinated debt offerings. Further, during the
      three
      months ended March 31, 2007, proceeds of approximately $6.9 million were
      received from the sale of equity securities in connection with our merger with
      SP Holding Corporation and concurrent private placement, and approximately
      $5.3
      million of notes payable were converted into shares of common stock.
      Additionally, during the three months ended June 30, 2007, proceeds of
      approximately $6.7 million were received from the sale of debt and equity
      securities. In October 2007, we closed a private placement offering and issued
      approximately 3.2 million shares of common stock and warrants to purchase
      approximately 1.5 million shares of common stock. The aggregate gross proceeds
      raised by the Company were approximately $5.7 million. In January 2008, we
      closed a private placement offering and issued approximately 1.4 million shares
      of Company common stock and warrants to purchase approximately 0.6 million
      shares of common stock. The aggregate gross proceeds raised by the Company
      were
      approximately $2.0 million. Also, in February 2008, we closed a private
      placement offering and issued approximately 7.1 million shares of common stock,
      a warrant to purchase approximately 4.3 million shares of common stock and
      a
      conditional warrant to purchase shares of common stock, which may only be
      exercised under certain circumstances. The aggregate gross proceeds raised
      by
      the Company were $10.0 million. Our management intends to continue to be engaged
      in additional fund-raising activities to fund future capital expenditures,
      potential acquisitions of businesses, and provide additional working capital.




15





**Critical
      Accounting Policies and Estimates**





Management's
      discussion and analysis of financial condition and results of operations are
      based on our financial statements, which have been prepared in accordance with
      accounting principles generally accepted in the United States. The preparation
      of these financial statements requires our management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      the
      disclosure of contingent assets and liabilities at the date of the financial
      statements, as well as the reported net sales and expenses during the reporting
      periods. On an ongoing basis, estimates and assumptions are evaluated. Estimates
      are based on historical experience and on various other factors believed
      reasonable under the circumstances, the results of which form the basis for
      making judgments about the carrying value of assets and liabilities that are
      not
      readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions. A summary of significant
      accounting policies is presented in Note 1 to our financial statements included
      elsewhere in this Form 10-K. The following accounting policies are considered
      the more critical to aid in understanding and evaluating our results of
      operations and financial condition.





*Use
      of Estimates -* In
      preparing the financial statements in conformity with accounting principles
      generally accepted in the United States of America, management makes estimates
      and assumptions that affect the reported amounts of assets and liabilities
      and
      disclosures of contingent assets and liabilities at the dates of the financial
      statements, as well as the reported amounts of revenues and expenses during
      the
      reporting years. Actual results could differ from those estimates. The more
      significant accounting estimates inherent in the preparation of our financial
      statements include estimates as to the depreciable lives of property and
      equipment, recoverability of long-lived assets, valuation of inventories,
      valuation of equity related instruments issued, and valuation allowance for
      deferred income tax assets.





*Inventory
      -* Inventory,
      which consists primarily of food, beverages and packaging products, is stated
      at
      the lower of cost or market. Cost is determined on a first-in, first-out basis.
      In assessing the ultimate realization of inventories, our management makes
      judgments as to future demand requirements compared to current inventory levels.





*Impairment
      of Long-lived Assets -* Long-lived
      assets are reviewed for impairment whenever events or changes in circumstances
      indicate that the carrying amount of the assets may not be recoverable.
      Impairment of long-lived assets would be recognized in the event that the net
      book values of such assets exceed the future undiscounted cash flows
      attributable to such assets. No impairment of long-lived assets was recognized
      for any of the periods presented.





*Intangible
      Assets -* In
      connection with acquisitions in 2006 and 2007 of certain assets of catering
      businesses and other retail store locations we acquired certain identifiable
      intangible assets including customer-based intangibles. These acquisitions
      have
      been accounted for in accordance with SFAS No. 141. Amounts allocated to
      intangible assets were identified by management and have been valued on a number
      of factors. The estimate of useful lives of each intangible asset was based
      on
      an analysis by management of all pertinent factors. Management selected an
      estimated useful life of two years for each identifiable intangible asset.




*Revenue
      Recognition -* Revenues
      are recognized at the point of sale at retail locations or upon delivery of
      products for delivery and wholesale transactions.




16





*Cost
      of Sales -* Cost
      of
      sales includes the cost of food, beverages and paper products.





*Income
      Taxes -* We
      account for income taxes in accordance with SFAS No. 109, “Accounting for Income
      Taxes,” which requires recognition of deferred tax assets and liabilities for
      expected future tax consequences of events that have been included in financial
      statements or tax returns. Under this method, deferred income taxes are
      recognized for the tax consequences in future years of differences between
      the
      tax bases of assets and liabilities and their financial reporting amounts at
      each period end based on enacted tax laws and statutory tax rates applicable
      to
      the periods in which the differences are expected to affect taxable income.
      Valuation allowances are established, when necessary, to reduce deferred tax
      assets to amounts expected to be realized. We continue to provide a full
      valuation allowance in order to reduce our net deferred tax asset to zero,
      inasmuch as our management has not determined that realization of deferred
      tax
      assets is more likely than not. The provision for income taxes represents the
      tax payable for the period and change during the period in net deferred tax
      assets and liabilities.





*Stock-based
      Compensation -* In
      December 2004, the FASB released SFAS 123R. SFAS 123R sets forth the accounting
      for share-based payment transactions in which an enterprise receives employee
      services in exchange for (a) equity instruments of the enterprise, or (b)
      liabilities that are based on the fair value of the enterprise's equity
      instruments or that may be settled by the issuance of such equity instruments.
      The statement eliminates the ability to account for share-based compensation
      transactions using APB Opinion No. 25, “Accounting for Stock Issued to
      Employees,” and generally requires instead that such transactions be accounted
      for using a fair-value-based method, which requires recording an expense over
      the requisite service period for the fair value of all options or warrants
      granted to employees and consultants. We adopted SFAS 123R effective beginning
      January 1, 2006.





**Results
      of Operations**




*Sales
      -* Sales
      for
      2007 increased approximately 65%, to $15.9 million, as
      compared with $9.7 million for 2006. Retail sales were $7.1 million
      during 2007, an increase of approximately 37% over $5.2 million during the
      comparative prior year. Retail sales comprised 45% of total sales in 2007
      compared to 54% of total sales in 2006. The increase in retail sales is
      primarily a result of the addition of eleven new Retail Cafés that were opened
      or acquired during 2007. In 2007, we ended the year with 23 Retail Cafés as
      compared with 12 at the end of 2006.





Delivery/Catering
      sales were $6.6 million during 2007, an increase of $3.3 million, or
      approximately 100% over $3.3 million during 2006. Delivery/Catering sales
      comprised 41% of total sales in 2007 as compared with 34% for the prior
      year. The increase in delivery/catering sales during 2007 is attributable to
      the
      acquisition of catering businesses in Seattle and San Diego in addition to
      increased business volume in all delivery/catering operations.





Wholesale
      sales were $2.2 million during 2007, an increase of $1.1 million, as compared
      with $1.1 million during 2006. Wholesale sales comprised 14% of total sales
      in
      the 2007 period as compared with 12% in 2006. The increase in wholesale
      sales is due to our entrance in the San Diego market and increased business
      volume in existing markets.





*Cost
      of Sales -* Cost
      of
      sales includes the cost of food and paper products. Cost of sales for 2007
      increased approximately 51%, to $7.4 million, as compared with $4.9 million
      for 2006. Cost of sales for 2007 was approximately 46% as a percent of sales
      as
      compared with 50% during the comparative prior year period. During 2007, we
      were able to negotiate lower costs on our food and paper products and reduce
      the
      amount of food waste and spoilage.





*Gross
      Profit -* Gross
      profit increased approximately 78%, to $8.5 million for 2007, as compared with
      $4.8 million for 2006. Gross profit for 2007 was approximately 54% of sales
      as
      compared with 50% during 2006. In addition to negotiating lower costs on
      our food and paper products and reducing the amount of food waste and spoilage,
      we also increased retail and wholesale prices during the year to improve our
      gross margin.




17





*Operating
      Expenses -* Operating
      expenses for 2007 increased approximately 53%, to $16.1 million, as
      compared with $10.5 million for 2006. Operating expenses are comprised
      primarily of labor, and, to a lesser extent, occupancy, utilities, and selling,
      general and administrative expenses. Operating expenses increased in 2007 as
      compared with 2006, primarily due to increased labor and related costs as a
      result of continued growth since the prior year, including the acquisition
      of
      two catering businesses, increasing the number of Retail Cafés from 12 in 2006
      to 23 in 2007, and preparing for future growth. During 2007, we recorded
      $498,000 in non-recurring, one-time expenses, including significant upfront
      expenses to research and open locations in San Diego, the first new geographic
      territory since the acquisition of Briazz in 2005.





*Depreciation
      and Amortization -* Depreciation
      and amortization expense for 2007 increased to $4.0 million as
      compared with $1.2 million during 2006, due primarily to amortization of
      identifiable intangible assets acquired in the catering and retail business
      acquisitions in the latter part of 2006 and throughout 2007. Depreciation and
      amortization for 2007 were approximately 25% of sales as compared with 12%
      during 2006.





*Loss
      from Operations -* Loss
      from
      operations during 2007 increased to approximately $11.5 million as
      compared with $6.9 million during 2006. The increase in loss from
      operations over the prior year is the result of an increase in gross profit
      of
      $3.7 million being offset by a $5.6 million increase in operating expenses,
      and
      an increase in depreciation and amortization of $2.8 million





*Interest
      Expense, Net -* Interest
      expense, net for 2007, decreased to $691,000 as compared with $1.1 million
      for
      the prior year. The decrease was primarily due to the increase in debt from
      July
      2006 through March 2007, prior to $5.3 million of debt being converted into
      equity in March 2007.





*Net
      Loss -* Net
      loss
      in 2007 increased to approximately $12.1 million as compared with $8.0
      million in 2006.





**Liquidity
      and Capital Resources**





As
      planned, we have funded operations through financing activities consisting
      primarily of private placements of debt and equity securities. Our management
      intends to raise additional debt and equity financing to fund future expansion
      and capital expenditures, operations and to provide additional working capital.
      During 2006, we raised approximately $8.1 million pursuant to sales of debt
      and
      equity securities in connection with our 2006 private placement and subordinated
      debt offerings. Further, during the three months ended March 31, 2007, proceeds
      of approximately $6.9 million were received from the sale of equity securities
      in connection with our merger with SP Holding Corporation and concurrent private
      placement, and approximately $5.3 million of notes payable were converted into
      shares of common stock. Additionally, during the three months ended June 30,
      2007, proceeds of approximately $6.7 million were received from the sales of
      debt and equity securities. In October 2007, we closed a private placement
      offering and issued approximately 3.2 million shares of common stock and
      warrants to purchase approximately 1.5 million shares of common stock. The
      aggregate gross proceeds raised by us were approximately $5.7 million. In
      January and February 2008, proceeds of approximately $12.0 million were received
      from the sales of equity securities. We intend to continue to be engaged in
      additional fund-raising activities to fund future capital expenditures,
      potential acquisitions of businesses, and provide additional working capital.





Net
      cash
      used by operating activities was approximately $9.7 million in 2007 and $6.0
      million in 2006. The increase in cash used by operating activities was due
      primarily to the increase in net loss as adjusted for depreciation and
      amortization expense.




18





Net
      cash
      used in investing activities was approximately $7.2 million and $1.2 million
      for
      2007 and 2006, respectively. Uses of cash flow for investing activities in
      2007
      primarily related to capital expenditures associated with business expansion
      for
      the acquisition of store and kitchen fixtures, equipment and leasehold
      improvements.




Net
      cash
      provided by financing activities was approximately$16.7 million and $7.8 million
      for 2007 and 2006, respectively. The increase of net cash provided in 2007
      was
      due to an increase in proceeds, net of issuance costs, from the issuance of
      common stock in private placements.





On
      January 25, 2008, we entered into a Securities Purchase Agreement (with select
      accredited investors related to the sale of common stock of the Company and
      warrants to purchase shares of common stock. We closed the private placement
      on
      January 25, 2008, and issued an aggregate of 1,428,572 shares of common stock
      and warrants to purchase an aggregate of 642,858 shares of common stock. The
      aggregate gross proceeds raised by us were approximately $2.0 million. Each
      share was sold at $1.40 per share. The warrants expire five (5) years from
      the
      date of issue and may be exercised at $2.50 per share, subject to adjustment
      in
      certain circumstances. The private placement was conducted pursuant to Section
      4(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated
      thereunder.




On
      February 19, 2008, we entered into a Securities Purchase Agreement with W.Health
      L.P., relating to the sale of (i) our common stock, (ii) an unconditional
      warrant to purchase common stock and (iii) a conditional warrant to purchase
      common stock. Pursuant to the terms of the Securities Purchase Agreement, we
      sold and issued to W.Health L.P. 7,142,857 shares of common stock at a price
      of
      $1.40 per share, for a total purchase price of $10.0 million.





The
      unconditional warrant provides W.Health L.P. the right to purchase 4,285,715
      shares of common stock at an exercise price of $2.50 per share, subject to
      adjustment under certain circumstances. The unconditional warrant is exercisable
      at any time through February 27, 2013 and may be exercised on a cashless basis.





The
      conditional warrant is exercisable only under certain circumstances, including
      (i) our failure to become listed on The NASDAQ Stock Market or the American
      Stock Exchange on or before February 27, 2011, (ii) our failure to maintain
      listing on The NASDAQ Stock Market or the American Stock Market for certain
      specified time periods or (iii) if we are acquired by or merge with another
      unaffiliated entity for consideration to the Company of an amount equal to
      or
      less than $2.50 per share before February 27, 2013 (each, an “Exercise Event”).
      Upon the occurrence of an Exercise Event, the W.Health L.P. will have the right
      to purchase such number of shares of common stock, calculated as of the initial
      date of exercise, equal to twenty percent (20%) of the total number of shares
      of
      capital stock on a fully diluted basis, taking into account such issuance,
      using
      the treasury method, at an exercise price of $0.001 per share, subject to
      adjustment under certain circumstances. The conditional warrant will expire
      upon
      the occurrence of certain specific events, but in any event, no later than
      February 27, 2013. The conditional warrant may be exercised on a cashless basis.





In connection with the sale
      of
      common stock to W.Health, L.P., we entered into registration rights agreements,
      which require us to
      file with the Securities and Exchange Commission and
      cause to be made effective, initial
      registration statements covering
      the resale of the common
      stock and the common stock issuable
      upon exercise of the warrants
      within specified time periods





Subsequent
      to December 31, 2007, we entered into new leases for computer hardware and
      software, furniture, fixtures and equipment in our cafés, which provide for
      additional minimum future lease payments over their three-year terms of
      approximately $1.0 million including interest.





**Item
      7A. Quantitative and Qualitative Disclosures About Market
      Risk.**





Not
      applicable.




19





**Item
      8. Financial Statements and Supplementary Data.**





Reference
      is made to the Index to Consolidated Financial Statements that appear on page
      F-1 to this Annual Report. The Report of Independent Registered Public
      Accounting Firm, the Consolidated Financial Statements and the Notes to the
      Consolidated Financial Statements listed in the Index to Consolidated Financial
      Statements, which appear beginning on page F-2 of this Annual Report, are
      incorporated by reference into this Item 8.





**Item
      9. Changes in and Disagreements With Accountants on Accounting and Financial
      Disclosure.**





None.





**Item
      9A. Controls and Procedures.**





Evaluation
      of Disclosure Controls and Procedures




Our
      management, with the participation of our Chief Executive Officer and Chief
      Financial Officer, evaluated the effectiveness of our disclosure controls and
      procedures (as defined in the rules and regulations of the SEC under the
      Exchange Act) as of the end of the period covered by this report (the
“Evaluation Date”). Based on this evaluation, our Chief Executive Officer and
      Chief Financial Officer have concluded that our disclosure controls and
      procedures were effective as of the Evaluation Date.




Management’s
      Report on Internal Control over Financial Reporting





We
      are
      responsible for establishing and maintaining adequate internal control over
      financial reporting. Our internal control over financial reporting includes
      the policies and procedures that pertain to the maintenance of records that
      in
      reasonable detail accurately and fairly reflect the transactions and
      dispositions of the assets of the registrant; to recording transactions as
      necessary to permit preparation of financial statements in accordance with
      generally accepted accounting principles, to making receipts and expenditures
      only in accordance with authorizations of management and directors
      of our company; and for prevention or timely detection of unauthorized
      acquisition, use or disposition of our assets that could have a material effect
      on the financial statements. We recognize that because of its inherent
      limitation, internal control over financial reporting may not prevent or detect
      misstatements. Also, projections of any evaluation of effectiveness to future
      periods are subject to the risk that controls may become inadequate because
      of
      changes in conditions, or that the degree of compliance with the policies or
      procedures may deteriorate. Accordingly, even effective internal control
      over financial reporting can provide only reasonable assurance with respect
      to
      financial statement preparation.




We
      conducted an evaluation of the effectiveness of our internal control over
      financial reporting as of December 31, 2007. This evaluation was based
      on the framework in “Internal Control - Integrated Framework”
published by the Committee of Sponsoring Organizations of the Treadway
      Commission. Based on
      this evaluation, our management concluded that we
      maintained effective internal control over financial reporting as of December
      31, 2007.




This
      Annual Report does not include an attestation report of our registered public
      accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by our registered public
      accounting firm pursuant to temporary rules of the SEC that permit us to provide
      only management’s report in this Annual Report.





Changes
      in Internal Control Over Financial Reporting





During
      the fiscal quarter ended December 31, 2007, there were no changes to our
      internal controls over financial reporting that have materially affected, or
      are
      reasonably likely to materially affect, our internal controls over financial
      reporting.




**Item
      9B. Other Information.**





None.




20




**PART
      III**





**Item
      10. Directors, Executive Officers and Corporate
      Governance.**





The
      information called for by this item is hereby incorporated by reference from
      our
      definitive Proxy Statement to be filed with the SEC on or about April 16,
      2008.





**Item
      11. Executive Compensation.**





The
      information called for by this item is hereby incorporated by reference from
      our
      definitive Proxy Statement to be filed with the SEC on or about April 16,
      2008.





**Item
      12. Security Ownership of Certain Beneficial Owners and Management and Related
      stockholder Matters.**





The
      information called for by this item is hereby incorporated by reference from
      our
      definitive Proxy Statement to be filed with the SEC on or about April 16,
      2008.





**Item
      13. Certain Relationships and Related Transactions, and Director
      Independence.**





The
      information called for by this item is hereby incorporated by reference from
      our
      definitive Proxy Statement to be filed with the SEC on or about April 16,
      2008.





**Item
      14. Principal Accounting Fees and Services.**





The
      information called for by this item is hereby incorporated by reference from
      our
      definitive Proxy Statement to be filed with the SEC on or about April 16,
      2008.




21




**ITEM
      IV**





**Item
      15. Exhibits, Financial Statement Schedules.**





(a) The
      following documents are filed as part of this Annual Report:




(1) *Financial
      Statements.* Please
      see the accompanying Index to Consolidated Financial Statements, which appears
      on page F-1 of the Annual Report. The Report of Independent Registered Public
      Accounting Firm, the Consolidated Financial Statements and the Notes to
      Consolidated Financial Statements listed in the Index to Consolidated Financial
      Statements, which appear beginning on page F-2 of this report, are incorporated
      by reference into Item 8 above.





(2) *Financial
      Statement Schedules* .
      Financial Statement Schedules have been omitted because the information required
      to be set forth therein is either not applicable or is included in the
      Consolidated Financial Statements or the notes thereto.




(3) *Exhibits* .
      See
      Item 15(b) below.




(b) *Exhibits* . The
      exhibits listed on the accompanying Exhibit Index immediately following the
      signature page are filed as part of, or are incorporated by reference into,
      this
      Annual Report on Form 10-K.




(c) *Financial
      Statement Schedules* . Reference
      is made to Item 15(a)(2) above.




22


**ORGANIC
      TO GO FOOD CORPORATION**




**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**





Report
                of Independent Registered Accounting Firm
            
            F-2Balance
                Sheets
            
            F-3Statements
                of Operations
            
            F-4Statement
                of Stockholders’ Deficit
            
            F-5Statements
                of Cash Flows
            
            F-6Notes
                to Financial Statements
            
            F-7





F-1








REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM







To
      the
      Board of Directors and Stockholders


Organic
      To Go Food Corporation





We
      have
      audited the accompanying consolidated balance sheets of Organic To Go Food
      Corporation as of December 31, 2006 and 2007, and the related consolidated
      statements of operations, stockholders’ equity, and cash flows for the years
      ended December 31, 2006 and 2007. These financial statements are the
      responsibility of the Company’s management.  Our responsibility is to
      express an opinion on these consolidated financial statements based on our
      audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States).  Those standards require that
      we plan and perform the audits to obtain reasonable assurance about whether
      the
      financial statements are free of material misstatement.  The Company is not
      required to have, nor were we engaged to perform, an audit of its internal
      control over financial reporting. Our audits included consideration of internal
      control over financial reporting as a basis for designing audit procedures
      that
      are appropriate in the circumstances, but not for the purpose of expressing
      an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements, assessing the accounting principles used and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation.  We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Organic To Go Food Corporation
      as
      of December 31, 2006 and 2007, and the results of their operations and their
      cash flows for the years ended December 31, 2006 and 2007, in conformity with
      accounting principles generally accepted in the United States of
      America.








Rose,
      Snyder & Jacobs


A
      Corporation of Certified Public Accountants





Encino,
      California





March
      17,
      2008




F-2




**Organic
                  To Go Food Corporation and its wholly-owned subsidiary, Organic
                  To Go,
                  Inc.****Consolidated
                  Balance Sheets****(in
                  thousands, except share
                  amounts)**


December
                  31,
              
              December
                  31,2006
              
              2007Current
                  assetsCash
                  and cash equivalents
              
              $
              865
              
              $
              668Accounts
                  receivable, net of allowance of $54 and $47
              
              
              365
              
              
              1,099Inventory
              
              
              236
              
              
              845Prepaid
                  expenses and other current assets
              
              
              189
              
              
              489Total
                  current assets
              
              
              1,655
              
              
              3,101Property
                  and equipment, net
              
              
              2,148
              
              
              5,465Identifiable
                  intangible assets, net
              
              
              851
              
              
              3,853Deposits
                  and other assets
              
              
              623
              
              
              521Total
                  assets
              
              $
              5,277
              
              $
              12,940Current
                  liabilitiesAccounts
                  payable
              
              $
              1,337
              
              $
              2,040Accrued
                  liabilities
              
              
              881
              
              
              780Current
                  portion of notes payable, net of discount
              
              
              6,281
              
              
              1,474Current
                  portion of capital lease obligations
              
              
              50
              
              
              463Total
                  current liabilities
              
              
              8,549
              
              
              4,757Deferred
                  rent
              
              
              -
              
              
              52Notes
                  payable, net of current portion
              
              
              592
              
              
              1,044Capital
                  lease obligations, net of current portion
              
              
              137
              
              
              440Total
                  liabilities
              
              
              9,278
              
              
              6,293Stockholders'
                  equity (deficit)Preferred
                  Stock; $0.001 par value; 9,670,000 and 10,000,000 shares
              
              
              8
              
              
              -authorized,
                  9,670,000 and no shares issued and outstandingCommon
                  stock and additional paid-in capital; $0.001 par value;15,100,000
                  and 500,000,000 shares authorized; 3,454,910 and27,758,326
                  shares issued and outstanding
              
              
              10,414
              
              
              33,215Accumulated
                  deficit
              
              
              (14,423
              )
              
              (26,568
              )Total
                  stockholders' equity (deficit)
              
              
              (4,001
              )
              
              6,647Total
                  liabilities and stockholders' equity (deficit)
              
              $
              5,277
              
              $
              12,940




F-3




**Organic
                  To Go Food Corporation and its wholly-owned subsidiary, Organic
                  To Go,
                  Inc.****Consolidated
                  Statements of Operations****(in
                  thousands, except per share
                  amounts)**


Year
                    ended December 31,2006
                
                2007Sales
                
                $
                9,663
                
                $
                15,902Cost
                    of sales
                
                
                4,876
                
                
                7,361Gross
                    Profit
                
                
                4,787
                
                
                8,541Operating
                    expenses
                
                
                10,483
                
                
                16,075Depreciation
                    and amortization
                
                
                1,206
                
                
                4,008Loss
                    from operations
                
                
                (6,902
                )
                
                (11,542
                )Interest
                    income (expense), net
                
                
                (1,064
                )
                
                (603
                )Loss
                    before income taxes
                
                
                (7,966
                )
                
                (12,145
                )Income
                    taxes
                
                
                -
                
                
                -Net
                    loss
                
                $
                (7,966
                )
                $
                (12,145
                )Net
                    loss per share - basic and diluted
                
                $
                (2.78
                )
                $
                (0.57
                )Weighted
                    average shares outstanding
                
                
                2,868
                
                
                21,136




F-4




**Organic
                  To Go Food Corporation and its wholly-owned subsidiary, Organic
                  To Go,
                  Inc.****Consolidated
                  Statement of Stockholders' Equity (Deficit)****(in
                  thousands, except share
                  amounts)**
  Series
                  A, B & C
                Preferred
                  Stock
              
              Common
                  Stock and
                Additional
                  Paid-in Capital
              
              Accumulated
              
              Total
                Stockholders'
                EquityShares
              
              Amount
              
              Shares
              
              Amount
              
              Deficit
              
              (Deficit)Balance
                  at December 31, 2005
              
              
              2,988,683
              
              $
              4
              
              
              2,942,402
              
              $
              4,367
              
              $
              (6,457
              )
              $
              (2,086
              )Issuance
                  of Series C Preferred Stock and warrants for cash and conversion
                  of notes
                  payable
              
              
              2,664,153
              
              
              4
              
              
              
              
              
              4,477
              
              
              
              
              
              4,481Issuance
                  of warrants with borrowings
              
              
              
              
              
              
              
              
              
              
              
              1,476
              
              
              
              
              
              1,476Stock
                  issue costs
              
              
              
              
              
              
              
              
              
              
              
              (32
              )
              
              
              
              
              (32
              )Redemption
                  of common stock for cash
              
              
              
              
              
              
              
              
              (132,961
              )
              
              (2
              )
              
              
              
              
              (2
              )Issuance
                  of common stock
              
              
              
              
              
              
              
              
              89,463
              
              
              128
              
              
              
              
              
              128Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (7,966
              )
              
              (7,966
              )Balance
                  at December 31, 2006
              
              
              5,652,836
              
              $
              8
              
              
              2,898,904
              
              $
              10,414
              
              $
              (14,423
              )
              $
              (4,001
              )Conversion
                  of preferred stock into common stock
              
              
              (5,652,836
              )
              
              (8
              )
              
              5,734,769
              
              
              8
              
              
              
              
              
              -Conversion
                  of bridge notes into common stock
              
              
              
              
              
              
              
              
              4,629,340
              
              
              4,225
              
              
              
              
              
              4,225SP
                  Holding Corporation shares outstanding at merger
              
              
              
              
              
              
              
              
              1,126,659
              
              
              (15
              )
              
              
              
              
              (15
              )Issuance
                  of common shares and warrants for cash
              
              
              
              
              
              
              
              
              12,137,418
              
              
              19,059
              
              
              
              
              
              19,059Stock
                  issue costs
              
              
              
              
              
              
              
              
              
              
              
              (1,875
              )
              
              
              
              
              (1,875
              )Issuance
                  of common shares in connection with acquisition of assets
              
              
              
              
              
              
              
              
              685,224
              
              
              1,084
              
              
              
              
              
              1,084Issuance
                  of common shares upon exercise of warrants
              
              
              
              
              
              
              
              
              546,012
              
              
              -
              
              
              
              
              
              -Stock
                  based compensation
              
              
              
              
              
              
              
              
              
              
              
              315
              
              
              
              
              
              315Net
                  loss for the year ended December 31, 2007
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (12,145
              )
              
              (12,145
              )Balance
                  at December 31, 2007
              
              
              -
              
              $
              -
              
              
              27,758,326
              
              $
              33,215
              
              $
              (26,568
              )
              $
              6,647




F-5




**Organic
                  To Go Food Corporation and its wholly-owned subsidiary, Organic
                  To Go,
                  Inc.****Consolidated
                  Statements of Cash Flows****(in
                  thousands)**
  Year
                  ended December 31,2006
              
              2007Cash
                  flows from operating activities:Net
                  loss
              
              $
              (7,966
              )
              $
              (12,145
              )Adjustments
                  to reconcile net loss to netcash
                  used by operating activities:Depreciation
                  and amortization expense
              
              
              1,206
              
              
              4,008Non-cash
                  interest expense
              
              
              776
              
              
              223Stock-based
                  compensation expense
              
              
              10
              
              
              315Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (281
              )
              
              (734
              )Inventory
              
              
              42
              
              
              (521
              )Prepaid
                  expenses and other current assets
              
              
              (123
              )
              
              (288
              )Accounts
                  payable
              
              
              (245
              )
              
              576Accrued
                  liabilities and deferred rent
              
              
              431
              
              
              (872
              )Other
              
              
              133
              
              
              (279
              )Net
                  cash used by operating activities
              
              
              (6,017
              )
              
              (9,717
              )Cash
                  flows from investing activities:Purchases
                  of property, equipment and other assets
              
              
              (172
              )
              
              (2,934
              )Purchase
                  of intangible assets
              
              
              (1,010
              )
              
              (4,276
              )Net
                  cash used by investing activities
              
              
              (1,182
              )
              
              (7,210
              )Cash
                  flows from financing activities:Principal
                  payments of notes payable
              
              
              (264
              )
              
              (1,055
              )Payments
                  of capital lease obligations
              
              
              (47
              )
              
              (266
              )Proceeds
                  from issuance of notes payable
              
              
              5,918
              
              
              868Proceeds
                  from sale of preferred stock, net of issue costs
              
              
              2,209
              
              
              -Redemption
                  of common stock
              
              
              (2
              )
              
              -Proceeds
                  from sale of common stock, net of issue costs
              
              
              -
              
              
              17,183Net
                  cash provided by financing activities
              
              
              7,814
              
              
              16,730Net
                  increase in cash and cash equivalents
              
              
              615
              
              
              (197
              )Cash
                  and cash equivalents, beginning of period
              
              
              250
              
              
              865Cash
                  and cash equivalents, end of period
              
              $
              865
              
              $
              668Supplemental
                  disclosures of cash flow information:Cash
                  paid for interest
              
              $
              237
              
              $
              505Cash
                  paid for income taxes
              
              $
              -
              
              $
              -Non-cash
                  investing and financing activities:Notes
                  payable converted into preferred stock
              
              $
              1,843
              
              $
              -Preferred
                  stock converted into common stock
              
              $
              -
              
              $
              5,700Notes
                  payable converted into common stock
              
              $
              -
              
              $
              4,225Assets
                  purchased through issuance of common stock
              
              $
              -
              
              $
              1,084Capital
                  lease obligations incurred
              
              $
              -
              
              $
              1,017Notes
                  payable for assets purchased
              
              $
              -
              
              $
              225Fixed
                  assets acquired under financing agreements
              
              $
              326
              
              $
              -




F-6




**Organic
      To Go Food Corporation and its wholly owned subsidiary, Organic To Go,
      Inc.**


**Notes
      to Consolidated Financial Statements**


**December
      31, 2007**





**Note
      1. Description of Business and Summary of Significant Accounting Policies**





Organization
      and business -
      Organic To Go Food Corporation, formerly SP Holding Corporation (“SP”) prior to
      May 2007, and its wholly owned subsidiary Organic To Go, Inc. (“Organic” and
      together with Organic To Go Food Corporation, collectively, the “Company”),
      which was acquired in a reverse merger on February 12, 2007, provides convenient
      Retail Cafes and delivery and catering facilities, which prepare and serve
“grab
      and go” lunch, dinner, and breakfast foods and beverages prepared using organic
      ingredients, whenever possible. The Company also distributes its products
      through select wholesale accounts. In October 2006, Organic expanded its
      catering operations in the California area by acquiring the assets of a catering
      operation headquartered in Los Angeles, California, and in March 2007, it
      expanded its catering operations by acquiring the assets of a catering operation
      located in Seattle, Washington. In July, September and October 2007, the Company
      further expanded its operations by acquiring the assets of one or two operating
      locations, for a total of six locations in San Diego in three separate
      transactions. At December 31, 2007, the Company operates five stores in
      Washington and 18 stores in California.





Reverse
      merger with public shell company in February 2007 -
      Pursuant to the terms of an Agreement and Plan of Merger and Reorganization
      by
      and among Organic and SP, on February 12, 2007, all of the outstanding shares
      of
      Organic common and preferred stock were exchanged for shares of SP common stock
      as determined by multiplying each such outstanding share of Organic stock by
      the
      exchange ratio of 0.69781 (the “Exchange Ratio”). In connection with the merger,
      Organic convertible promissory bridge notes approximating $5.3 million
      automatically converted into SP common stock. As a result, among other things,
      Organic became a wholly owned subsidiary of SP. Outstanding Organic options,
      warrants and purchase rights were converted into options, warrants and purchase
      rights to purchase shares of SP common stock in accordance with the Exchange
      Ratio. The closing of the merger was conditioned upon SP closing a private
      placement offering of a minimum of eighty units (the “Units”) at a purchase
      price of $50,000 per Unit for $4 million. Each Unit consists of (i) 40,000
      shares of SP common stock and (ii) a warrant to purchase 8,000 shares of SP
      common stock at an exercise price of $2.50 per share, exercisable for a period
      of five years from the date of issuance. Consummation of the merger occurred
      concurrently with completion of a private placement of 138 Units, for an
      aggregate purchase price of approximately $6.9 million. Prior to the merger,
      SP
      was a non-operating “public shell” company. The merged company operates under
      the name of Organic To Go Food Corporatoin.





From
      an
      accounting perspective, the merger transaction is considered a recapitalization
      of Organic accompanied by the issuance of stock by Organic for the assets and
      liabilities of SP, as a result of SP not having operations immediately prior
      to
      the merger, and following the merger, SP becoming an operating company.
      Immediately following the merger and private placement, former SP stockholders
      owned approximately 5% of the common stock of the merged company, former Organic
      stockholders and convertible bridge note holders owned approximately 70% of
      the
      merged company, and the purchasers of Units owned approximately 25% of the
      merged company. In addition, the board of directors and executive officers
      of
      the merged company was comprised of Organic directors and executive officers.
      In
      these circumstances, the merger transaction is accounted for as a capital
      transaction rather than as a business combination, in that the transaction
      is
      equivalent to the issuance of stock by Organic for the assets and liabilities
      of
      SP, accompanied by a recapitalization. The accounting is identical to that
      resulting from a reverse acquisition, except that no goodwill or other
      intangible is recorded. All share and per share information presented and
      disclosed in these financial statements have been Exchange Ratio adjusted.




F-7





Basis
      of presentation and liquidity - The
      accompanying financial statements have been prepared in conformity with
      generally accepted accounting principles, which contemplate continuation of
      the
      Company as a going concern. The Company has reported recurring losses and cash
      used by operating activities, and at December 31, 2007 has a net working capital
      deficiency and stockholders’ deficit that could raise doubt about its ability to
      continue as a going concern. Since inception, the Company has funded its
      operations and business development and growth through debt and equity
      financings. In this regard, during 2006, the Company raised approximately $8.1
      million pursuant to sales of debt and equity securities in connection with
      its
      private placement and subordinated debt offerings. Further, during the three
      months ended March 31, 2007, proceeds of approximately $6.9 million were
      received from the sale of equity securities in connection with the merger and
      private placement, and approximately $5.3 million of notes payable were
      converted into common shares. Additionally, during the three months ended June
      30, 2007, proceeds of approximately $6.7 million were received from the sale
      of
      debt and equity securities. In October 2007, the Company closed its private
      placement offering and issued approximately 3.2 million shares of Company common
      stock and warrants to purchase approximately 1.5 million shares of Company
      common stock. The aggregate gross proceeds raised by the Company were
      approximately $5.7 million. Subsequent to December 31, 2007, the Company closed
      a private placement offering in January 2008 and issued approximately 1.4
      million shares of Company common stock and warrants to purchase approximately
      0.6 million shares of Company common stock. The aggregate gross proceeds raised
      by the Company were approximately $2.0 million. In February 2008, the Company
      closed a private placement offering and issued approximately 7.1 million shares
      of Company common stock and a warrant to purchase approximately 4.3 million
      shares of Company common stock and a conditional warrant to purchase shares
      of
      Company common stock, which may only be exercised under certain circumstances.
      The aggregate gross proceeds raised by the Company were approximately $10.0
      million. Company management intends to continue to be engaged in additional
      fund-raising activities to fund future capital expenditures, potential
      acquisitions of businesses, and provide additional working capital. The
      accompanying financial statements do not include any adjustments to reflect
      the
      possible future effects on the recoverability and classification of assets
      or
      the amounts and classifications of liabilities that could result should the
      Company not continue as a going concern.




Use
      of
      estimates in the preparation of financial statements -
      Preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect reported amounts of assets and liabilities and disclosure of contingent
      assets and liabilities at the date of the financial statements and reported
      amounts of revenue and expenses during the reporting period. Actual results
      could differ from those estimates. The more significant accounting estimates
      inherent in the preparation of the Company's financial statements include
      estimates as to the depreciable lives of property and equipment, recoverability
      of receivables, valuation and recoverability of inventories, recoverability
      of
      long-lived assets, valuation of intangible assets and allocation of purchase
      price, valuation of equity related instruments issued, and valuation allowance
      for deferred income tax assets.





Cash
      and cash equivalents - The
      Company considers all highly liquid investments purchased with maturities of
      three months or less to be cash equivalents. The Company places its cash
      balances with high credit quality financial institutions. At times, such
      balances may be in excess of the FDIC insurance limit. At December 31, 2007,
      approximately $675,000 was in excess of the FDIC limit.




Contingencies -
      Certain conditions may exist as of the date financial statements are issued,
      which may result in a loss to the Company, but which will only be resolved
      when
      one or more future events occur or fail to occur. Company management and its
      legal counsel assess such contingent liabilities, and such assessment inherently
      involves an exercise of judgment. In assessing loss contingencies related to
      legal proceedings that are pending against the Company or unasserted claims
      that
      may result in such proceedings, the Company's legal counsel evaluates the
      perceived merits of any legal proceedings or unasserted claims as well as the
      perceived merits of the amount of relief sought or expected to be sought
      therein. If the assessment of a contingency indicates that it is probable that
      a
      liability has been incurred and the amount of the liability can be estimated,
      then the estimated liability would be accrued in the Company's financial
      statements. If the assessment indicates that a potentially material loss
      contingency is not probable but is reasonably possible, or is probable but
      cannot be estimated, then the nature of the contingent liability, together
      with
      an estimate of the range of possible loss if determinable would be disclosed.




F-8





Concentrations  **-** All
      of
      the Company’s operations are currently located in Washington and California. As
      a result, the Company is sensitive to negative occurrences in markets where
      the
      Company is located, and particularly susceptible to adverse trends and economic
      conditions including labor markets. In addition, given geographic concentration,
      negative publicity regarding any of our operations in Washington or California
      could have a material adverse effect on the Company’s business and operations,
      as could other regional occurrences such as local strikes, earthquakes or other
      natural disasters.




Fair
      value of financial instruments - The
      Company measures its financial assets and liabilities in accordance with
      generally accepted accounting principles. For certain of the Company's financial
      instruments, including cash and cash equivalents, accounts receivable, accounts
      payable and accrued liabilities, the carrying amounts approximate fair value
      due
      to their short maturities. Amounts recorded for notes payable also approximate
      fair value because current interest rates offered to the Company for debt of
      similar maturities are substantially the same **.**





Accounts
      receivable - The
      Company extends credit to some of its customers. Accounts receivable are
      customer obligations due under normal trade terms. The Company performs
      continuing credit evaluations of its customers’ financial condition. Management
      reviews accounts receivable on a regular basis on contracted terms and how
      recent payments have been received in order to determine estimates of amounts
      that could potentially be uncollectible. The Company includes an estimate of
      the
      amount that is more likely than not to be uncollectible in its allowance for
      doubtful accounts. Accounts uncollected are ultimately written off after all
      reasonable collection efforts have occurred.





Inventory  **-** Inventory,
      which consists primarily of food, beverages and packaging products, is stated
      at
      the lower of cost or market. Cost is determined by the first-in, first-out
      method. In assessing the ultimate realization of inventories, Company management
      makes judgments as to future demand requirements compared to current inventory
      levels.





Property
      and Equipment -
      Property and equipment is stated at cost. Additions and improvements that
      significantly add to the productive capacity or extend the life of an asset
      are
      capitalized. Maintenance and repairs are expensed as incurred. Depreciation
      is
      computed using the straight-line method over five to seven years for furniture,
      fixtures, equipment and vehicles, and over three years for computer software
      and
      hardware. Leasehold improvements are amortized over the shorter of the lease
      term or 10 years.





Identifiable
      intangible assets - In
      connection with the acquisition in October 2006 of certain assets of a catering
      business, the Company acquired certain identifiable intangible assets including
      customer-based intangibles and a covenant not to compete received from the
      sellers. This acquisition has been accounted for in accordance with Statement
      of
      Financial Accounting Standards No. 141, “Business Combinations” (“SFAS No.
      141”). Amounts allocated to intangible assets were identified by management and
      have been valued on a number of factors based upon preliminary estimates. The
      estimate of useful lives of each intangible asset was based on an analysis
      by
      management of all pertinent factors, and selected an estimated useful life
      of up
      to two years for each identifiable intangible asset. Customer based intangible
      assets are amortized utilizing an accelerated method and non-compete intangible
      assets are amortized on a straight-line basis. At December 31, 2007,
      identifiable intangible assets were comprised of customer based intangible
      assets of approximately $6.3 million, less accumulated amortization of $2.9
      million, and non-compete intangible assets of approximately $589,000, less
      accumulated amortization of approximately $157,000. Amortization expense for
      these intangible assets will approximate $3.8 million in 2008 and $117,000
      in
      2009.





Statement
      of Financial Accounting Standards No. 142, “Goodwill and Other Intangible
      Assets,” (“SFAS No. 142”) requires that long-lived assets and certain
      identifiable intangibles be reviewed for impairment whenever events or changes
      in circumstances indicate that the carrying amount of an asset may not be
      recoverable. Recoverability of assets to be held and used is measured by a
      comparison of the carrying amount of an asset to future net discounted cash
      flows expected to be generated by the asset or other valuation methods. If
      such
      assets are considered to be impaired, impairment to be recognized is measured
      by
      the amount by which the carrying amount of the assets exceeds the asset’s fair
      value.




F-9





Impairment
      of long-lived assets -
      Long-lived assets are reviewed for impairment whenever events or changes in
      circumstances indicate that the carrying amount of the assets may not be
      recoverable. Impairment of long-lived assets would be recognized in the event
      that the net book values of such assets exceed the future undiscounted cash
      flows attributable to such assets.




Deferred
      debt issue costs - The
      Company capitalizes costs incurred in connection with borrowings. These costs
      are amortized as an adjustment to interest expense over the life of the
      borrowing. Deferred debt issue costs are included in other assets and were
      approximately $386,000 and $0 at December 31, 2006 and 2007,
      respectively.





Debt
      discount - The
      Company records the fair value of warrants issued with debt securities as a
      debt
      discount, which is amortized as an adjustment to interest expense over the
      life
      of the borrowing.





Revenue
      recognition -
      Revenues are recognized at the point of sale at retail locations or upon
      delivery of the product for delivery and wholesale transactions.





Cost
      of sales - Cost
      of sales includes the cost of food and paper products.





Pre-operating
      costs - Costs
      incurred in connection with start-up and promotion of new store openings are
      expensed as incurred.





Advertising
      and promotion -
      Advertising and promotion costs are expensed as incurred. Approximately $671,000
      and $1.2 million was expensed in 2006 and 2007, respectively.





Income
      taxes - The
      Company accounts for income taxes in accordance with SFAS No. 109, “Accounting
      for Income Taxes,” which requires recognition of deferred tax assets and
      liabilities for expected future tax consequences of events that have been
      included in financial statements or tax returns. Under this method, deferred
      income taxes are recognized for the tax consequences in future years of
      differences between the tax bases of assets and liabilities and their financial
      reporting amounts at each period end based on enacted tax laws and statutory
      tax
      rates applicable to the periods in which the differences are expected to affect
      taxable income. Valuation allowances are established, when necessary, to reduce
      deferred tax assets to amounts expected to be realized. The Company continues
      to
      provide a full valuation allowance to reduce its net deferred tax asset to
      zero,
      inasmuch as Company management has not determined that realization of deferred
      tax assets is more likely than not.





Stock-based
      compensation - Prior
      to January 1, 2006, the Company accounted for employee stock option grants
      in
      accordance with APB No. 25, and adopted the disclosure-only provisions of SFAS
      No. 123, “Accounting for Stock-Based Compensation,” amended by SFAS No. 148,
“Accounting for Stock-Based Compensation - Transition and Disclosure.” In
      December 2004, the FASB released a revision to SFAS No. 123, “Accounting for
      Stock-Based Compensation” (“FAS 123R”). FAS 123R sets forth the accounting for
      share-based payment transactions in which an enterprise receives employee
      services in exchange for (a) equity instruments of the enterprise or (b)
      liabilities that are based on the fair value of the enterprise's equity
      instruments or that may be settled by the issuance of such equity instruments.
      The statement eliminates the ability to account for share-based compensation
      transactions using APB Opinion No. 25, “Accounting for Stock Issued to
      Employees,” and generally requires instead that such transactions be accounted
      for using a fair-value-based method, which requires recording an expense over
      the requisite service period for the fair value of all options or warrants
      granted to employees and consultants. The Company adopted FAS 123R effective
      beginning January 1, 2006 using the modified prospective method.





The
      Company accounts for equity instruments issued to non-employees in accordance
      with the provisions of SFAS No. 123 and Emerging Task Force Issue No. 96-18,
      “Accounting for Equity Instruments that are Issued to Other Than Employees for
      Acquiring or in Conjunction with Selling Goods or Services.” Compensation
      expense related to equity instruments issued to non-employees is recognized
      as
      the equity instruments vest.




F-10





Basic
      and diluted net loss per share - Basic
      net loss per common share is computed by dividing net loss by the
      weighted-average number of common shares outstanding during the period. Diluted
      net loss per common share is determined using the weighted-average number of
      common shares outstanding during the period, adjusted for the dilutive effect
      of
      common stock equivalents, consisting of shares that might be issued upon
      exercise of common stock options, warrants or convertible promissory notes,
      or
      conversion of preferred stock shares. In periods where losses are reported,
      the
      weighted-average number of common shares outstanding excludes common stock
      equivalents, because their inclusion would be anti-dilutive. In connection
      with
      the merger with SP in February 2007, all shares of Organic preferred stock
      automatically converted into an equal number of Organic common shares and all
      Organic common shares automatically converted into SP common shares at the
      Exchange Ratio adjusted number of shares equal to .69781 SP common shares for
      every one Organic common share. All share and per share amounts have been
      Exchange Ratio adjusted. For purposes of determining the weighted average number
      of common shares outstanding historical Organic shares outstanding have been
      multiplied by the Exchange Ratio, which results in a fewer number of shares
      outstanding than historical amounts. Computations of net loss per share for
      2007
      exclude approximately 7,458,035 shares issuable upon exercise of outstanding
      and
      issuable warrants, 3,050,938 shares of common stock issuable upon exercise
      of
      outstanding stock options, and 294,022 shares of common stock issuable upon
      conversion of convertible notes payable. Computations of net loss per share
      for
      2006, exclude approximately 3,912,000 shares of common stock issuable upon
      conversion of convertible notes payable, 5,653,000 shares issuable upon
      conversion of preferred stock and 2,332,000 shares issuable upon exercise of
      outstanding and issuable warrants. These common stock equivalents could have
      the
      effect of decreasing diluted net income per share in future periods.




Reclassifications -
      Certain reclassifications have been made to prior years’ financial statements to
      conform with current year presentations. Such reclassifications had no effect
      on
      stockholders’ equity, net loss or net increase in cash and cash
      equivalents.





Recent
      accounting pronouncements - In
      July 2006, the FASB issued FASB Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes” ** (“FIN No. 48”),
      which prescribes a recognition threshold and measurement process for recording
      in the financial statements uncertain tax positions taken or expected to be
      taken in a tax return. Additionally, FIN No. 48 provides guidance on
      the recognition, classification, accounting in interim periods and disclosure
      requirements for uncertain tax positions. The accounting provisions of
      FIN No. 48 were effective for the Company beginning January 1,
      2007, the adoption of which did not have a significant effect on its results
      of
      operations or financial position.





In
      October 2006, the FASB issued FASB Staff Position No. 123(R)-5, “Amendment of
      FASB Staff Position FAS 123(R)-1” (“FSP 123(R)-5”) FSP 123(R)-5 amends FSP
      123(R)-1 for equity instruments that were originally issued as employee
      compensation and then modified, with such modification made to the terms of
      the
      instrument solely to reflect an equity restructuring that occurs when the
      holders are no longer employees. In such circumstances, no change in the
      recognition or the measurement date of those instruments will result if both
      of
      the following conditions are met: (a) there is no increase in fair value of
      the
      award (or the ratio of intrinsic value to the exercise price of the award is
      preserved, that is, the holder is made whole), or the antidilution provision
      is
      not added to the terms of the award in contemplation of an equity restructuring;
      and (b) all holders of the same class of equity instruments (for example, stock
      options) are treated in the same manner. The adoption of FSP 123(R)-5 did not
      have a significant impact on the Company’s results of operations or financial
      position.





In
      December 2006, the FASB issued FASB Staff Position No. EITF 00-19-2 “Accounting
      for Registration Payment Arrangements” (“FSP EITF 00-19-2”), which addresses an
      issuer’s accounting and disclosures relating to registration payment
      arrangements. In connection with issuance of Units in the private placement
      in
      February 2007, the Company has registered the shares underlying the Units.
      In
      accordance with FSP EITF 00-19-2, the registration payment arrangements are
      accounted for as an instrument separate and apart from the related securities
      and will be accounted for in accordance with Statement of Financial Accounting
      Standards No. 5 “Accounting for Contingencies,” accruing a liability if payment
      is probable and the amount can be reasonably estimated.




F-11





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - including an amendment of FASB
      Statement No. 115,” which is effective for fiscal years beginning after November
      15, 2007. This statement permits entities to choose to measure many financial
      instruments and certain other items at fair value. This statement also
      establishes presentation and disclosure requirements designed to facilitate
      comparisons between entities that choose different measurement attributes for
      similar types of assets and liabilities. Unrealized gains and losses on items
      for which the fair value option is elected would be reported in
      earnings.





In
      December 2007, the FASB issued SFAS No. 141(revised 2007), *Business
      Combinations* (“SFAS
      No. 141R”), which revises current purchase accounting guidance in SFAS
      No. 141, *Business
      Combinations* .
      SFAS
      No. 141R requires most assets acquired and liabilities assumed in a
      business combination to be measured at their fair values as of the date of
      acquisition. SFAS No. 141R also modifies the initial measurement and
      subsequent remeasurement of contingent consideration and acquired contingencies,
      and requires that acquisition related costs be recognized as expense as incurred
      rather than capitalized as part of the cost of the acquisition. SFAS
      No. 141R is effective for fiscal years beginning after December 15,
      2008 (the Company’s fiscal 2009) and is to be applied prospectively to business
      combinations occurring after adoption. The impact of SFAS No. 141R on the
      Company’s consolidated financial statements will depend on the nature and extent
      of the Company’s future acquisition activities.





In
      December 2007, the FASB issued SFAS No. 160. “Noncontrolling Interests in
      Consolidated Financial Statements-and Amendment of ARB No. 51.” SFAS 160
      establishes accounting and reporting standards pertaining to ownership interests
      in subsidiaries held by parties other than the parent, the amount of net income
      attributable to the parent and to the noncontrolling interest, changes in a
      parent’s ownership interest, and the valuation of any retained noncontrolling
      equity investment when a subsidiary is deconsolidated. This statement also
      establishes disclosure requirements that clearly identify and distinguish
      between the interests of the parent and the interests of the noncontrolling
      owners. SFAS 160 is effective for fiscal years beginning on or after December
      15, 2008. Management has reviewed this new standard and believes that it
      has no impact on the financial statements of the Company at this time, however,
      it may apply in the future.





**Note
      2. Inventories**





Inventories
                at December 31, consist of the following (in thousands):
            
            2006
            
            2007Food
                and beverages
            
            $
            191
            
            $
            820Paper
                products
            
            
            45
            
            
            25$
            236
            
            $
            845




**Note
      3. Property and Equipment**




Property
                and equipment at December 31, consist of the following
              (in
                thousands):
            
            
            2006
            
            
            2007Leasehold
                improvements
            
            $
            1,512
            
            $
            2,389Furniture,
                fixtures and equipment
            
            
            1,452
            
            
            3,878Vehicles
            
            
            391
            
            
            1,156Leased
                equipment
            
            
            259
            
            
            6863,614
            
            
            8,109Less
                accumulated depreciation and amortization
            
            
            1,466
            
            
            2,644$
            2,148
            
            $
            5,465




Amortization
      of leased equipment is included in depreciation and amortization
      expense.





F-12





**Note
      4. Notes Payable**





Notes
      payable consist of the following (in thousands):





December
                31,
            
            December
                31,2006
            
            2007Notes
                payable, 6% to 25% interest collateralized by vehicles and
                equipment
            
            $
            323
            
            $
            141Convertible
                note payable, 8.25% interest, collateralized by substantially all
                assets
            
            
            759
            
            
            759Notes
                payable, 7.75% interest, collateralized by certain assets, due April
                2010
            
            
            418
            
            
            418Convertible
                notes payable, 8% interest, due June 2008
            
            
            525
            
            
            -Note
                payable, 9.25% interest, due March 2009
            
            
            -
            
            
            97Note
                payable, 8.0% interest, due October 2009
            
            
            -
            
            
            54Notes
                payable, 18% interest, due May 2008
            
            
            
            
            
            500Convertible
                notes payable, 8% interest, due June 2007
            
            
            5,275
            
            
            -Note
                payable, 9% interest, due December 2006
            
            
            275
            
            
            -Notes
                payable, 10.5% interest, due December 2009
            
            
            -
            
            
            549Total
                notes payable
            
            
            7,575
            
            
            2,518Less:
                unamortized original discount
            
            
            (702
            )
            
            -Less:
                current portion of notes payable
            
            
            (6,281
            )
            
            (1,474
            )Notes
                payable, net of current portion
            
            $
            592
            
            $
            1,044




The
      Company has a borrowing agreement with a vendor pursuant to which the Company
      has had outstanding borrowings of approximately $759,000 since March 31, 2006.
      The note payable requires monthly payments of interest at the prime rate plus
      1%
      (9.25% at December 31, 2006, and 8.25% at December 31, 2007), with the principal
      due in September 2007. The note is convertible at the note holder’s option into
      shares of the Company’s common stock at an Exchange Ratio adjusted conversion
      price of approximately $1.68 per share. If the note was not converted in full
      on
      or before the maturity date, the then outstanding principal balance and accrued
      interest automatically converts into a term note, which shall provide for
      thirty-six equal monthly payments and a final maturity date in September 2010.
      Since the note was not converted or repaid on or prior to the maturity date
      the
      original note has been replaced with a 36 month term loan with interest at
      prime
      plus 1%. The note is collateralized by a pledge of Company assets.





During
      2006, the Company received approximately $4.3 million through the issuance
      of
      approximately $3.8 million of convertible promissory notes bearing interest
      at
      8% due June 2007 (the “Bridge Notes”) and $525,000 of convertible promissory
      notes bearing interest at 8% due June 2008 (the “2 year Bridge Notes”) and
      warrants to purchase shares of Company common stock (together with the notes,
      the “Bridge Securities”). The estimated fair value of the warrants of
      approximately $768,000 was recorded as an original issue discount to be
      amortized to interest expense on a straight-line basis over the 7-month term
      of
      the notes. Additionally, in 2006, the Company received approximately $1.6
      million through the issuance of convertible promissory notes bearing interest
      at
      24%, approximately $1.5 million of which were converted at the holders’ option
      into bridge notes and the remaining notes were repaid. Warrants were issued
      in
      connection with the short-term loans, the fair value of which was expensed
      over
      the debt term prior to conversion. Bridge Notes of approximately $5.8 million
      were convertible at the note holders’ option, or in certain circumstances
      automatically, into shares of the Company’s common stock at an Exchange Ratio
      adjusted conversion price of approximately $1.68 per share. In February 2007,
      in
      connection with the closing of the merger with SP, the Bridge Notes of
      approximately $5.3 million were automatically converted into common stock.
      A
      portion of the bridge known as “Satellite Note” of $525,000 was not converted.
      The Satellite Note principal was paid in December 2007 with the proceeds from
      the issuance of two promissory notes payable in the amounts of $258,500 and
      $291,500, each bearing interest at 10.5% per annum, both due on December 12,
      2009. The holder of each note can elect to require payment in full on December
      12, 2008.




F-13




During
      2006, the Company borrowed $275,000 from one of the Company’s equity and bridge
      note investors pursuant to a promissory note payable of $275,000, bearing
      interest at 9% per annum, which was outstanding and due at December 31, 2006,
      and which was repaid in full during the three months ended March 31, 2007.





During
      2007, the Company borrowed $500,000 from three of the Company’s equity and
      bridge note investors pursuant to a promissory note payable of $500,000, bearing
      interest at 18% per annum, all of which are due on May 15, 2008.





Also
      during 2007, as part of asset purchase agreements, the Company issued to the
      sellers promissory notes of $150,000 and $75,000, bearing interest at 9.25%
      and
      8% per annum, payable monthly and due on March 11, 2009 and October 10, 2010
      respectively.





Future
      minimum principal payments on notes payable at December 31, 2007 are as follows
      (in thousands):





2008
            
            $
            1,4742009
            
            
            8562010
            
            
            188$
            2,518




**Note
      5. Reverse Merger with Public Shell Company, Private Placement and Stockholders’
Equity**





Reverse
      merger - On
      February 12, 2007, pursuant to an Agreement and Plan of Merger and
      Reorganization by and among Organic and SP, Organic became a wholly owned
      operating subsidiary of SP. Those persons holding shares of Organic capital
      stock, warrants and options to purchase shares of Organic capital stock, and
      certain promissory notes convertible into shares of Organic capital stock,
      received shares of SP common stock and warrants and options to purchase shares
      of SP common stock.





Under
      the
      terms of the merger, each share of Organic common stock and Organic preferred
      stock (which included certain issued and outstanding convertible promissory
      notes on an “as converted” basis) outstanding immediately prior to the closing
      of the merger was converted into the right to receive 0.69781 shares of SP
      common stock. Under the terms of the merger, each then convertible promissory
      note whose holder had not previously elected to convert to Organic common stock,
      became convertible for shares of SP common stock, provided that (i) the face
      value of each such convertible note remained unchanged, (ii) each such
      convertible note became convertible for such number of shares of SP common
      stock
      as was determined by multiplying the number of Organic shares underlying said
      convertible note by the Exchange Ratio, with the resulting product rounded
      down
      to the nearest whole number of shares, and (ii) the per share conversion price
      for each convertible note determined by dividing the conversion price per share
      for said convertible note by the Exchange Ratio, with the resulting quotient
      rounded down to the nearest whole cent.





Under
      the
      terms of the merger, each then outstanding option and warrant to purchase shares
      of Organic common stock, whether or not exercisable, was converted into an
      option or warrant to purchase shares of SP common stock upon the same terms
      and
      conditions as the corresponding Organic options and warrants, provided that
      (i)
      each such Organic option and warrant related to such number of shares of SP
      common stock as was determined by multiplying the number of shares of Organic
      common stock underlying such Organic option or warrant by the Exchange Ratio,
      with the resulting product rounded down to the nearest whole number of shares,
      and (ii) the per share exercise price for the newly issued SP options or
      warrants was determined by dividing the exercise price per share of such Organic
      options or warrants by the Exchange Ratio, with the resulting quotient rounded
      down to the nearest whole cent.




F-14





Private
      placement -
      Consummation of the merger occurred concurrently with the completion of a
      private placement of 138 Units for an aggregate of approximately $6.9 million,
      issued by SP. Each Unit is comprised of (i) 40,000 shares of SP common stock,
      and (ii) a detachable five-year warrant to purchase 8,000 shares of SP common
      stock, at an exercise price of $2.50 per share (the “SP Warrants”). The purchase
      price per Unit was $50,000. Pursuant thereto the Company issued to the investors
      an aggregate of 5,522,992 shares of SP common stock and SP Warrants to purchase
      1,104,598 shares of Company common stock. Organic engaged Burnham Hill Partners,
      a division of Pali Capital, Inc., as the placement agent (the “Placement Agent”)
      in connection with the Private Placement. Pursuant to the terms of the
      engagement with the Placement Agent, the Placement Agent, or its registered
      assignees or designees, received a cash commission of 10% of the gross proceeds
      from the Units sold in the Private Placement. In addition, the Company issued
      to
      the Placement Agent or its registered assignees or designees, SP Warrants (the
      “Placement Agent Warrants”) to purchase up to 888,899 shares of SP common stock.
      The Placement Agent Warrants are exercisable at any time at a price equal to
      110% of the price paid by the investors in the private placement, on a
      net-issuance or cashless basis. The Placement Agent Warrants had registration
      rights similar to the registration rights afforded to the holders of SP
      Warrants. The Placement Agent Warrants are fully vested and have a term of
      five
      years.




The
      issuance of SP common stock to the Organic stockholders and the investors is
      intended to be exempt from registration under the Securities Act of 1933, as
      amended (the “Securities Act”), pursuant to Section 4(2) thereof. As such, the
      SP common stock received by the Organic stockholders pursuant to the merger
      and
      issued to the investors pursuant to the Private Placement may not be offered
      or
      sold in the United States unless they are registered under the Securities Act,
      or an exemption from the registration requirements of the Securities Act is
      available. In April 2007, the Company filed a registration statement covering
      these securities with the Securities and Exchange Commission. The registration
      statement was declared effective in May 2007.





During
      the three months ended June 30, 2007, the Company closed a private placement
      with select accredited investors related to the sale and issuance of an
      aggregate of 3,350,000 shares of common stock of the Company and warrants to
      purchase an aggregate of 1,340,000 shares of common stock. The aggregate gross
      proceeds raised by the Company were approximately $6.7 million. Each share
      was
      sold to the investors at $2.00 per share. The warrants will expire five years
      from the date of issue and may be exercised at $2.50 per share, subject to
      adjustment in certain circumstances. In connection with the private placement,
      the Company paid its placement agents an aggregate cash commission equal to
      $84,000. In addition, the Company reimbursed the placement agents $40,000 for
      costs and expenses incurred in connection with the private placement, and issued
      to the placement agents five-year warrants to purchase an aggregate of 21,000
      shares of common stock, at an exercise price of $2.50 per share, subject to
      adjustment in certain circumstances. The private placement was conducted
      pursuant to Section 4(2) of the Securities Act and Rule 506 promulgated
      thereunder.





In
      October 2007, the Company entered into a securities purchase agreement with
      select accredited investors related to the sale of Company common stock and
      warrants to purchase shares of Company common stock. The purchase price of
      the
      common stock was $1.75 per share. The Company closed its private placement,
      pursuant to which it issued an aggregate of 3,264,426 shares of Company common
      stock and warrants to purchase an aggregate of 1,468,990 shares of Company
      common stock at an exercise price of $2.50 per share with a five year term.
      The
      aggregate gross proceeds raised by the Company were approximately $5.7 million.
      In connection with the private placement, the Company paid to certain finders
      an
      aggregate cash commission equal to $140,000 and warrants to purchase an
      aggregate of 35,000 shares of Company common stock at an exercise price of
      $2.50
      per share with a five year term.




F-15





In
      connection with the placements, the Company entered into registration rights
      agreements requiring the Company to file with the Securities and Exchange
      Commission an initial registration statement covering the resale of the common
      stock and the common stock issuable upon exercise of the warrants within 30
      days
      following the closing of each such private placement. In addition, the Company
      was required to cause each registration statement to be declared effective
      by
      the Securities and Exchange Commission 90 to 180 days following the close of
      the
      respective private placement, depending on certain conditions. The Company’s
      registration statements were declared effective by the Securities and Exchange
      Commission within the prescribed time limits.





Authorized
      shares - SP is
      currently authorized under its Amended and Restated Certificate of Incorporation
      to issue 500,000,000 shares of its common stock and 10,000,000 shares of its
      preferred stock. Prior to the closing of the merger and private placement,
      there
      were 439,403 shares of SP common stock issued and outstanding and 60 shares
      of
      SP preferred stock issued and outstanding. At the closing of the merger and
      private placement and after giving effect thereto, there were 19,595,671 shares
      of SP common stock issued and outstanding and no shares of preferred stock
      issued and outstanding (the 60 shares of SP preferred stock issued and
      outstanding prior to the merger having automatically converted into 687,271
      shares of SP common stock upon closing of the merger).





Warrants - During
      the three months ended March 31, 2007, in conjunction with various financing
      related agreements, including issuances of debt and equity securities, the
      Company issued warrants for a term of approximately 5 years to purchase shares
      of the Company’s common stock at exercise prices ranging from $1.17 to $1.38 per
      share for approximately 4,165,000 shares and at $2.50 per share for
      approximately 1,105,000 shares. During the three months ended June 30, 2007,
      the
      Company issued warrants at exercise prices ranging from $1.17 to $2.50 per
      share
      for approximately 1,371,000 shares and 822,270 shares were redeemed. During
      the
      three months ended December 31, 2007, the Company issued warrants at an exercise
      price of $2.50 per share for approximately 1,639,000 shares. As of December
      31,
      2007, there were a total of 7,458,035 warrants outstanding.





Stock
      options -
      Commencing in 2006, the Company from time to time granted to certain of its
      directors, officers and employees options to purchase shares of the Company’s
      common stock. Options have a term of 10 years from the date of grant, with
      exercise prices established at no less than the estimated fair market value
      of
      the Company’s common stock on the date of grant. The Company determines the fair
      market value of options granted using the Black-Scholes option-pricing model.
      The determination of the fair market value of stock-based awards on the date
      of
      grant using an option pricing model is affected by the stock price as well
      as
      assumptions regarding a number of subjective variables. These variables include,
      among others, the expected life of the award, expected stock price volatility
      over the term of the award and actual and projected exercise behaviors. Although
      the fair value of stock-based awards is determined in accordance with SFAS
      123R
      and SAB 107, the Black-Scholes option pricing model requires the input of highly
      subjective assumptions, and other reasonable assumptions could provide differing
      results. The weighted average fair value of stock options granted during the
      year ended December 31, 2006 and 2007 was approximately $0.21 and $0.72 per
      share, respectively determined using the Black-Scholes option pricing model
      with
      the following assumptions: dividend yield of 0%; expected volatility of 50%
      (based on the volatilities of common stock of comparable public companies);
      risk-free interest rates of approximately 5.1% and 4.4 %, and estimated lives
      of
      5 years.





Compensation
      expense recognized for stock options approximated $60,000 and $315,000 for
      the
      years ended December 31, 2006 and 2007, respectively. As of December 31, 2007,
      there was approximately $1.5 million of unrecognized compensation cost related
      to unvested stock options granted, which is expected to be recognized as expense
      over a period of approximately 3 years. The intrinsic value of stock options
      outstanding and exercisable is based on the close/last price for the Company’s
      common stock as reported by the OTCBB of $1.43 per share at December 31, 2006
      and $1.50 at December 31, 2007, and is calculated by aggregating the difference
      between the closing price and the exercise price of vested and unvested stock
      options which have an exercise price less than the closing price. The following
      summarizes activity for stock options (intrinsic value in thousands):




F-16




Outstanding
              
              Weighted
                  average
                exercise
                  price
              
              Weighted
                    averageremaining
                  life in years
              
              Aggretateintrinsic
                  valueBalance
                  at January 1, 2005
              
              -Granted
              
              
              655,545
              
              $
              0.54
              
              
              10.0Exercised
              
              
              -Forfeitures
              
              
              -Balance
                  at December 31, 2006
              
              
              655,545
              
              
              0.54
              
              
              9.4
              
              $
              585Granted
              
              
              2,827,965
              
              
              1.55Exercised
              
              
              -Forfeitures
              
              
              (432,572
              )
              
              1.98Balance
                  at December 31, 2007
              
              
              3,050,938
              
              $
              1.50
              
              
              8.2
              
              $
              762Exercisable
                  at December 31, 2007
              
              
              467,026
              
              $
              0.70
              
              
              8.7
              
              $
              435




Additional
      information regarding stock options outstanding as of December 31, 2007, is
      as
      follows:





**Options
                  outstanding**
              
              
              **Options
                  exercisable**Range
                  of exercise prices
              
              
              number
              
              
              Weighted
                  average
                exercise
                  price
              
              
              Weighted
                    averageremaining
                  life in years
              
              
              number
              
              
              Weighted
                    averageexercise
                  price$0.17
              
              
              349,254
              
              $
              0.17
              
              
              8.2
              
              
              282,773
              
              $
              0.17$0.34
              
              
              118,628
              
              
              0.34
              
              
              8.5
              
              
              44,485
              
              
              0.34$1.38
              
              
              1,246,674
              
              
              1.38
              
              
              9.1
              
              
              -$1.43
                  - $1.48
              
              
              369,781
              
              
              1.47
              
              
              9.7
              
              
              110,080
              
              
              1.43$1.60
                  - 1.92
              
              
              355,000
              
              
              1.80
              
              
              9.7
              
              
              -$2.23
              
              
              461,601
              
              
              2.23
              
              
              9.6
              
              
              -$3.60
              
              
              150,000
              
              
              3.60
              
              
              9.5
              
              
              29,688
              
              
              3.603,050,938
              
              $
              1.50
              
              
              
              
              
              467,026
              
              $
              0.70




**Note
      6. Asset purchase agreements**





In
      October 2006, pursuant to terms of an asset purchase agreement, the Company
      acquired for $1.0 million cash, among other things, all inventory, furniture,
      fixtures, equipment, customer lists, leasehold improvements, and owned vehicles
      used in connection with a catering business in California. Other than the notes
      payable on the vehicles, no liabilities were assumed by the Company. The Company
      also entered in to a one year lease agreement for the building owned by the
      seller. The total purchase price of approximately $1.0 million, including
      related acquisition costs, was allocated to assets acquired based on relative
      estimated fair values, which resulted in the majority being allocated to
      customer based identifiable intangible assets, and which is summarized as
      follows (in thousands):




Inventory
            
            $
            12Furniture,
                fixtures and equipment
            
            
            29Customer
                based intangible assets
            
            
            860Covenant
                not compete intangible asset
            
            
            150Note
                payable assumed
            
            
            (9
            )Total
            
            $
            1,042




F-17




In
      March
      2007, pursuant to terms of an asset purchase agreement, the Company acquired
      for
      cash of approximately $612,000, a $150,000 promissory note and 400,000 shares
      of
      its common stock, among other things, all inventory, furniture, fixtures,
      equipment, leasehold improvements, customer lists and other intangible assets
      used in connection with a Seattle-based catering business. Other than a
      facilities lease and equipment lease, no liabilities were assumed by the
      Company. The total purchase price approximates $1.2 million, and because
      information known to exist as it pertains to estimates of fair values of
      intangible assets, has been preliminarily allocated to assets acquired based
      on
      relative estimated fair values, which resulted in the majority being allocated
      to customer based intangibles, and which is summarized as follows (in
      thousands):




Inventory
            
            $
            32Furniture,
                fixtures, equipment and vehicles
            
            
            160Customer
                based intangible assets
            
            
            1,084Liabilities
                assumed
            
            
            (42
            )Total
            
            $
            1,234




On
      October 18, 2007, pursuant to terms an asset purchase agreement, the Company
      acquired for $2.4 million cash, shares of Company common stock having a fair
      value of $250,000 based on the closing price as of the date of the agreement,
      $35,000 per month for 12 months from the closing date, $150,000 due 90 days
      from
      the closing date and another $150,000 due 120 days after the close, and upon
      the
      occurrence of certain events, additional shares of the Company having a fair
      value of $50,000 based on the closing price as of the date of the agreement,
      all
      inventory, furniture, fixtures, equipment, customer lists, leasehold
      improvements, and owned vehicles used in connection with a catering and retail
      business operating three stores in San Diego, California. Other than the
      Company’s assumption of the leases for the three locations, no other liabilities
      were assumed. The total purchase price of approximately $3.0 million will be
      allocated to assets acquired based on estimated fair values, which will result
      in the majority being allocated to customer based identifiable intangible
      assets.





Inventory
                and other assets
            
            $
            90Furniture,
                fixtures, equipment and vehicles
            
            
            210Customer
                based intangible assets
            
            
            3,100Total
            
            $
            3,400





Operating
      results for the acquired catering businesses
      are included in the Company’s operating results from the dates of acquisitions.
      The following supplemental pro forma information has been presented on the
      basis
      as if the asset acquisitions of the catering businesses had occurred at the
      beginning of the periods presented (in thousands):




2006
            
            2007Sales
            
            $
            16,414
            
            $
            20,189Net
                loss
            
            $
            (9,774
            )
            $
            (11,040
            )Net
                loss per share
            
            $
            (2.94
            )
            $
            (0.39
            )




F-18




In
      July
      2007, pursuant to terms of an asset purchase agreement, the Company acquired
      for
      approximately $375,000 cash, shares of Company common stock having a fair value
      of approximately $163,000 based on the closing price as of the date of the
      agreement, and $50,000 due 60 days from the date of the agreement, among other
      things, all inventory, furniture, fixtures, equipment, customer lists, leasehold
      improvements, and owned vehicles used in connection with a retail business
      operating two stores in San Diego, California. No liabilities were assumed
      by
      the Company. The Company also entered in to a five-year lease agreement for
      one
      of the store locations from a landlord affiliated with the seller, and assumed
      the lease for the other store location. The total purchase price of
      approximately $600,000 has been preliminarily allocated to assets acquired
      based
      on estimated fair values, which resulted in the majority being allocated to
      customer based identifiable intangible assets, and which is summarized as
      follows (in thousands):




Inventory
                and other assets
            
            $
            12Furniture,
                fixtures, equipment and vehicles
            
            
            30Customer
                based intangible assets
            
            
            558Total
            
            $
            600




In
      September 2007, pursuant to terms of an asset purchase agreement, the Company
      acquired for approximately $266,000 cash, shares of Company common stock having
      a fair value of approximately $100,000 based on the closing price as of the
      date
      of the agreement, $25,000 due in equal monthly payments within 90 days from
      the
      date of the agreement, and related acquisition costs of approximately $22,000,
      among other things, all inventory, furniture, fixtures, equipment, customer
      lists, leasehold improvements, and owned vehicles used in connection with a
      retail business operating one store in San Diego, California. No liabilities
      were assumed by the Company. The Company assumed the lease for the store
      location. The total purchase price of approximately $415,000 has been
      preliminarily allocated to assets acquired based on estimated fair values,
      which
      resulted in the majority being allocated to customer based identifiable
      intangible assets, and which is summarized as follows (in thousands):




Inventory
                (and other assets)
            
            $
            11Furniture,
                fixtures, equipment and vehicles
            
            
            25Customer
                based intangible assets
            
            
            379Total
            
            $
            415




In
      September 2007, pursuant to terms of an asset purchase agreement, the Company
      acquired for approximately $381,000 cash and shares of Company common stock
      having a fair value of approximately $48,000 based on the closing price as
      of
      the date of the agreement, all inventory, furniture, fixtures, equipment,
      customer lists, leasehold improvements, and owned vehicles used in connection
      with a retail business operating two stores in San Diego, California. No
      liabilities were assumed by the Company. The Company also entered in to a
      five-year lease agreement for one of the store locations from a landlord
      affiliated with the seller, and assumed the lease for the other store location.
      The total purchase price of approximately $430,000 has been preliminarily
      allocated to assets acquired based on estimated fair values, which resulted
      in
      the majority being allocated to customer based identifiable intangible assets,
      and which is summarized as follows (in thousands):




Inventory
                and other assets
            
            $
            6Furniture,
                fixtures, equipment and vehicles
            
            
            30Customer
                based intangible assets
            
            
            394Total
            
            $
            430




F-19





**Note
      7. Commitments and contingencies**





The
      Company leases its cafes, central kitchens and office facilities under
      non-cancelable operating leases, some with renewal options. Rents are fixed
      base
      amounts, some with escalating rents and some with contingent rentals based
      on
      sales. Lease provisions also require additional payments for maintenance and
      other expenses. Rent is expensed on a straight-line basis over the term of
      the
      lease. The difference between amounts paid and expensed is recorded as a
      deferred credit. The Company also leases certain point-of-sale computer hardware
      and software pursuant to capital leases. Subsequent to December 31, 2007, the
      Company has entered into new leases for computer hardware and software,
      furniture, fixtures and equipment in our cafés, which provide for additional
      minimum future lease payments over their three year terms of approximately
      $1.0
      million including interest. Capital lease obligations are for terms ranging
      from
      two to five years with interest at 9% to 22%. At December 31, 2007, minimum
      future annual lease obligations are as follows (in thousands):




Operating
            
            
            Capital2008
            
            $
            1,529
            
            $
            5522009
            
            
            1,168
            
            
            2612010
            
            
            1,067
            
            
            1452011
            
            
            981
            
            
            882012
                and thereafter
            
            
            1,740
            
            
            326,485
            
            
            1,078Less
                amounts representing interest
            
            
            
            
            
            (175
            )$
            6,485
            
            $
            903




On
      January 8, 2008, Esther Sanchez, a former employee of Organic To Go, Inc.,
      our
      wholly owned subsidiary, brought suit against us seeking damages in the Superior
      Court of the State of California for the County of Los Angeles claiming wrongful
      termination, sexual harassment and related causes of action in connection with
      the termination of Ms. Sanchez’s employment with us. Our employment practices
      liability insurer has agreed to provide a defense on our behalf, subject to
      a
      reservation of rights letter and the terms and conditions of its insurance
      policy.





We
      are
      currently in mediation pursuant to the Standard Form of Agreement with Wheelihan
      Construction, Inc. This matter arose out of tenant improvements made by
      Wheelihan Construction, Inc. and its subcontractors at one of our retail
      locations in San Diego, California. In connection with the matter, four
      subcontractors/suppliers have commenced actions against us, Wheelihan
      Construction, Inc. and other defendants.





From
      time
      to time, the Company is subject to various legal proceedings and claims that
      may
      arise in the ordinary course of business. Further, in the past, certain vendors
      have taken legal action against the Company as a result of untimely payment
      of
      invoices. In some cases, the courts have stipulated judgment requiring the
      Company to pay interest and comply with payment schedules. Company management
      currently believes that resolution of such legal matters will not have a
      material adverse impact on the Company’s financial statements. We are not a
      party to any other material legal proceedings nor are we aware of any
      circumstance that may reasonably lead a third party to initiate material legal
      proceedings against us. In 2006, a former employee of the Company brought suit
      against us. The matter was settled for an amount immaterial to the Company’s
      financial results in June 2007.





Effective
      January 1, 2007, the Company entered into an employment agreement with a
      three-year term with its founder and Chief Executive Officer, pursuant to which
      the executive officer shall receive a base salary at an annual rate of $225,000,
      subject to annual increases as determined by the Company’s Board of Directors.
      The Company’s Chief Executive Officer is also eligible for cash bonuses and
      other typical employment benefits. In addition, effective upon the closing
      of
      the merger, the executive officer received 1,246,674 options to purchase shares
      of the Company’s common stock at an exercise price of $1.38 per share, with a
      term of 10 years from the date of grant. Options granted vest 25% after 12
      months of employment, with the remainder vesting over the next 36 months,
      subject to accelerated vesting in the event of a “Change in Control,” as defined
      in the employment agreement, or in certain other circumstances. Under certain
      departure circumstances, the executive officer could be eligible to receive
      payments equal to one year’s salary and benefits.





Effective
      February 7, 2008, the Company entered into an amended and restated employment
      agreement with a three-year term with its founder and Chief Executive Officer,
      pursuant to which the executive officer shall receive a base salary at an annual
      rate of $250,000, subject to annual increases as determined by the Company’s
      Board of Directors. The Company’s Chief Executive Officer is also eligible for
      cash bonuses and other typical employment benefits.




F-20





Effective
      January 14, 2008, the Company entered into an employment agreement with a
      three-year term with its Chief Financial Officer, pursuant to which the
      executive officer shall receive a base salary at an annual rate of $235,000,
      subject to annual increases as determined by the Company’s Chief Executive
      Officer. The Company’s Chief Financial Officer is also eligible for cash bonuses
      and other typical employment benefits. In addition, the executive officer
      received 300,000 options to purchase shares of the Company’s common stock at an
      exercise price of $1.48 per share, with a term of 10 years from the date of
      grant. Options granted vest 25% after 12 months of employment, with the
      remainder vesting over the next 36 months, subject to accelerated vesting in
      the
      event of a “Change in Control,” as defined in the employment agreement, or in
      certain other circumstances. Under certain departure circumstances, the
      executive officer could be eligible to receive payments equal to six month’s
      salary.





**Note
      8. Income taxes**





Deferred
      income taxes represent the net tax effects of temporary differences between
      the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      amounts used for income tax purposes. Significant components of the Company’s
      deferred tax assets and liabilities and related valuation allowances as of
      December 31 are as follows (in thousands):




Deferred
                tax assets
            
            2006
            
            2007Net
                operating loss carryforwards
            
            $
            4,689
            
            $
            7,919Property
                and equipment
            
            
            351
            
            
            122Intangible
                assets
            
            
            58
            
            
            1,111Other
            
            
            112
            
            
            262Total
                deferred tax assets
            
            
            5,210
            
            
            9,414Valuation
                allowance
            
            
            (
                5,210
            )
            
            (9,414
            )Deferred
                tax assets, net of valuation allowance.
            
            $
            -
            
            $
            -




The
      Company has recorded no provision for income taxes due to net losses incurred.
      A
      valuation allowance has been recorded against deferred tax assets as it has
      not
      been determined that it is more likely than not that these deferred tax assets
      will be realized. As of December 31, 2007, the Company has net operating loss
      carryforwards of approximately $21.0 million and $12.0 million for federal
      and
      state income tax purposes, respectively, which expire beginning in 2024
      (federal) and 2014 (state). Realization is dependent on generating sufficient
      taxable income prior to expiration of the loss carryforwards. Further, as a
      result of ownership changes, the Company may be subject to annual limitations
      on
      the amount of net operating loss utilizable in any tax year.





The
      difference between the expected benefit computed using the statutory tax rate
      and the recorded benefit of zero is primarily due to the change in the valuation
      allowance. The change in the valuation allowance was approximately $2.9 million
      and $4.2 million in 2006 and 2007, respectively.





**Note
      9. Subsequent events**





On
      January 25, 2008, the Company entered into a Securities Purchase Agreement
      with
      select accredited investors related to the sale of common stock and warrants
      to
      purchase shares of common stock. The Company closed the private placement on
      January 25, 2008, and issued an aggregate of 1,428,572 shares of common stock
      and warrants to purchase an aggregate of 642,858 shares of common stock. The
      aggregate gross proceeds raised by the Company were approximately $2.0 million.
      Each share was sold to the investors at $1.40 per share. The warrants expire
      five years from the date of issue and may be exercised at $2.50 per share,
      subject to adjustment in certain circumstances. The private placement was
      conducted pursuant to Section 4(2) of the Securities Act of 1933, as amended,
      and Rule 506 promulgated thereunder.




F-21




On
      February 19, 2008, we entered into a Securities Purchase Agreement with W.Health
      L.P., relating to the sale of (i) our common stock, (ii) an unconditional
      warrant to purchase common stock and (iii) a conditional warrant to purchase
      common stock. Pursuant to the terms of the Securities Purchase Agreement, we
      sold and issued to W.Health L.P. 7,142,857 shares of common stock at a price
      of
      $1.40 per share, for a total purchase price of $10.0 million.





The
      unconditional warrant provides W.Health L.P. the right to purchase 4,285,715
      shares of common stock at an exercise price of $2.50 per share, subject to
      adjustment under certain circumstances. The unconditional warrant is exercisable
      at any time through February 27, 2013 and may be exercised on a cashless basis.





The
      conditional warrant is exercisable only under certain circumstances, including
      (i) our failure to become listed on The NASDAQ Stock Market or the American
      Stock Exchange on or before February 27, 2011, (ii) our failure to maintain
      listing on The NASDAQ Stock Market or the American Stock Market for certain
      specified time periods or (iii) if we are acquired by or merge with another
      unaffiliated entity for consideration to the Company of an amount equal to
      or
      less than $2.50 per share before February 27, 2013 (each, an “Exercise Event”).
      Upon the occurrence of an Exercise Event, the W.Health L.P. will have the right
      to purchase such number of shares of common stock, calculated as of the initial
      date of exercise, equal to twenty percent (20%) of the total number of shares
      of
      capital stock on a fully diluted basis, taking into account such issuance,
      using
      the treasury method, at an exercise price of $0.001 per share, subject to
      adjustment under certain circumstances. The conditional warrant will expire
      upon
      the occurrence of certain specific events, but in any event, no later than
      February 27, 2013. The conditional warrant may be exercised on a cashless basis.





In connection with the sale
      of
      common stock to W.Health, L.P., we entered into registration rights agreements,
      which require us to
      file with the Securities and Exchange Commission and
      cause to be made effective, initial
      registration statements covering
      the resale of the common
      stock and the common stock issuable
      upon exercise of the warrants
      within specified time periods.




F-22




**SIGNATURES**




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




ORGANIC
                TO GO FOOD CORPORATIONBy:/s/
                Jason
                Brown
            
            
            Date:
                March 31, 2008Jason
                BrownTitle
                : Chief Executive Officer and Chairman




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, this report has been signed below by the following persons on behalf
      of
      the registrant and in the capacities and on the dates indicated.




SIGNATURE
            
            TITLE
            
            DATE/s/
                Jason Brown
            
            Chief
                Executive Officer and Chairman
            
            March
                31,
                2008Jason
                Brown
            
            (Principal
                Executive Officer)/s/
                Michael Gats
            
            Chief
                Financial Officer
            
            March
                31, 2008Michael
                Gats
            
            (Principal
                Financial Officer and PrincipalAccounting
                Officer)/s/
                Dave Smith
            
            Director
            
            March
                31,
                2008Dave
                Smith/s/
                Peter Meehan
            
            Director
            
            March
                31, 2008Peter
                Meehan/s/
                Roy Bingham
            
            Director
            
            March
                31, 2008Roy
                Bingham/s/
                Douglas Lioon
            
            Director
            
            March
                31, 2008Douglas
                LioonDirector
            
            March
                31, 2008S.M.
                “Hass” Hassan/s/
                Dr. Gunnar Weikert
            
            Director
            
            March
                31, 2008Dr.
                Gunnar Weikert





II-1




**EXHIBIT
      INDEX**





**Exhibit**
              **Number**
            
            **Description**2.1
            
            Agreement
                and Plan of Merger and Reorganization, dated as of January 11, 2007
                (1)2.2
            
            First
                Amendment to Agreement and Plan of Merger and Reorganization and
                Company
                Disclosure Schedule, dated as of February 12, 2007 (2)3.1
            
            Amended
                and Restated Certificate of Incorporation (3)3.2
            
            Certificate
                of Amendment to Amended and Restated Certificate of Incorporation
                (4)3.3
            
            Amended
                and Restated Bylaws (5)4.1
            
            Specimen
                Common Stock Certificate (2)4.2
            
            Form
                of Warrant (2)4.3
            
            Form
                of Warrant issued in connection with June 28, 2007 Private Placement
                (6)4.4
            
            Form
                of Warrant issued in connection with October 2007 Private Placement
                (7)4.5
            
            Form
                of Warrant issued in connection with January 2008 Private Placement
                (14)4.6
            
            Form
                of Unconditional Warrant issued in connection with February 2008
                Private
                Placement (16)4.7
            
            Form
                of Conditional Warrant issued in connection with February 2008 Private
                Placement (16)10.1
            
            Asset
                Purchase Agreement by and between Organic Holding Company, Inc. and
                Briazz
                Inc. (2)10.2
            
            Asset
                Purchase Agreement by and among Vinaigrettes LLC, Dan Karzen and
                Organic
                Holding Company, Inc. (2)10.3
            
            Placement
                Agent Agreement, dated December 18, 2006, by and between Organic
                Holding
                Company, Inc. and Burnham Hill Partners, a division of Pali Capital,
                Inc.
                (2)10.4
            
            Form
                of Subscription Agreement by and between SP Holding Corporation and
                the
                Investors (2)10.5
            
            2007
                Equity Participation Plan of Organic To Go Food Corporation
                (4)10.6
            
            Escrow
                Agreement, dated June 20, 2007 (6)10.7
            
            Securities
                Purchase Agreement, dated June 26, 2007 (6)









10.8
            
            Registration
                Rights Agreement, dated June 26, 2007 (6)10.9
            
            Joinder
                to each of the Securities Purchase Agreement and the Registration
                Rights
                Agreement, dated June 28, 2007 (10)10.10
            
            Employment
                Agreement between Organic To Go, Inc. and Andrew Jacobs
                (11)10.11
            
            Escrow
                Agreement, dated October 10, 2007 (7)10.12
            
            Securities
                Purchase Agreement, dated October 12, 2007 (7)10.13
            
            Registration
                Rights Agreement, dated October 12, 2007 (7)10.14
            
            Joinder
                to each of the Securities Purchase Agreement and the Registration
                Rights
                Agreement, dated October 12, 2007 (9)10.15
            
            Agreement
                of Purchase and Sale of Assets (8)10.16
            
            First
                Amendment to Agreement of Purchase and Sale of Assets
                (8)10.17
            
            Employment
                Agreement by and between Michael Gats and Organic To Go Food Corporation
                (13)10.19
            
            Securities
                Purchase Agreement, dated January 25, 2008 (14)10.20
            
            Employment
                Agreement by and between Jason Brown and Organic To Go Food Corporation
                (15)10.21
            
            Securities
                Purchase Agreement, dated February 19, 2008 (16)10.22
            
            Registration
                Rights Agreement, dated February 27, 2008 (16)10.23
            
            Deferred
                Registration Rights Agreement, dated February 27, 2008
                (16)16.1
            
            Letter
                from De Leon & Company, P.A. to the SEC, dated March 7, 2007
                (12)21.1
            
            List
                of Subsidiaries (2)23.1
            
            Consent
                of Rose, Snyder & Jacobs*31.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes
                - Oxley
                Act of 2002*31.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302 oftheSarbanes
                - Oxley Act of 2002*32.1
            
            Certification
                of Chief Executive Officer and Chief Financial Officer under Section
                906
                of the Sarbanes - Oxley Act of 2002**
            
            Filed
                herewith









(1)
            
            Filed
                on January 17, 2007 as an exhibit to our Current Report on Form 8-K
                and
                incorporated herein by reference.(2)
            
            Filed
                on February 13, 2007 as an exhibit to our Current Report on Form
                8-K and
                incorporated herein by reference.(3)
            
            Filed
                on December 13, 2003 as an exhibit to our Current Report on Form
                8-K and
                incorporated herein by reference.(4)
            
            Filed
                on May 21, 2007 as an exhibit to our Current Report on Form 8-K and
                incorporated herein by reference.(5)
            
            Filed
                onMay
                14, 2001as
                an exhibitto
                ourreport
                on Form 10-QSBandincorporated herein by reference.(6)
            
            Filed
                on June 27, 2007 as an exhibit to our Current Report on Form 8-K
                and
                incorporated herein by reference.(7)
            
            Filed
                on October 18, 2007 as an exhibit to our Current Report on Form 8-K
                and
                incorporated herein by reference.(8)
            
            Filed
                on October 24, 2007 as an exhibit to our Current Report on Form 8-K
                and
                incorporated herein by reference.(9)
            
            Filed
                on November 5, 2007 as an exhibit to our Current Report on Form 8-K
                and
                incorporated herein by reference.(10)
            
            Filed
                on June 29, 2007 as an exhibit to our Current Report on Form 8-K
                and
                incorporated herein by reference.(11)
            
            Filed
                on July 13, 2007 as an exhibit to our Registration Statement on Form
                SB-2
                and incorporated herein by reference.(12)
            
            Filed
                on March 9, 2007 as an exhibit to our Current Report on Form 8-K
                and
                incorporated herein by reference.(13)
            
            Filed
                on December 19, 2007 as an exhibit to our Current Report on Form
                8-K and
                incorporated herein by reference.(14)
            
            Filed
                on January 28, 2008 as an exhibit to our Current Report on Form 8-K
                and
                incorporated herein by reference.(15)
            
            Filed
                on February 13, 2008 as an exhibit to our Current Report on Form
                8-K and
                incorporated herein by reference.(16)
            
            Filed
                on February 25, 2008 as an exhibit to our Current Report on Form
                8-K and
                incorporated herein by reference.