**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**


**Form 10-Q**




þ
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**





**For
      the quarterly period ended June 30, 2008**


**OR**




o
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**





**For
      the transition period from
                    to**





**Commission
      file number 0-21061**







**ORGANIC
      TO GO FOOD CORPORATION**


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









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





**3317
      Third Avenue South**


**Seattle,
      Washington 98134**


**(206) 838-4670**


**(Address
      principal executive offices)**


**(Registrant’s
      telephone number, including area code)**








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 R  No £





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 the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
      Exchange Act.





£Large
                accelerated filer
            £Accelerated
                filer£Non-accelerated
                filer
            RSmaller
                reporting company





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes £  No R





As
      of
      August 8, 2008, 36,903,543 shares of the Company’s Common Stock, par value
      $0.001 per share, were outstanding.








**Organic
      To Go Food Corporation**





**Table
      of Contents**





**Page
                No.****PART
                I FINANCIAL INFORMATION**Item
                1. Unaudited Condensed Consolidated Financial Statements:Balance
                Sheets as of December 31, 2007 and June 30, 2008
            1Statements
                of Operations for the Three and Six Months Ended June 30, 2007 and
                2008
            2Statement
                of Stockholders’ Equity for the Six Months Ended June 30,
                2008
            3Statements
                of Cash Flows for the Six Months Ended June 30, 2007 and
                2008
            4Notes
                to Condensed Consolidated Financial Statements
            5Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            15Item
                3. Quantitative and Qualitative Disclosures About Market
                Risk
            18Item
                4. Controls and Procedures
            18**PART
                II OTHER INFORMATION**Item
                4. Submission of Matters to Vote of Security Holders
            19Item
                6. Exhibits
            20SIGNATURES
            21







**PART
      I. FINANCIAL INFORMATION**





**Item
      1. Unaudited Condensed Consolidated Financial Statements**





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


**Condensed
      Consolidated Balance Sheets**


**(In
      thousands, except per share amounts)**





**(*****audited*****)**
              **December
                31,**
              **2007**
            
            **(*****unaudited*****)**
              **June
                30,**
              **2008****ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            668
            
            $
            6,144Accounts
                receivable, net
            
            
            1,099
            
            
            1,513Inventory
            
            
            845
            
            
            1,813Prepaid
                expenses and other current assets
            
            
            489
            
            
            1,127Total
                current assets
            
            
            3,101
            
            
            10,597Property
                and equipment, net
            
            
            5,465
            
            
            8,001Identifiable
                intangible assets, net
            
            
            3,853
            
            
            6,513Deposits
                and other assets
            
            
            521
            
            
            292TOTAL
                ASSETS
            
            $
            12,940
            
            $
            25,403**LIABILITIES
                AND SHAREHOLDERS’ EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            2,040
            
            $
            2,867Accrued
                liabilities
            
            
            780
            
            
            665Current
                portion of notes payable,
            
            
            1,474
            
            
            1,410Current
                portion of capital lease obligations
            
            
            463
            
            
            797Total
                current liabilities
            
            
            4,757
            
            
            5,739Deferred
                rent
            
            
            52
            
            
            151Notes
                payable, net of current portion
            
            
            1,044
            
            
            1,752Capital
                lease obligations, net of current portion
            
            
            440
            
            
            1,230TOTAL
                LIABILITIES
            
            
            6,293
            
            
            8,872Commitments
                and Contingencies (see Note 8)Stock
                subscription
            
            
            -
            
            
            5,000Shareholders’
                equity:Preferred
                Stock - $0.001 par value per share, 10,000,000 shares authorized,
                no
                shares issued and outstanding
            
            
            -
            
            
            -Common
                stock and additional paid-in capital - $0.001 par value per share,
                500,000,000 shares authorized, 27,758,326 and 36,903,543 shares issued
                and
                outstanding
            
            
            33,215
            
            
            44,544Accumulated
                deficit
            
            
            (26,568
            )
            
            (33,013
            )TOTAL
                SHAREHOLDERS’ EQUITY
            
            
            6,647
            
            
            11,531TOTAL
                LIABILITIES AND SHAREHOLDERS’ EQUITY
            
            $
            12,940
            
            $
            25,403








*See
      accompanying notes to condensed consolidated financial
      statements.*





1


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


**Condensed
      Consolidated Statements of Operations**


**(Unaudited
      and in thousands, except per share amounts)**




**Three
                Months Ended**
              **June
                30,**
            
            **Six
                Months Ended**
              **June
                30,****2007**
            
            **2008**
            
            **2007**
            
            **2008**Sales
            
            $
            3,854
            
            $
            6,020
            
            $
            7,472
            
            $
            11,195Cost
                of sales
            
            
            1,799
            
            
            2,378
            
            
            3,641
            
            
            4,359Gross
                profit
            
            
            2,055
            
            
            3,642
            
            
            3,831
            
            
            6,836Operating
                expenses
            
            
            3,915
            
            
            5,133
            
            
            7,384
            
            
            9,338Depreciation
                and amortization
            
            
            704
            
            
            2,066
            
            
            1,138
            
            
            3,836Total
                operating expenses
            
            
            4,619
            
            
            7,199
            
            
            8,522
            
            
            13,174Loss
                from operations
            
            
            (2,564
            )
            
            (3,557
            )
            
            (4,691
            )
            
            (6,338
            )Interest
                income (expense), net
            
            
            (68
            )
            
            (42
            )
            
            (415
            )
            
            (107
            )Other
                income (expense), net
            
            
            (14
            )
            
            -
            
            
            (14
            )
            
            -Loss
                before income taxes
            
            
            (2,646
            )
            
            (3,599
            )
            
            (5,120
            )
            
            (6,445
            )Income
                taxes
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                loss
            
            $
            (2,646
            )
            $
            (3,599
            )
            $
            (5,120
            )
            $
            (6,445
            )Basic
                and diluted net loss per share
            
            $
            (0.13
            )
            $
            (0.10
            )
            $
            (0.32
            )
            $
            (0.19
            )Weighted
                average shares outstanding
            
            
            20,683
            
            
            36,600
            
            
            15,788
            
            
            34,039








*See
      accompanying notes to condensed consolidated financial
      statements.*





2


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


**Condensed
      Consolidated Statement of Stockholders’ Equity**


**(Unaudited
      and in thousands, except share amounts)**


**Common
                  Stock**
              
              
              
              **Total****and
                  Additional**
              
              **Accumulated**
              
              **Stockholders’****Paid
                  In Capital**
              
              **Deficit**
              
              **Equity****Shares**
              
              **Amount**Balance
                  at December 31, 2007
              
              
              27,758,326
              
              $
              33,215
              
              $
              (26,568
              )
              $
              6,647Issuance
                  of common shares and warrants for cash
              
              
              8,571,429
              
              
              12,000
              
              
              -
              
              
              12,000Stock
                  issued in connection with acquisition of assets
              
              
              573,788
              
              
              750
              
              
              
              
              
              750Stock
                  issuance costs
              
              
              -
              
              
              (1,386
              )
              
              -
              
              
              (1,386
              )Stock
                  subscription issuance costs
              
              
              -
              
              
              (327
              )
              
              -
              
              
              (327
              )Share
                  based compensation
              
              
              -
              
              
              292
              
              
              -
              
              
              292Net
                  loss
              
              
              -
              
              
              -
              
              
              (6,445
              )
              
              (6,445
              )Balance
                  at June 30, 2008
              
              
              36,903,543
              
              $
              44,544
              
              $
              (33,013
              )
              $
              11,531







*See
      accompanying notes to condensed consolidated financial
      statements.*




3




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


**Condensed
      Consolidated Statements of Cash Flows**


**(Unaudited
      and in thousands)**





**Six
                Months Ended**
              **June
                30,****2007**
            
            **2008**Cash
                flows from operating activities:Net
                loss
            
            $
            (5,120
            )
            $
            (6,445
            )Adjustments
                to reconcile net loss to net cash used by operating
                activities:Depreciation
                and amortization
            
            
            1,138
            
            
            3,836Share-based
                compensation cost
            
            
            96
            
            
            292Amortization
                of debt issue costs and debt discount included in interest
                expense
            
            
            232
            
            
            -Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (309
            )
            
            (414
            )Inventory
            
            
            (53
            )
            
            (968
            )Prepaid
                expenses and other current assets
            
            
            (230
            )
            
            (638
            )Accounts
                payable
            
            
            45
            
            
            672Accrued
                liabilities
            
            
            (345
            )
            
            (115
            )Other
            
            
            (131
            )
            
            33Net
                cash used by operating activities
            
            
            (4,677
            )
            
            (3,747
            )Cash
                flows from investing activities:Purchases
                of property, equipment and other assets
            
            
            (1,030
            )
            
            (1,393
            )Purchase
                of intangible assets
            
            
            (837
            )
            
            (4,054
            )Net
                cash used in investing activities
            
            
            (1,867
            )
            
            (5,447
            )Cash
                flows from financing activities:Principal
                payments on notes payables
            
            
            (397
            )
            
            (410
            )Principal
                payments on capital lease obligations
            
            
            (38
            )
            
            (537
            )Proceeds
                from issuance of notes payable, net
            
            
            500
            
            
            50Proceeds
                from sale of common stock, net
            
            
            -
            
            
            10,894Proceeds
                from stock subscription, net
            
            
            -
            
            
            4,673Redemption
                of common stock
            
            
            12,025
            
            
            -Net
                cash provided by financing activities
            
            
            12,090
            
            
            14,670Net
                increase in cash and cash equivalents
            
            
            5,545
            
            
            5,476Cash
                and cash equivalents:Beginning
                of period
            
            
            865
            
            
            668End
                of period
            
            $
            6,410
            
            $
            6,144Supplemental
                disclosure of cash flow information:Cash
                paid for interest
            
            $
            340
            
            $
            176Cash
                paid for income taxes
            
            
            -
            
            
            -Non-cash
                investing and financing activities:Assets
                acquired through issuance of notes payable
            
            $
            160
            
            $
            1,140Assets
                purchased through issuance of common stock
            
            $
            400
            
            $
            750Fixed
                assets acquired though capital lease
            
            $
            227
            
            $
            1,524Assets
                purchased through accounts payable
            
            
            -
            
            
            150Conversion
                of debt into common stock
            
            $
            4,600
            
            $
            -Conversion
                of preferred stock into common stock
            
            $
            5,700
            
            $
            -






*See
      accompanying notes to condensed consolidated financial
      statements.*




4




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


**Notes
      to Condensed Consolidated Financial Statements**


**June
      30, 2008**





**Note
      1.  Description of Business, Basis of Presentation 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 services, preparing and serving “grab and
      go” breakfast, lunch and dinner 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. During 2007, the Company further expanded its
      operations by acquiring the assets of three separate businesses, for a total
      of
      six additional locations in San Diego, California. During the second quarter
      of
      2008, the Company acquired the assets of a retail and catering operation in
      Seattle, Washington, adding three additional retail locations in downtown
      Seattle. Also during the second quarter of 2008, the Company gained its first
      foothold on the East coast of the United States with the acquisition of the
      assets of a business with catering and four retail locations in Washington,
      D.C.
      As of June 30, 2008, the Company operates nine stores in Washington, nineteen
      stores in California, and four stores in the Washington, D.C. metropolitan
      area,
      for a total of 32 retail locations nationwide.





**Basis
      of Presentation**





In
      the
      opinion of management, the accompanying Condensed Consolidated Balance Sheets
      and related Condensed Consolidated Statements of Operations, Condensed
      Consolidated Statement of Stockholders’ Equity and Statements of Cash Flows have
      been prepared in accordance with accounting principles generally accepted in
      the
      United States of America (“ GAAP”)
      for interim financial information and with the instructions to Form 10-Q and
      Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
      information and notes required by GAAP for complete financial statements.
      Management believes that all adjustments (consisting of normal recurring
      adjustments) considered necessary for fair presentation have been included.
      Interim results are not necessarily indicative of results for a full year.
      The
      information included in this Form 10-Q should be read in conjunction with
“Management’s Discussion and Analysis of Financial Condition and Results of
      Operations” and the financial statements and notes thereto included in the
      Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
      2007.





The
      presentation of financial statements prepared in conformity with GAAP
      contemplates continuation of the Company as a going concern. The Company has
      reported recurring losses and cash used by operating activities, and at
      June **** 30,
      2008
      has an accumulated 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. During the six months ended June
      30,
      2007, proceeds of approximately $6.9 million were received from the sale of
      equity securities in connection with its reverse 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. In January 2008, the Company 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 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. In June 2008, the Company raised
      an additional $5.0 million through the issuance of a subscription agreement
      convertible into shares of the Company’s common stock at a future specified
      date, and has another $5.0 million available under the same agreement for future
      cash needs. 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.




5




**Use
      of Estimates**





Preparation
      of financial statements in conformity with GAAP 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.





**Summary
      of Significant Accounting Policies**





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 on deposit with high credit, highly-rated financial institutions.
      At
      times, such balances may be in excess of the FDIC insurance limit. At
      June 30, 2008, approximately $5.6 million 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.





Concentrations  **-** All
      of
      the Company’s operations are currently located in Washington, California and
      Washington, D.C. 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, California or Washington D.C. 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 GAAP.
      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 **.**




6




Accounts
      receivable - The
      Company extends credit to certain of its customers. Accounts receivable are
      customer obligations due under normal trade terms. The Company performs 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 been exhausted.





Inventory  **-** Inventory,
      which consists primarily of food, beverages and packaging products, is stated
      at
      the lower of cost or market. Cost is determined according to 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 ten years.





Identifiable
      intangible assets -
      Through its acquisitions of other businesses, the Company has acquired certain
      identifiable intangible assets including customer-based intangibles and a
      covenant not to compete. All such intangible assets have been accounted for
      in
      accordance with Statement of Financial Accounting Standards No. 141, “Business
      Combinations” (“SFAS 141”). The estimate of useful lives of each intangible
      asset was based on an analysis by management of all pertinent factors, and
      selection of an estimated useful life of up to two years has been identified
      for
      each intangible asset. Customer based intangible assets are amortized utilizing
      an accelerated method and non-compete intangible assets are amortized on a
      straight-line basis.





Statement
      of Financial Accounting Standards No. 142, “Goodwill and Other Intangible
      Assets,” (“SFAS 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.





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.




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.




7




Income
      taxes - The
      Company accounts for income taxes in accordance with Statement of Financial
      Accounting Standards No. 109, “ *Accounting
      for Income Taxes* ”
(“SFAS
      109”), 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 - The
      Company accounts for its share-based compensation under the provisions of Financial
      Accounting Standards Board (“FASB”) Statement
      No. 123(R), *Share-Based
      Payment* ,
      (“FAS
      123R”).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 FAS 123R 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.





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. 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.
      Computations of net loss per share for the periods ending June 30, 2007 and
      2008
      exclude approximately 5.8 million and 13.0 million common shares, respectively,
      issuable upon exercise of outstanding and issuable warrants, 2.8 million and
      5.0
      million shares, respectively, of common stock issuable upon exercise of
      outstanding stock options, and 0 and 308,000 shares, respectively, of common
      stock issuable upon conversion of convertible notes payable. These common stock
      equivalents could have the effect of decreasing diluted net income per share
      in
      future periods when the Company generates net income.




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





Recent
      accounting pronouncements - In
      May
      2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”)
      SFAS No. 162, *The
      Hierarchy of Generally Accepted Accounting Principles* (“SFAS 162”).
      SFAS 162 identifies the sources of accounting principles and the framework
      for selecting the principles to be used in the preparation of financial
      statements for nongovernmental entities that are presented in conformity with
      GAAP. SFAS 162 will be effective 60 days following the SEC’s approval.
      The Company does not expect that this statement will result in a change in
      current practice.




In
      April
      2008, the FASB issued Staff Position No. 142-3, *Determination
      of the Useful Life of Intangible Assets* (“FSP 142-3”).
      FSP 142-3 amends the factors that should be considered in developing
      assumptions about renewal or extension used in estimating the useful life of
      a
      recognized intangible asset under SFAS No. 142, *Goodwill
      and Other Intangible Assets* (“SFAS 142”).
      This standard is intended to improve the consistency between the useful life
      of
      a recognized intangible asset under SFAS 142 and the period of expected
      cash flows used to measure the fair value of the asset under
      SFAS No. 141 (revised 2007), *Business
      Combinations* (“SFAS 141(R)”)
      and other GAAP. FSP 142-3 is effective for financial statements issued for
      fiscal years beginning after December 15, 2008. The measurement provisions
      of this standard will apply only to intangible assets acquired after the
      effective date.





In
      March
      2008, the FASB issued SFAS No. 161, *Disclosures about Derivative
      Instruments and Hedging Activities, an amendment of FASB Statement No. 133*("SFAS 161").  SFAS 161 requires enhanced disclosures about a
      company's derivative and hedging activities. These enhanced disclosures will
      discuss (a) how and why a company uses derivative instruments, (b) how
      derivative instruments and related hedged items are accounted for under FASB
      Statement No. 133 and its related interpretations and (c) how derivative
      instruments and related hedged items affect a company's financial position,
      results of operations and cash flows. SFAS No. 161 is effective for fiscal
      years
      beginning on or after November 15, 2008, with earlier adoption allowed. The
      Company does not anticipate that the adoption of this accounting
      pronouncement will have a material effect on its consolidated financial
      statements.




8




In
      February 2008, the FASB issued FASB Staff Position No. 157-2, Effective
      Date of FASB Statement No. 157, which delays the effective date of SFAS 157
      for nonfinancial assets and nonfinancial liabilities to fiscal years beginning
      after November 15, 2008.  Therefore, the Company will delay
      application of SFAS 157 to its nonfinancial assets and nonfinancial
      liabilities.  The Company does not anticipate that the delayed
      adoption of this accounting pronouncement will have a material effect
      on its consolidated financial statements.




In
      December 2007, the FASB issued SFAS No. 141(revised 2007), *Business
      Combinations* (“SFAS 141R”),
      which revises current purchase accounting guidance in SFAS 141, *Business
      Combinations* .
      SFAS 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 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 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 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 160, *Accounting and Reporting of**Noncontrolling Interests in Consolidated Financial Statements
      - an
      amendment of ARB No. 51* (“SFAS 160”).  SFAS 160 establishes
      accounting and reporting standards for the noncontrolling interest in a
      subsidiary and for the deconsolidation of a subsidiary.  SFAS 160
      clarifies that a noncontrolling interest in a subsidiary is an ownership
      interest in the consolidated entity that should be reported as equity in the
      consolidated financial statements and requires retroactive adoption of the
      presentation and disclosure requirements for existing minority interests, of
      which the Company currently has none.  All other requirements of SFAS
      160 shall be applied prospectively.  SFAS 160 is effective for fiscal
      years beginning after December 15, 2008.




**Note
      2. Inventories**




Inventories
                consist of the following (in thousands):
            
            December
                31,
              2007
            
            June
                30,
              2008Food
                and beverages
            
            $
            820
            
            $
            1,689Paper
                products
            
            
            25
            
            
            124Total
                inventories
            
            $
            845
            
            $
            1,813




**Note
      3. Property and Equipment**


Property
        and equipment consists of the following (in thousands):
 December
                  31,
                2007
              
              June
                  30,
                2008Leasehold
                  improvements
              
              $
              2,389
              
              $
              3,120Furniture,
                  fixtures and equipment
              
              
              3,878
              
              
              5,226Vehicles
              
              
              1,156
              
              
              1,373Leased
                  equipment
              
              
              686
              
              
              1,9278,109
              
              
              11,646Less
                  accumulated depreciation and amortization
              
              
              2,644
              
              
              3,645Total
                  property and equipment, net
              
              $
              5,465
              
              $
              8,001





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




9




**Note
      4. Identifiable Intangible Assets**


Identifiable
        intangible assets consist of the following (in thousands):


December
                31,
              2007
            
            June
                30,
              2008Customer
                based intangible assets
            
            $
            6,303
            
            $
            11,754Non-compete
                intangible assets
            
            
            589
            
            
            589Other
                identifiable intangible assets
            
            
            -
            
            
            286,892
            
            
            12,371Less
                accumulated amortization
            
            
            (3,039
            )
            
            (5,858
            )Total
                identifiable intangible assets, net
            
            $
            3,853
            
            $
            6,513





The
      Company recorded amortization expense on intangible assets of $508,000 and
      $1.5
      million, respectively, for the quarterly periods ended June 30, 2007 and 2008,
      and $718,000 and $2.8 million, respectively, for the six month periods ended
      June 30, 2007 and 2008.




**Note
      5. Notes Payable**




Notes
        payable consist of the following (in thousands):
 December
                    31,
                  2007
                
                March
                    31,
                  2008Notes
                    payable, 6% to 25% interest collateralized by vehicles and
                    equipment
                
                $
                141
                
                $
                -Convertible
                    note payable, 8.25% interest, collateralized by substantially
                    all
                    assets
                
                
                759
                
                
                567Notes
                    payable, 7.75% interest, collateralized by certain assets, due
                    April
                    2010
                
                
                418
                
                
                418Note
                    payable, 9.25% interest, due March 2009
                
                
                97
                
                
                60Note
                    payable, 8.0% interest, due October 2009
                
                
                54
                
                
                39Notes
                    payable, 18% interest, due May 2009
                
                
                500
                
                
                400Notes
                    payable, 10.5% interest, due December 2009
                
                
                549
                
                
                550Notes
                    payable, no interest, monthly straight-line payment
                
                
                -
                
                
                178Note
                    payable, 5% (prime rate) interest, due November 2009
                
                
                -
                
                
                950Total
                    notes payable
                
                
                2,518
                
                
                3,162Less:
                    current portion of notes payable
                
                
                (1,474
                )
                
                (1,410
                )Notes
                    payable, net of current portion
                
                $
                1,044
                
                $
                1,752





The
      Company has a borrowing agreement with a vendor pursuant to which the Company
      has outstanding borrowings of approximately $567,000 as of June 30, 2008. This
      term loan requires monthly payments of interest at prime rate plus 1% (8.25%
      at
      December 31, 2007 and 6.00% at June 30, 2008), and provides for thirty-six
      equal
      monthly payments and a final maturity date in September 2010. The note is
      collateralized by a pledge of Company assets.





In
      December 2007, the proceeds from the issuance of two separate promissory notes
      payable in the amounts of $258,500 and $291,500 were used to pay off a prior
      note payable in the amount of $550,000. Each bears interest at 10.5% per annum
      and both are due in December, 2009. The holder of each note can elect to require
      payment in full in December, 2008.




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 were due in May, 2008. Two of the
      promissory notes totaling $350,000 were replaced pursuant to promissory notes
      payable of $200,000 each bearing interest at 12% per annum, both of which are
      due in May 2009. The third promissory note in the amount of $150,000 was paid
      off in May 2008.




10




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 in March, 2009 and October, 2010,
      respectively.





In
      May
      2008, as part of an asset purchase agreement, the Company issued the seller
      a
      promissory note in the amount of $950,000, bearing interest at prime rate (5.00%
      at June 30, 2008), payable quarterly and due in November 2009.





Future
      minimum principal payments on notes payable at June 30, 2008 are as follows
      (in
      thousands):





One
                year (7/2008 - 6/2009)
            
            $
            1,410Two
                years (7/2009 - 6/2010)
            
            
            1,689Three
                years (7/2010 - 6/2011)
            
            
            63Total
            
            $
            3,162




**Note
      6. Stockholders’ Equity**





Authorized
      shares - The
      Company 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. During
      the period ended June 30, 2008, the Company issued a convertible instrument
      in
      exchange for $5.0 million which allows its holder to receive shares of the
      Company’s common stock, the number of which will be determined according to a
      formula specified in such instrument, to occur on or before March 2010. See
      Note
      9, “Subscription Ageement” for more details.





Warrants - During
      the six months ended June 30, 2008, in conjunction with various debt and equity
      financing related agreements and related issuance 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 an exercise price of $2.50 and $3.00 per
      share for approximately 4.9 million and 625,000 shares, respectively. As of
      June
      30, 2008, there were a total of 13.0 million warrants outstanding as
      follows:





**Exercise
                Price**
            
            **Number
                of warrants**$
                1.38
            
            
            66,6291.68
            
            
            2,151,9862.10
            
            
            2,229,4302.50
            
            
            7,938,5633.00
            
            
            625,000Total
            
            
            13,011,608





Stock
      options - From
      time to time, the Company grants to its directors, officers, employees and
      consultants options to purchase shares of the Company’s common stock. The
      Company accounts for its share-based compensation under the provisions of FAS
      123R. Options have a term of 10 years from the date of grant, with exercise
      prices at no less than the price of a share of the Company’s common stock on the
      date of grant. The Company uses the Black-Scholes option pricing model to
      estimate the fair value of its stock options on the date of grant. Fair value
      determination using this model is affected by the Company’s stock price on the
      date of grant as well as the expected life of the award, expected stock price
      volatility over the term of the award and actual and projected exercise
      behaviors. FAS 123R requires that the Company recognize compensation expense
      for
      only the portion of options that are expected to vest. Therefore, management
      applies an estimated forfeiture rate for projected future employee turnover
      rates. The estimated forfeiture rate is approximately 12%. If the actual number
      of forfeitures differs from those estimated by management, additional
      adjustments to compensation expense may be required in future periods. The
      Company’s stock price volatility, option lives and expected forfeiture rates
      involve management’s best estimates at the time of such determination, all of
      which impact the fair value of the option calculated under the Black-Scholes
      methodology and, ultimately, the expense that will be recognized over the life
      of the option. The Company typically issues stock options with a four-year
      vesting period (defined by FAS 123R as the requisite service period). The
      Company amortizes stock compensation cost ratably over the requisite service
      period.




11




Although
      the fair value of share-based awards is determined in accordance with FAS 123R
      and SAB 107, the Black-Scholes option pricing model requires the input of highly
      subjective assumptions, and other reasonable assumptions could provide different
      results. The weighted average fair value of stock options granted during the
      quarters ended June 30, 2007 and 2008 was approximately $1.11 and $0.63 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 5.0% and 3.1 %, respectively; and
      estimated lives of 5 years.





Compensation
      expense recognized for stock options and restricted stock approximated $77,000
      and $177,000, respectively, for the three months ended June 30, 2007 and 2008,
      and $96,000 and $292,000 for the six months ended June 30, 2007 and 2008,
      respectively. As of June 30, 2008, there was approximately $2.2 million of
      unrecognized compensation cost related to unvested stock options and restricted
      stock, which is expected to be recognized as expense over a period of
      approximately 3 years. The following table summarizes activity for stock options
      over the first six months of 2008:




**Options**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**
            
            **Weighted**
              **Average**
              **Remaining**
              **Contractual**
              **Term**
            
            **Aggregate**
              **Intrinsic**
              **Value**Outstanding
                at December 31, 2007
            
            
            3,050,938
            
            $
            1.50Grants
            
            
            2,439,730
            
            
            1.38Cancellations
            
            
            (457,369
            )
            
            2.10Outstanding
                at June 30, 2008
            
            
            5,033,299
            
            $
            1.39
            
            
            9.1
                years
            
            $
            376,000Exercisable
                at June 30, 2008
            
            
            1,121,775
            
            $
            1.14
            
            
            8.5
                years
            
            $
            300,000Available
                for grant at June 30, 2008
            
            
            2,269,794





The
      aggregate intrinsic value in the table above represents the total pretax
      intrinsic value for all “in-the-money” options (i.e., the difference between the
      Company’s closing stock price on the last trading day of its second quarter of
      2008 and the exercise price, multiplied by the number of shares) that would
      have
      been received by the option holders had all option holders exercised their
      options on June 30, 2008. Aggregate intrinsic value changes, based on the fair
      market value of the Company’s stock on a daily basis. The intrinsic value of
      stock options outstanding and exercisable at June 30, 2008 is based on the
      closing price for the Company’s common stock as reported by the OTCBB of $1.10
      per share.





Additional
      information regarding stock options outstanding as of June 30, 2008, is as
      follows:





**Outstanding
                Options**
            
            **Exercisable
                Options****Range
                of**
              **Exercise
                Prices**
              **Per
                Share**
            
            **Number**
              **Outstanding**
            
            **Weighted**
              **Average**
              **Remaining**
              **Life
                (Years)**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**
            
            **Number**
              **Exercisable**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**$
                0.17
            
            
            307,385
            
            
            7.7
            
            $
            0.17
            
            
            274,239
            
            $
            0.17$
                0.34
            
            
            118,628
            
            
            8.0
            
            $
            0.34
            
            
            59,314
            
            $
            0.34$
                1.30 - $ 1.38
            
            
            2,805,674
            
            
            9.2
            
            $
            1.38
            
            
            442,530
            
            $
            1.38$
                1.40 - $ 1.48
            
            
            1,090,511
            
            
            9.5
            
            $
            1.43
            
            
            211,058
            
            $
            1.41$
                1.60 - $ 1.92
            
            
            249,500
            
            
            9.2
            
            $
            1.82
            
            
            -
            
            $
            -$
                2.23
            
            
            461,601
            
            
            8.9
            
            $
            2.23
            
            
            134,634
            
            $
            2.23$
                0.17 - $ 2.23
            
            
            5,033,299
            
            
            9.1
            
            $
            1.38
            
            
            1,121,775
            
            $
            1.14




12




**Note
      7. Business Acquisitions**




On
      May
      14, 2008, pursuant to terms an asset purchase agreement, the Company acquired
      for $250,000
      cash, shares of Company’s common stock having a fair value of $500,000 and
      another $950,000 due in six quarterly installments beginning August 14, 2008,
      all furniture, fixtures, equipment, customer lists, trade names and leasehold
      improvements used in connection with a retail business operating three stores
      in
      Seattle, Washington. The Company also entered into a consulting agreement with
      the seller wherein that individual will provide consulting services to the
      Company for a one year period, pursuant to which, among other things, the
      Company will pay monthly fees totaling $100,000 over the course of a year.
      The
      Company assumed operating leases for the three locations, as well as various
      equipment leases and financing agreements. The total purchase price of
      approximately $1.8 million has been allocated to assets acquired based on
      estimated fair values, which will result in the majority being allocated to
      customer based identifiable intangible assets, which will be amortized using
      an
      accelerated amortization method over a 16-month period and is summarized as
      follows (in thousands):





Furniture,
                fixtures, equipment and vehicles
            
            $
            105Customer
                based intangible assets
            
            
            1,731Total
            
            $
            1,836





On
      May
      29, 2008, the Company entered into a purchase and sale of assets agreement
      whereby it purchased substantially all of the assets of High Noon Holdings,
      which owned and operated four cafés in the Washington D.C. metropolitan area.
      Under the terms of the agreement, the total purchase price was $3.9 million,
      of
      which $3.5 million was paid in cash at closing and $250,000 was satisfied by
      the
      issuance of 198,413 shares of the Company’s common stock. The Company
      assumed operating leases for the four locations, as well as various equipment
      leases and financing agreements. The total purchase price has been allocated
      to
      assets acquired based on estimated fair values, which resulted in the majority
      being allocated to trade names and customer-based intangible assets, which
      will
      be amortized using an accelerated amortization method over a 16-month period
      and
      is summarized as follows (in thousands):





Furniture,
                fixtures and equipment
            
            $
            186Customer
                based intangible assets
            
            
            3,721Total
            
            $
            3,907




**Note
      8. 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 rent credit. The Company also leases certain point-of-sale computer
      hardware and software pursuant to capital leases. At June 30, 2008, minimum
      future annual lease obligations are as follows (in thousands):


Operating
                Leases
              
              Capital
                Leases
              
              Total1
                  year (July 2008 - June 2009)
              
              $
              1,761
              
              $
              980
              
              $
              2,7412
                  years (July 2009 - June 2010)
              
              
              1,519
              
              
              634
              
              
              2,1533
                  years (July 2010 - June 2011)
              
              
              1,306
              
              
              507
              
              
              1,8134
                  years (July 2011 - June 2012)
              
              
              980
              
              
              198
              
              
              1,1785
                  years and thereafter (July 2012 and beyond)
              
              
              2,181
              
              
              65
              
              
              2,2467,747
              
              
              2,384
              
              
              10,131Less
                  amounts representing interest
              
              
              -
              
              
              (357
              )
              
              (357
              )Total
                  lease obligations
              
              $
              7,747
              
              $
              2,027
              
              $
              9,774




13




On
      January 8, 2008, Esther Sanchez, a former employee of Organic To Go, Inc.,
      the
      Company’s wholly owned subsidiary, brought suit against the Company, 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. The
      Company’s employment practices liability insurer has agreed to provide a defense
      on its behalf, subject to a reservation of rights letter and the terms and
      conditions of its insurance policy.





The
      Company is 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 the
      Company’s retail locations in San Diego, California. In connection with the
      matter, four subcontractors/suppliers have commenced actions against the
      Company, 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. The Company is
      not a party to any other material legal proceedings other than those disclosed
      above, nor is it aware of any circumstance that may reasonably lead a third
      party to initiate material legal proceedings against it at this
      time.




**Note
      9. Subscription Agreement**





On
      June
      1, 2008, the Company entered into an agreement with W. Health L.P., relating
      to
      the sale of a $5.0 million convertible instrument and a warrant to purchase
      625,000 shares of the Company’s common stock. The instrument is convertible into
      shares of the Company’s common stock at the earlier of the maturity date, which
      is March 2010, or the date at which the Company’s stock has traded for a period
      of 60 consecutive days at a price equal to or greater than $3.00 per share.
      The
      agreement provides the Company the option to sell an additional $5.0 million
      in
      convertible instruments and warrants to W. Health L.P. for a period of nine
      months following the closing. For accounting purposes, this $5.0 million has
      been recorded as a stock subscription.





14


**Item
      2. Management’s Discussion and Analysis or Plan of
      Operation**





*The
      following discussion and analysis of the results of operations and financial
      condition of Organic To Go Food Corporation for the periods ended June 30,
      2007
      and 2008 should be read in conjunction with our financial statements and the
      notes to those financial statements that are included elsewhere in this Form
      10-Q. 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 are the nation’s first fast casual café chain to be certified as an
      organic retailer, with our food available in more than 170 locations. We provide
      convenient cafés which prepare and serve fresh custom-made and “grab and go”
breakfast, lunch and dinner foods and beverages prepared using organic
      ingredients, whenever possible. We also distribute our products through
      delivery, catering and wholesale accounts. Our company has grown through both
      organic expansion and acquisitions. 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. During the second quarter of 2008, we acquired
      the assets of a retail and catering operation in Seattle, Washington, adding
      three additional retail locations in downtown Seattle. Also during the second
      quarter of 2008, we gained our first foothold on the East coast of the United
      States with the acquisition of the assets of a business with four catering
      and
      retail locations in Washington, D.C. As of June 30, 2008, we operated nine
      stores in Washington, nineteen stores in California, and four stores in
      Washington, D.C., with central kitchens in Seattle, Los Angeles, San Diego
      and
      Washington, D.C. In addition to the thirty-two cafés, our food is available in
      more than 120 wholesale locations, 14 universities and 11 locations at Los
      Angeles International Airport.





Management
      believes we have the opportunity to capture increasing market share in all
      three
      of our business channels: Retail Cafes, Delivery and Catering, and Wholesale
      of
      our “grab & go” sandwiches, wraps and salads, 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 cafés, catering customers
      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, business development and growth through
      debt and equity financings. In this regard, during the first six months of
      2008,
      we closed two private placement offerings, raising a total of approximately
      $12.0 million. The proceeds are intended to be used for the expansion of the
      Company and working capital needs. 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 in this transaction were
      approximately $2.0 million. Additionally, 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 be exercised
      only under certain circumstances. In June 2008, we issued a stock subscription
      in exchange for $5.0 million which is convertible into shares of the Company’s
      common stock on or before March 2010. 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
      GAAP. 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-Q. 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 GAAP, 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.





*Intangible
      Assets -* In
      connection with our 2006, 2007 and 2008 asset acquisitions, 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 based 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 estimated a useful life of nearly 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.





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




*Stock-based
      Compensation -* We
      account for share-based compensation under the provisions of FAS 123R, which
      we
      adopted effective beginning January 1, 2006 using the modified prospective
      method.





**Results
      of Operations**





*Sales
      -* Sales
      for
      the second quarter of 2008 increased approximately 56%, to $6.0 million, as
      compared with $3.9 million in the first quarter of 2007. Sales for the six
      months ended June 30, 2008 increased approximately 50% to $11.2 million,
      compared to $7.5 million for the six months ended June 30, 2007. Retail café
sales were $2.7 million during the quarter ended June 30, 2008, an increase
      of
      approximately 84% over $1.5 million during the comparable prior year period.
      Café sales comprised 45% of total sales in the 2008 quarter compared to 38% of
      total sales in the second quarter of 2007. Café sales for the six months ended
      June 30, 2008 and 2007 were $5.0 million and $3.0 million, respectively, and
      comprised 45% and 40% of total sales. The increases in year-over-year retail
      sales for both the quarter and six month periods is primarily a result of the
      addition of eleven Retail Cafés that were opened or acquired from July through
      October in 2007, three more that were opened during the first quarter of 2008
      and seven that were opened during the second quarter of 2008. We ended the
      second quarter of 2008 with thirty-two Retail Cafés as compared with thirteen at
      the end of the same period in 2007.




16




Delivery
      and Catering sales were $2.6 million for the second quarter of 2008, an increase
      of over $713,000, or approximately 37%, over $1.9 million during the second
      quarter of 2007. Delivery and Catering sales comprised 44% of total sales in
      the
      second quarter of 2008 as compared with 50% for the same period of the prior
      year. Delivery and catering sales for the six months ended June 30, 2008 and
      2007 were $4.6 million and $3.6 million, respectively, and comprised 40% and
      45%
      of total sales. In addition to increased business volume in all delivery and
      catering operations, the increase in delivery and catering sales in 2008 is
      attributable to the mid- to late-2007 fiscal year and second quarter 2008
      acquisitions of catering businesses in Seattle, San Diego and Washington,
      D.C.





Wholesale
      sales were $692,000 in the quarter ending June 30, 2008, an increase of 46%,
      as
      compared with $476,000 in the comparable quarter of 2007. Wholesale sales
      comprised 12% of total sales in the 2008 period as compared with 12% in the
      comparable 2007 period. Wholesale sales for the six months ended June 30, 2008
      and 2007 were $1.6 million and $927,000, respectively, and comprised 12% and
      14%
      of total sales. In addition to increased sales efforts in all markets, the
      increase in wholesale sales is due to our entrance into the San Diego market
      in
      mid-2007. At the end of June 2008, we had just entered the Washington, D.C.
      market and had not realized any wholesale sales during the quarter. We
      anticipate launching wholesale sales in Washington, D.C. by the end of the
      third
      quarter of 2008.





*Cost
      of Sales -* Cost
      of
      sales includes the cost of food and paper products. Cost of sales for the second
      quarter of 2008 increased 32% as compared to a 56% increase in sales, to nearly
      $2.4 million, as compared with $1.8 million for the second quarter of 2007.
      Cost of sales for the quarter ended June 30, 2008 was approximately 40% as
      a
      percent of sales as compared with 47% during the comparable prior year
      period. For the six month period ending June 30, 2008, cost of sales were $4.3
      million, or 39% of sales, as compared to $3.6 million, or 49% of sales, for
      the
      comparable 2007 period. In the second half of 2007, we were able to negotiate
      lower costs on our food and paper products and reduce the amount of food waste
      and spoilage, which has brought positive changes to our cost of sales in 2008
      when compared to the prior year period. In addition, our increased volume with
      our vendors has resulted in more favorable pricing in 2008.





*Gross
      Profit -* Gross
      profit increased approximately 77%, to $3.6 million for the second quarter
      in
      2008, as compared with $2.1 million for the second quarter in 2007. Gross profit
      for our 2008 period was approximately 61% of sales as compared with 53%
      during the comparable 2007 period. Gross profit for the six months ended June
      30, 2008, was $6.8 million, or 61% of sales, and $3.8 million, or 51% of sales,
      for the comparable period in 2007. 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 2007, which has improved
      our
      gross margin. Our increased volume with our vendors that resulted in more
      favorable product pricing in 2008 also contributed to the improved gross
      margin.





*Operating
      Expenses -* Operating
      expenses for the second quarter of 2008 were $5.1 million, as compared with
      $3.9 million for the comparable 2007 period. For the six month period ended
      June
      30, 2008, operating expenses were $9.3 million, or 83% of sales, as compared
      to
      $7.4 million, or 99% of sales, for the comparable 2007 period. Operating
      expenses are comprised primarily of labor, and, to a lesser extent, occupancy,
      utilities, and selling, general and administrative expenses. Operating expenses
      increased in 2008 as compared with 2007, primarily due to increased labor
      and related costs as a result of continued growth since the prior year periods,
      including the acquisition of four catering businesses, increasing the number
      of
      Retail Cafés from thirteen as of June 30, 2007 to thirty-two as of June 30,
      2008, and preparing for future growth, both in facilities leases and with the
      hiring of members to the executive management team.





*Depreciation
      and Amortization -* Depreciation
      and amortization expense for the second quarter and first six months of 2008
      increased to $2.1 million and $3.8 million, respectively, as compared with
      $700,000 and $1.1 million during the comparable 2007 periods. This increase
      was
      due primarily to amortization of identifiable intangible assets acquired in
      the
      catering and retail business in the latter part of 2006, throughout 2007 and
      the
      second quarter of 2008. Depreciation and amortization for the six month periods
      ended June 30, 2007 and 2008 were approximately 15% and 34% of sales,
      respectively. We amortize identifiable intangibles over a relatively short
      period, generally no more than two years.




17




*Loss
      from Operations -* Loss
      from
      operations during the second quarter of 2008 increased to approximately $3.6
      million as compared with $2.6 million during the second quarter of 2007.
      For the six months ended June 30, 2008, the loss from operations was $6.3
      million as compared with a loss of $4.7 million for the first six months of
      2007. The increase in loss from operations over the prior year period is the
      result of an increase in gross profit of $1.6 million for the quarter and $3.0
      million for the six month period, being offset by a $2.6 million and $4.7
      million increase in total operating, depreciation and amortization expenses
      for
      the quarterly and six month periods, respectively.





*Interest
      and Other Expense, Net -* Net
      interest and other expense for the quarter ended June 30, 2008 decreased to
      $42,000 as compared with $82,000 for the quarter ended June 30, 2007. The
      decrease is primarily due to the interest income generated during the second
      quarter of 2008. For the six months ended June 30, 2007 and 2008, net interest
      and other expense was $429,000 and $107,000, respectively. The decrease was
      primarily due to an increase in total 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 the second quarter of 2008 increased to $3.6 million, or $(0.10) basic and
      diluted net loss per share, as compared with $2.6 million, or $(0.13) basic
      and diluted net loss per share in the second quarter of 2007. Net loss for
      the
      six months ended June 30, 2008 was $6.4 million or $(0.19) basic and diluted
      net
      loss per share, as compared with $5.1 million or $(0.32) basic and diluted
      net
      loss per share in the six months ended June 30, 2007.





**Liquidity
      and Capital Resources**





As
      planned, we have funded operations through financing activities consisting
      primarily of private placements of debt and equity securities. In January and
      February 2008, gross proceeds of approximately $12.0 million were received
      from
      the sales of equity securities, and in June 2008 we received $5.0 million from
      the sale of convertible instruments. We intend to continue to engage 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 $4.7 million during the first
      six
      months of 2007 and $3.7 million in the comparable 2008 period. The decrease
      in
      cash used by operating activities was due primarily to an increase in net loss
      offset by an adjustment for depreciation and amortization expense, most of
      which
      represented amortization of identifiable intangible assets.





Net
      cash
      used in investing activities was approximately $1.9 million and $5.5 million
      for
      the six month periods ended June 30, 2007 and 2008, respectively. Uses of cash
      flow for investing activities in both periods was primarily related to capital
      expenditures associated with business expansion, the acquisition of store,
      kitchen fixtures and equipment, and leasehold improvements to existing locations
      and locations obtained through acquisitions.




Net
      cash
      provided by financing activities was approximately $12.1 million and $14.7
      million for the six months ended June, 2007 and 2008, respectively. The increase
      of net cash provided during the first six months of 2008 was due to an increase
      in proceeds, net of issuance costs, from the issuance of common stock in private
      placements and proceeds from the issuance of a subscription agreement during
      the
      second quarter of 2008.





**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk**





Not
      applicable.





**Item
      4. Controls and Procedures**





(a) 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 Securities and
      Exchange Commission under the Securities Exchange Act of 1934, as amended)
      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.




18




(b) Changes
      in Internal Control Over Financial Reporting





During
      the fiscal quarter ended June 30, 2008, 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.





**PART
      II. OTHER INFORMATION**





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





We
      held
      our Annual Meeting on May 16, 2008. At the meeting, stockholders voted on the
      following actions:





1.
      Election of Directors.


**Name**
              
              **For**
              
              **Withheld**Jason
                  Brown
              
              
              21,313,883
              
              
              2,695,972Dave
                  Smith
              
              
              23,935,716
              
              
              74,139Peter
                  Meehan
              
              
              23,998,847
              
              
              11,008Roy
                  Bingham
              
              
              23,998,746
              
              
              11,109Douglas
                  Lioon
              
              
              23,998,747
              
              
              11,108S.M.
                  “Hass” Hassan
              
              
              23,998,747
              
              
              11,108Gunnar
                  Weikert
              
              
              23,998,847
              
              
              11,008





The
      seven
      nominees who received the highest number of votes (all of the above individuals)
      were elected to the Board of Directors and will serve as directors until our
      next annual meeting and until their successor is elected and qualified.





2.
      Ratification of the appointment of Rose, Snyder & Jacobs as our independent
      registered public accounting firm for the fiscal year ending December 31, 2008.




For
            
            
            23,974,808Against
            
            
            22,314Abstain
            
            
            12,733Non-Votes
            
            
            -





The
      proposal was approved.





3.
      Ratification of an amendment to our 2007 Equity Participation Plan to increase
      the number of shares of common stock authorized for issuance under the plan
      by
      2,000,000 shares.




For
            
            
            17,876,938Against
            
            
            3,140,149Abstain
            
            
            29,324Non-Votes
            
            
            2,963,444





The
      proposal was approved.




19




**Item
      6. Exhibits**





(a) Exhibits .


31.1
              Certification
                  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 200231.2
              Certification
                  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 200232.1
              Certification
                  of Chief Executive Officer and Chief Financial Officer under Section
                  906
                  of the Sarbanes-Oxley Act of 2002
  20





**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly authorized.


ORGANIC
                  TO GO FOOD CORPORATIONDated:
                  August 14, 2008
              /s/
                  Michael GatsMichael
                  Gats, Chief Financial Officer(Principal
                  Financial and Accounting Officer)
  21