Odimo Inc.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K


x		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007


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

For the transition period from to

Commission file number: 000-51161

ODIMO INCORPORATED

(Exact name of registrant as specified in its charter)


Delaware		22-3607813

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)


14051 N.W. 14th Street, Sunrise, Florida		33323

(Address of principal executive offices)		(Zip Code)

(954) 993-4703
(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock, par value $0.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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

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. (Check one):

PART I

FORWARD-LOOKING STATEMENTS

This report contains various forward-looking statements regarding our business, financial condition, results of operations and future plans and projects. Forward-looking statements discuss matters that are not historical facts and can be identified by the use of words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “projects,” “can,” “could,” “may,” “will,” “would” or similar expressions. In this report, for example, we make forward-looking statements regarding, among other things, our expectations about our ability to continue as a going concern.

Although these forward-looking statements reflect the good faith judgment of our management, such statements can only be based upon facts and factors currently known to us. Forward-looking statements are inherently subject to risks and uncertainties, many of which are beyond our control. As a result, our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth below under the caption “Risk Factors.” For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You should not unduly rely on these forward-looking statements, which speak only as of the date on which they were made. They give our expectations regarding the future but are not guarantees. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.

ITEM 1. BUSINESS

Non-Operating Shell Company

We are a non operating shell corporation. We intend to effect a merger, acquisition or other business combination with an operating company by using a combination of capital stock, cash on hand, or other funding sources, if available. We intend to devote substantially all of our time to identifying potential merger or acquisition candidates. There can be no assurances that we will enter into such a transaction in the near future or on terms favorable to us, or that other funding sources will be available.

Cessation of Online Retailing Business of the Company

Prior to May 2006, we were an online retailer of high quality diamonds and fine jewelry, current season brand name watches and luxury goods through three websites, www.diamond.com, www.worldofwatches.com and www.ashford.com. In May 2006, we sold assets related to our online diamond and jewelry business operations, including our domain name www.diamond.com. In December 2006, we sold assets related to our online watch business operations, including our domain name www.worldofwatches.com. In April 2007, we sold our domain name www.ashford.com and related intellectual property rights, product images and other intangibles.

Other than Amerisa Kornblum, our President and Chief Executive Officer, who, commencing in 2008, serves the Company for no compensation, we have no full time employees.

Going Concern

These conditions raise substantial doubt about our ability to continue as a going concern. Further, the registered public accounting firm’s report states that the financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As of March 20, 2008 we have borrowed from Alan Lipton, our Chairman of the Board of Directors the net sum of $525,000. We issued to Mr. Lipton an 8% promissory note in exchange for the funds (the “Note”). Under the Note, $525,000 plus all interest is repayable by the Company upon the earlier to occur of (a) January 16, 2010; or (ii) the occurrence of a change in control of the Company. Our repayment obligation under the Note is secured by all of the Company’s assets. We used the proceeds of the loans from Mr. Lipton for working capital purposes, including payment of our existing liabilities. On February 4, 2008 we sold 714,284 newly issued shares of our common stock, par value $.001, to three investors for a gross purchase price of $100,000. An entity controlled by Alan Lipton, our Chairman of the Board and Amerisa Kornblum, our President and Chief Financial Officer each purchased 178,571 of these shares. There were no underwriting discounts or commissions paid in connection with the sale of these shares.

We may seek to raise additional capital through the issuance of equity or debt, including loans from related parties, to acquire sufficient liquidity to satisfy our future liabilities. Such additional capital may not be available timely or on terms acceptable to us, if at all. Our plans to repay our liabilities as they become due may be impacted adversely by our inability to have sufficient liquid assets to satisfy our liabilities.

Available Information

We make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. All of our filings with the SEC may be obtained at the SEC’s Public Reference Room. The SEC maintains an Internet site that contains reports, proxy and other information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.

ITEM 1A. RISK FACTORS

Some of the statements in this report and in particular, statements found in Management’s Discussion and Analysis of Financial Condition and Results of Operations, that are not historical in nature may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are often identified by the words “will,” “should,” “anticipate,” “believe,” “expect,” “intend,” “estimate,” “hope,” or similar expressions. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties. There are important factors that could cause actual results to differ materially from those in forward-looking statements, many of which are beyond our control. These factors, risks and uncertainties include, but are not limited to, the factors described below.

Our actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, and accordingly, we can give no assurances that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on our results of operations or financial condition. In view of these uncertainties, investors are cautioned not to place undue reliance on these forward-looking statements. We expressly disclaim any obligation to publicly revise any forward-looking statements that have been made to reflect the occurrence of events after the date hereof.

You should carefully consider the risks and uncertainties described below, together with all other information included in this report, including the consolidated financial statements and the related notes herein, as well as in our other public filings, before making any investment decision regarding our stock. If any of the following risks actually occurs, our business, financial condition, results of operations and future prospects would likely be materially and adversely affected. In that event, the market price of our stock could decline and you could lose all or part of your investment.

We are a non-operating shell company.

We are a public shell company with no operations and we are seeking to effect a merger, acquisition or other business combination with an operating company by using a combination of capital stock, cash on hand, or other funding sources, if available. There can be no assurances that we will be successful in identifying acquisition candidates or that if identified we will be able to consummate a transaction on terms acceptable to us.

While we anticipate having sufficient liquid assets to satisfy our liabilities, if we do not have sufficient liquid assets to satisfy our liabilities we will seek to raise additional capital through the issuance of equity or debt, including loans from related parties. Such additional capital may not be available timely or on terms acceptable to us, if at all. Our plans to repay our liabilities as they become due may be impacted adversely by our inability to have sufficient liquid assets to satisfy our liabilities.

We do not intend to pay dividends on our common stock, and, consequently, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.

We have never declared or paid any cash dividends on our common stock and do not intend to pay dividends on our common stock for the foreseeable future. We intend to invest our future earnings, if any, to fund our growth.

Our common stock is currently quoted for trading on the Over the Counter Bulletin Board which may adversely impact the liquidity of our shares and reduce the value of an investment in our stock.

Effective August 14, 2006, our common stock was delisted from quotation on the Nasdaq Global Market (formerly known as the Nasdaq National Market) and on the same day our common stock became quoted on the Over-The-Counter Market on the NASD Electronic Bulletin Board (OTCBB). Our common stock has historically been sporadically or “thinly traded” (meaning that the number of persons interested in purchasing our shares at or near ask prices at any given time may be relatively small or non-existent) and no assurances can be given that a broader or more active public trading market for our common stock will develop or be sustained in the future or that current trading levels will be sustained. You may be unable to sell at or near ask prices or at all if you desire to liquidate your shares. This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price.

Because our common stock is considered a “penny stock” any investment in our common stock is considered to be a high-risk investment and is subject to restrictions on marketability.

Our common stock is currently traded on the Over-The-Counter Bulletin Board (“OTC Bulletin Board”) and is considered a “penny stock.” The OTC Bulletin Board is generally regarded as a less efficient trading market than the NASDAQ Market.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. The broker-dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer and any salesperson in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock.

Since our common stock is subject to the regulations applicable to penny stocks, the market liquidity for our common stock could be adversely affected because the regulations on penny stocks could limit the ability of broker-dealers to sell our common stock and thus your ability to sell our common stock in the secondary market. There is no assurance our common stock will be quoted on NASDAQ or the NYSE or listed on any exchange, even if eligible.

Our stock price has been and may continue to be volatile.

The market price for our common stock has been and is likely to continue to be volatile. The market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control.

Future sales of our common stock may cause our stock price to decline.

A small number of our current stockholders hold a substantial number of shares of our common stock. Shares held by our officers, directors and principal stockholders are considered “restricted securities” within the meaning of Rule 144 under the Securities Act and, are eligible for resale subject to the volume, manner of sale, holding period and other limitations of Rule 144.

Sales of a substantial number of shares, or the expectation that such sale may occur, could significantly reduce the market price of our common stock. Moreover, the holders of a substantial number of our shares of common stock have rights to require us to file registration statements to permit the resale of their shares in the public market or to include their shares in registration statements that we may file for ourselves or other stockholders. We also have registered all common stock that we may issue under our stock incentive plan. Accordingly, these shares, when registered, can be freely sold in the public market upon issuance, subject to restrictions under the securities laws. If any of these stockholders cause a large number of securities to be sold in the public market, the sales could reduce the trading price of our common stock. These sales also could impede our ability to raise future capital.

Anti-takeover provisions in our organizational documents and Delaware law may discourage or prevent a change in control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely and prevent attempts by our stockholders to replace or remove our current management.

Our restated certificate of incorporation and restated bylaws contain provisions that may delay or prevent a change in control, discourage bids at a premium over the market price of our common stock and adversely affect the market price of our common stock and the voting and other rights of the holders of our common stock. These provisions include:

	•		Our board of directors has the exclusive right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

	•		Our stockholders may not act by written consent. As a result, a holder or holders controlling a majority of our capital stock would be able to take certain actions only at a stockholders’ meeting;

	•		No stockholder may call a special meeting of stockholders. This may make it more difficult for stockholders to take certain actions;

	•		Our stockholders may not remove a director without cause, and our certificate of incorporation provides for a classified board of directors with staggered, three-year terms. As a result, it could take up to three years for stockholders to replace the entire board;

	•		Our certificate of incorporation does not provide for cumulative voting in the election of directors. This limits the ability of minority stockholders to elect director candidates;

	•		Stockholders must provide advance notice to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting. These provisions may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; and

	•		Our board of directors may issue, without stockholder approval, shares of undesignated preferred stock. The ability to authorize undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.

As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under Delaware law, a corporation may not engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction. Our board of directors could rely on Delaware law to prevent or delay an acquisition of us.

A significant portion of our voting power is concentrated and, as a result, our other stockholders’ ability to influence corporate matters may be limited.

Elao, LLC, a limited liability company controlled by Alan Lipton and a trust established for the benefit of Mr. Lipton’s minor child together own approximately 42.24% of our outstanding voting stock. Accordingly, Mr. Lipton will have significant influence over the management and affairs of Odimo and over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of Odimo or its assets, for the foreseeable future. This concentrated control limits the ability of our other stockholders to influence corporate matters and, as a result, Mr. Lipton may take actions that Odimo’s other stockholders do not view as beneficial.

Our ability to use net operating loss carryforwards may be limited.

Section 382 of the Internal Revenue Code generally imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in its stock ownership. We have preliminarily reviewed the applicability of the annual limitations imposed by Section 382 caused by previous changes in our stock ownership and believe the availability of our net operating loss carryforwards is substantially limited. There can be no assurance that we will be able to utilize any net operating loss carryforwards in the future. This limitation may adversely affect our ability to attract certain business combination candidates and/or consummate a business combination with an operating business.

Our limited resources make it impracticable to conduct a complete and exhaustive search for a business combination.

Our limited resources and the lack of extensive management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a business opportunity before we commit our resources thereto. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if we had more funds available to us, would be desirable. We will be particularly dependent in making decisions upon information provided by the promoter, owner, sponsor, or others associated with the business opportunity seeking our participation.

ITEM 2. PROPERTIES

Our corporate office is located in Sunrise, Florida, where we lease approximately 200 square feet pursuant to a month to month agreement. We pay approximately $200 per month for this office space.

ITEM 3. LEGAL PROCEEDINGS

In January 2006, we were served with a complaint which was a consolidation of two previously served complaints. The consolidated complaint named the Company, Alan Lipton, the former Chief Executive Officer and President and Chairman of the Board of Directors and Amerisa Kornblum, the Chief Financial Officer as defendants and was pending in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida on behalf of a purported class of purchasers of the Company’s common stock in or traceable to our initial public offering. The complaint generally alleged that the Company and the other defendants violated Sections 11, 12(a) (2) and 15 of the Securities Act of 1933 due to allegedly false and misleading statements in public disclosures in connection with the initial public offering regarding the impact to its operations of advertising expenses. We believed that the lawsuit was without merit and vigorously defend it. On June 6, 2007, Odimo, Alan Lipton and Amerisa Kornblum entered into a Stipulation of Settlement, for the settlement of this litigation. The settlement provided for the payment of $1.25 million by the defendants to a class of purchasers (other than those who timely and validly request exclusion from the class) who purchased Odimo common stock in Odimo’s February 15, 2005 initial public offering through August 15, 2005. All amounts payable by defendants were paid by our insurer. On June 8, 2007 the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida entered its Order Preliminarily Approving Settlement and Providing for Notice which, among other things, certified a class for settlement purposes only and approved preliminarily the settlement, subject to further consideration at a final settlement hearing set for September 25, 2007 (the “Settlement Hearing”). At the Settlement Hearing, the Court determined the proposed settlement was fair, reasonable and adequate and a final order approved the settlement.

In May 2007, we were served with a complaint from a former vendor alleging that we owed to this former vendor approximately $174,000 plus interest on such amount since December 2006, for goods and services provided by this vendor to us, which amount had been accrued in accordance with Generally Accepted Accounting Principles. In December 2007, we settled this lawsuit by paying the former vendor $25,000 and agreeing to be contingently liable for an additional amount equal to the difference between $136,000 and amounts paid to the vendor over a two year period by the entity who purchased from us the domain name www.ashford.com.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock was quoted for trading on the Nasdaq National Market from February 15, 2005 through August 13, 2006 and has been quoted for trading on the OTCBB since August 14, 2006 under the symbol ODMO. Prior to February 15, 2005, there was no public market for our common stock. The following table sets forth the high and low closing sales prices for our common stock as reported on the Nasdaq National Market for the quarterly periods from February 15, 2005 through August 13, 2006 and the reported low bid and high bid per share quotations for our common stock for the quarterly periods since August 14, 2006. The high and low bid prices for the periods indicated reflect inter-dealer prices, without retail markup, markdown or commission and may not represent actual transactions.


	High		Low
First Quarter 2006 (from February 15, 2005)		6.10		2.05
Second Quarter 2006		3.76		1.67
Third Quarter 2006 (through August 13, 2006)		1.45		1.24
Third Quarter 2006 (from August 14, 2006)		1.26		0.75

Fourth Quarter		0.24		0.06
First Quarter 2007		0.29		0.08
Second Quarter 2007		0.30		0.20
Third Quarter 2007		0.20		0.16
Fourth Quarter 2007		0.29		0.11
First Quarter 2008 (through March 25, 2008)		0.16		0.05

The approximate number of holders of record of our common stock as of March 25, 2008 is 39, inclusive of those brokerage firms and/or clearing houses holding shares of common stock for their clientele (with each such brokerage house and/or clearing house being considered as one holder).

Dividend Policy

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

Equity Compensation Plan

The following table details our equity compensation plan as of December 31, 2007:

2007 EQUITY COMPENSATION PLAN INFORMATION

(a)

(b)

(c)

Number of

securities

remaining available

Number of

for future issuance

securities to be

under equity

issued upon

Weighted-average

compensation plan

exercise of

exercise price of

(excluding

outstanding

securities

options, warrants

reflected in

Plan Category

and rights

column (a))

Equity compensation plans approved by security holders

26,000

24.48

533,391

Equity compensation plans not approved by security holders

—

Total

26,000

24.48

533,391

Recent Sales of Unregistered Securities

On February 4, 2008 we sold 714,284 newly issued shares of our common stock, par value $.001, to three investors for a gross purchase price of $100,000. An entity controlled by Alan Lipton, our Chairman of the Board and Amerisa Kornblum, our President and Chief Financial Officer each purchased 178,571 of these shares. There were no underwriting discounts or commissions paid in connection with the sale of these shares. We relied upon the exemption from registration contained in Section 4(2) of the Securities Act of 1933 in making the sale.

Repurchases of Equity Securities

None.

ITEM 6. SELECTED FINANCIAL DATA.

As a Smaller Reporting Company as defined Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item 6.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth previously under the caption “Risk Factors.” This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report.

Overview

All information contained in this report reflects our operations as an online retailer of jewelry, diamonds, watches and luxury goods on www.diamond.com; www.ashford.com; and www. worldofwatches.com through May 11, 2006 and watches and luxury goods on www.worldofwatches.com and www.ashford.com from May 12, 2006 through November 30, 2006 and watches and luxury goods on www.ashford.com from May 12, 2006 through December 31, 2006. We ceased operations as an online retailer at December 31, 2006 and, other than commissions we earned prior to April 2007 which were based on a percentage of gross sales made to visitors to our www.ashford.com homepage who were redirected to websites owned and operated by others, we recorded no net sales or other operating revenue for the year ended December 31, 2007. We do not expect to generate operating revenue until such time as we consummate a business combination with an operating business, if at all. Our historical operating results disclosed in this Report on Form 10-K are not meaningful to our future results.

These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis of Presentation

Total Revenues consists of Net Sales and commissions earned from a third party who hosted our www.ashford.com website during the first quarter 2007.

Net Sales consists of revenue from the sale of our products, net of estimated returns by customers, promotional discounts and, to a much lesser extent, revenue from upgrades to our standard free shipping.

Gross Profit is calculated by subtracting the cost of sales from net sales. Our cost of sales consists of the cost of the products we sell, including inbound freight costs and assembly costs. Our gross profit fluctuated based on several factors, including product acquisition costs, product mix and pricing decisions. Due to the seasonality of our business, our gross profit as a percentage of net sales was typically greater in the fourth quarter. In general, we realized higher gross profit on the sale of our luxury goods, jewelry and watches in comparison to diamonds.

General and Administrative Expenses include payroll and related employee benefits, costs to maintain our websites, professional fees, insurance, rent, travel and other general corporate expenses.

Results of Operations

Comparison of Years Ended December 31, 2007 and 2006

Total Revenue for the years ended December 31, 2007 and 2006 was $14,000 (consisting solely of commissions) and $19.0 million (consisting solely of Net Sales).

Net Sales. Net sales for the years ended December 31, 2007 and 2006 were zero and $19.0 million. The decrease is due to our ceasing operations in 2006.

Gross Profit. Gross profit for the years ended December 31, 2007 and 2006 was zero and $3.1 million.

General and Administrative Expenses. General and administrative expenses for the years ended December 31, 2007 and 2006 were $744,000 and $9.6 million. During 2007, such expenses consisted primarily of executive officer and part time employee compensation totaling approximately $262,000, insurance costs of approximately $140,000, and professional fees amounting to approximately $197,000. We anticipate that our general and administrative expenses will remain low until such time as we effect a merger or other business combination with an operating business, if at all.

Gain on Sale of Assets. In connection with the April 2007 sale of assets related to the sale of our domain name www.ashford.com, we recorded a net gain on sale of assets of $424,000 in the second quarter of 2007.

Interest Expense, Net. Interest expense, net, for the years ended December 31, 2007 and 2006 was $38,000 and $16,000.

Liquidity and Capital Resources

As of December 31, 2007, we had cash of approximately $1,000 and total liabilities of approximately $882,000. On February 4, 2008, we sold 714,284 newly issued shares of common stock, par value $.001, to four investors for a gross purchase price of $100,000, which we are using for working capital.

We intend to continue devoting substantially all of our time to identifying merger or acquisition candidates. In the event we locate an acceptable operating business, we intend to effect the transaction utilizing any combination of our Common Stock, cash on hand, or other funding sources that we reasonably believe are available. However, there can be no assurances that we will be able to consummate a merger or acquisition of an operating business on terms favorable to us, if at all, or that other funding sources will be available.

Discussion of Cash Flows

Net cash used in operating activities for the year ended December 31, 2007 was $1.0 million compared to net cash used in operating activities for the year ended December 31, 2006 of $10.5 million. Included in the net cash used in operating activities for the year ended December 31, 2006 is a $9.2 million reduction in accounts payable and accrued liabilities offset by a $6.9 million decrease in inventory.

Net cash provided by investing activities in the year ended December 31, 2007 was $674,000 compared to net cash provided by investing activities of $6.5 million in the year ended December 31, 2006. Since our inception, our investing activities have consisted primarily of purchases of fixed assets and capital expenditures for our technology systems and software development. Included in net cash provided by investing activities in the year ended December 31, 2006 is $7.2 million of net proceeds from the sale of assets.

Net cash provided by financing activities in the year ended December 31, 2007 was $253,000 as compared to $300,000 of net cash provided by financing activities during the year ended December 31, 2006. Net cash provided by financing activities in 2007 and 2006 consisted of $283,000 and $300,000, respectively, in proceeds from a related party notes payable.

Liquidity Sources

Our current source of liquidity consists of cash on hand. As of December 31, 2007, we had $1,000 of cash on hand compared to $75,000 of cash and cash equivalents (and $ 108,000 of restricted cash pledged as collateral to a credit card processing company) as of December 31, 2006.

Until required for other purposes, our cash and cash equivalents are maintained in deposit accounts or highly liquid investments with original maturities of 90 days or less at the time of purchase.

As of March 20, 2008, we have borrowed from Alan Lipton, our Chairman of the Board of Directors the net sum of $525,000. We issued to Mr. Lipton an 8% promissory note in exchange for the funds (the “Note”). Under the Note, $525,000 plus all interest is repayable by the Company upon the earlier to occur of (a) January 16, 2010; or (ii) the occurrence of a change in control of the Company. Our repayment obligation under the Note is secured by all of the Company’s assets. We used the proceeds of the loans from Mr. Lipton for working capital purposes, including payment of our existing liabilities. On February 4, 2008 we sold 714,284 newly issued shares of our common stock, par value $.001, to three investors for a gross purchase price of $100,000. An entity controlled by Alan Lipton, our Chairman of the Board, and Amerisa Kornblum, our President and Chief Financial Officer each purchased 178,571 of these shares. There were no underwriting discounts or commissions paid in connection with the sale of these shares.

Our independent registered public accounting firm’s report on our financial statements for the fiscal year ended December 31, 2007 includes an explanatory paragraph regarding our ability to continue as a going concern. As shown in our historical financial statements, we have incurred significant recurring net losses and negative cash flows from operations for the past several years and as of December 31, 2007, our financial statements reflect negative working capital and a stockholders’ equity deficiency. These conditions raise substantial doubt about our ability to continue as a going concern. Further, the registered public accounting firm’s report states that the financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Contractual Obligations

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements.

Outstanding Stock Options

As of December 31, 2007, we had outstanding vested options to purchase approximately 26,000 shares of common stock, at a weighted average exercise price of $24.48 per share. We have no outstanding unvested options. The per share value of each share of common stock underlying the vested options, based on the difference between the weighted average exercise price per option and the estimated fair market value of the shares ranges from $0 to $16.25 per share.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to allowances for sales returns, inventories, intangible assets, income taxes, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 1 to our consolidated financial statements included in this report, we believe the policies discussed below are the most critical to understanding our financial position and results of operations.

Revenue Recognition

We recognized revenue from product sales or services rendered when the following four revenue recognition criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the selling price is fixed or determinable and (4) collectibility is reasonably assured.

Product sales, net of promotional discounts, rebates, and return allowances, were recorded when the products were delivered and title passed to customers. We required payment before shipping products, so we estimated receipt of delivery by our customers based on shipping time data provided by our carriers. Retail items sold to customers were made pursuant to a sales contract that provided for transfer of both title and risk of loss upon delivery to the customer. Return allowances, which reduced product revenue by our best estimate of expected product returns, were estimated using historical experience.

Inventories

Inventories, which consisted of products available for sale, were accounted for using the first-in first-out method, and were valued at the lower of cost or market value. This valuation required us to make judgments, based on currently-available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors or liquidations, and expected recoverable values of each disposition category. Based on this evaluation, we recorded a valuation write-down, when needed, to adjust the carrying amount of our inventories to lower of cost or market value.

Goodwill and Other Long-Lived Assets

Our long-lived assets included goodwill and other intangible assets. Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (“SFAS 142”) required that goodwill be tested for impairment on an annual basis and between annual tests in certain circumstances. Application of the goodwill impairment test requires significant judgment to estimate the fair value, including estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value. For 2006 and 2005, we determined that we had one reporting unit. For the year ended December 31, 2005, we recorded an impairment charge of $9.8 million related to the impairment of goodwill.

Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS 144”), required that we record an impairment charge on finite-lived intangibles or long-lived assets to be held and used when we determine that the carrying value of intangible assets and long-lived assets may not be recoverable. Based on the existence of one or more indicators of impairment, we measured any impairment of intangibles or long-lived assets based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our business model. Our estimates of cash flows required significant judgment based on our historical results and anticipated results and were subject to many factors. During 2006, we recorded impairment charges related to long lived assets of approximately $5.4 million.

Income Taxes

We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized by applying statutory tax rates in effect in the years in which the differences between the financial reporting and tax filing bases of existing assets and liabilities are expected to reverse. We have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance against our deferred tax assets. We have recorded a full valuation allowance against our deferred tax assets since we have determined that it is more likely than not that we may not be able to realize our deferred tax asset in the future.

Stock-Based Compensation

We historically accounted for stock-based compensation paid to employees using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25 (“APB Opinion 25”), Accounting for Stock Issued to Employees and related interpretations including Financial Accounting Standards Board (“FASB”) Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25 (“FIN 44”). Compensation for stock options granted to employees (including members of the board of directors), if any, was measured as the excess of the market price of the Company’s stock at the date of grant over the amount the employee must pay to purchase the stock. Any compensation expense related to such grants was deferred and amortized to expense over the vesting period of the related options.

Compensation expense related to options granted to non-employees was calculated using the fair-value based method of accounting prescribed by Statement of Financial Accounting Standards No. 123 Accounting for Stock-Based Compensation (“SFAS No. 123”). SFAS No. 123 established accounting and disclosure requirements using a fair-value based method of accounting for stock-based employee compensation plans. We elected to account for stock options granted to employees, as prescribed by APB Opinion 25, and adopted the disclosure-only requirements of SFAS No. 123. Accordingly, prior to January 1, 2006, no employee compensation cost related to share-based awards was recognized in net income of the Company for these plans. However, on January 1, 2006, we prospectively adopted the provisions of SFAS 123R, Share-Based Payment, which requires all share-based awards to employees be recognized in the income statement based on their fair values. We had no unvested stock options as of January 1, 2006. No stock options were granted during 2006 or 2007 nor were any options exercised during these periods. As a result, there was no impact of SFAS 123R on our Consolidated Statements of Operations for the years ended December 31, 2006 or December 31, 2007.

Recently Issued Accounting Standards

In December 2007 the FASB issued 141R, “Business Combinations” (“SFAS 141R”) which requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair value as of the date. SFAS 141R requires, among other things, that in a business combination achieved in stages (sometimes referred to as a “step acquisition”), that the acquirer recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of their fair values (or other amounts determined in accordance with this Statement).

SFAS 141R also requires the acquirer to recognize goodwill as of the acquisition date, measured as a residual, which in most types of business combinations will result in measuring goodwill as the excess of the consideration transferred plus the fair value of any non-controlling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We do not expect that the adoption of SFAS 141R will have a material impact on our financial statements.

In December 2007, the FASB issues SFAS 160, “Non-controlling Interests in Consolidated Financial Statements” (“SFAS 160”), This Statement changes the way the consolidated income statement is presented. SFAS 160 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. Currently, net income attributable to the non-controlling interest generally is reported as an expense or other deduction in arriving at consolidated net income. It also is often presented in combination with other financial statement amounts. SFAS 160 results in more transparent reporting of the net income attributable to the non-controlling interest. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We do not believe SFAS 160 will have a material impact on our financial statements.

In February 2007, the Financial Accounting Standards Board (the “FASB”) issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities Including an amendment of FASB Statement No. 115 (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. We expect to adopt SFAS No. 159 on January 1, 2008 and do not expect the adoption to have a material impact on the consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under SFAS No. 157, fair value measurements would be separately disclosed by level within the fair value hierarchy. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. Management believes the adoption of this pronouncement will not have a material impact on our consolidated financial statements.

In July 2006, the FASB issued Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (“FIN 48”), which is a change in accounting for income taxes. FIN 48 specifies how tax benefits for uncertain tax positions are to be recognized, measured, and derecognized in financial statements; requires certain disclosures of uncertain tax matters; specifies how reserves for uncertain tax positions should be classified on the statement of financial condition; and provides transition and interim-period guidance, among other provisions. The provisions of FIN 48 are effective as of the beginning of our first fiscal year that begins after December 15, 2006. Management evaluated the impact of the adoption of this pronouncement and concluded the adoption did not have a material impact on our consolidated financial position, results of operation or cash flows.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the list of financial statements filed with this report under Item 15 below.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

None

ITEM 9A(T). CONTROLS AND PROCEDURES

a. Evaluation of Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Due to the material weakness (discussed below in subsection c of this Item), our disclosure controls and procedures were not effective as of December 31, 2007 to ensure that the information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the requisite time periods and that such information is accumulated and disclosed appropriately.

Notwithstanding this material weakness, we believe that the financial statements included herein fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods and dates presented.

b. Changes in Internal Control Over Financial Reporting.

Other than as set forth above, our management has determined that there have been no changes in the Company’s internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

c. Management Report On Internal Control Over Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2007. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework. Based on our assessment using those criteria, our management concluded that our internal control over financial reporting was not effective as of December 31, 2007 because we create, review and process financial data without internal independent review.

Since January 2007, Amerisa Kornblum began to serve as both our Chief Executive Officer and Chief Financial Officer whereas prior to that date, Ms. Kornblum was the Chief Financial Officer. Commencing January 1, 2007, we have observed that, although our operations subsequent to the year ended December 31, 2006 are limited, we have a material weakness in our internal controls over financial reporting in that we create, review and process financial data without internal independent review due to our not having sufficient personnel. Due to this material weakness, there is more than a remote likelihood that a material misstatement of our financial statements could occur and not be detected, prevented or corrected. Notwithstanding this material weakness, we believe that the financial statements included in this Form 10-K fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods and dates presented.

This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report. Accordingly, our management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2007 has not been audited by our auditors, Rachlin LLP.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table sets forth our executive officer and each Class I director, Class II director, and Class III director, their ages and present positions with Odimo as of March 20, 2008.


Name	Age		Position
Alan Lipton		57	Chairman of the Board, Class III Director
Amerisa Kornblum		46	Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer
Sidney Feltenstein(1)		67	Class III Director
Stanley Stern(2)		50	Class I Director
Steven Tishman(3)		51	Class II Director


(1)		Member of the Audit Committee, the Compensation Committee and the Nominating Committee

(2)		Member of the Compensation Committee and Nominating Committee

(3)		Member of the Audit Committee

Alan Lipton has been our Chairman of the Board of Directors since May 2004 and a member of our Board of Directors since November 1999. From November 1999 through May 11, 2006, Mr. Lipton was our Chief Executive Officer and President. From 1983 to 1994 Mr. Lipton was the Chief Executive Officer of Jan Bell Marketing, Inc., which was a publicly held watch and jewelry retailer and supplier to wholesale price clubs. After retiring from Jan Bell Marketing in 1994, Mr. Lipton founded the Lipton Foundation, a philanthropic organization. From 1994 to the present, Mr. Lipton has been involved with the Lipton Foundation and in various real estate development projects in South Florida.

Amerisa Kornblum has been our Chief Financial Officer and Treasurer since November 1999, our Secretary since November 2005 and our Chief Executive Officer since January 2007. From October 1997 to November 1999, Ms. Kornblum served as Chief Financial Officer of Gold Coast Media, Inc. From 1994 through 1997, Ms. Kornblum was a financial systems consultant, for various catalog and retail companies. From 1988 to 1993, Ms. Kornblum worked for Jan Bell Marketing, Inc. in various capacities, including Controller, Director of Internal Audit, and Director of Investor Relations. From 1985 to 1988, Ms. Kornblum was a senior auditor for Deloitte & Touche LLP. Ms. Kornblum is a certified public accountant in the State of Florida. Ms. Kornblum is married to Jeff Kornblum, our former President and Chief Executive Officer.

Sidney Feltenstein has been a member of our Board of Directors since May 2004. Mr. Feltenstein currently is a private investor. From June 2005 through February 2008, Mr. Feltenstein was the Chairman of Sagittarius Brands, a restaurant holding company. From 1995 to 2002, Mr. Feltenstein served as Chairman, President and Chief Executive Officer of Yorkshire Global Restaurants, an operator of A&W Restaurants and Long John Silver’s restaurants. Mr. Feltenstein has served in a variety of operations and marketing management positions in the restaurant business including Chief Marketing Officer for Dunkin Donuts and Executive President of Worldwide Marketing for Burger King Corporation. Mr. Feltenstein is active in various organizations, including the International Franchise Association. Since 2003, Mr. Feltenstein has been a director of BUCA, Inc., a public company that operates restaurants.

Stanley Stern was a member of our Board of Directors from November 1999 through May 2004 and rejoined the Board in February 2005. Since March 2004, Mr. Stern has been a Managing Director and head of investment banking with Oppenheimer & Co. Inc., an investment banking firm. From February 2002 to March 2004, Mr. Stern served as a Managing Director and head of investment banking with C.E. Unterberg, Towbin, an investment banking firm. From January 2000 to February 2002, Mr. Stern served as Managing Director of STI Ventures Advisory USA Inc. and as a member of the board of directors and the investment committee of STI Ventures. Mr. Stern also serves as the chairman of the board of Tucows, Inc., and is a director of Fundtech, a provider of financial payment processing solutions.

Steven Tishman has been a member of our Board of Directors since February 2005. Since October 2002, he has been a Managing Director of Rothschild Inc., a merchant banking firm. From November 1999 to July 2002, Mr. Tishman was a Managing Director of Robertson Stephens, Inc., an investment banking firm. Mr. Tishman is also a director of Cedar Fair, L.P., an operator of amusement parks.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires that our directors and executive officers and persons who own more than 10% of our common stock file initial reports of ownership and reports of changes of ownership with the SEC. Reporting persons are required by the SEC regulations to furnish us with copies of all Section 16(a) forms they file. These reports are available for review on our website at www.odimo.com. Based solely on a review of these reports, we believe that all directors and executive officers complied with all Section 16(a) filing requirements for 2007.

Code of Conduct and Ethics

Our Board of Directors has adopted a code of business conduct and ethics applicable to our directors, officers and employees, in accordance with applicable federal securities laws and the Nasdaq Rules. Upon written request to our Corporate Secretary, Odimo Incorporated, 14051 NW 14th Street, Sunrise, Florida 33323, we will provide, without charge, any person with a copy of our Code of Conduct and Ethics.

Audit Committee Financial Experts

Our Board of Directors has determined that both Mr. Tishman and Mr. Feltenstein satisfy the definition of “audit committee financial expert” as promulgated by the SEC by virtue of their educational and work experience as described above and are both independent from our executive officers in accordance with the definition of “independence” as promulgated by the American Stock Exchange.

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Since January 2007, Amerisa Kornblum has been our only executive officer. From January 2007 through December 2007, we paid Ms. Kornblum $2,500 per month. Commencing January 2008, Ms. Kornblum has agreed to continue to serve in her capacity as our sole executive officer for no compensation. Since January 2007, Ms. Kornblum has served us as our sole executive officer with no written employment agreement. Due to our severely limited resources we are unable to attract other executive talent and we are unable to offer any compensation to Ms. Kornblum. While we have, in the past and may in the future grant stock options as a means to attract and provide equity incentives to executives, no options have been granted since 2004 and all options that have heretofore been granted to prior executive officers have been cancelled.

SUMMARY COMPENSATION TABLE

The following table sets forth information regarding the compensation paid, distributed, or accrued for services rendered by our principal executive officer and our two most highly compensated executive officers other than our principal executive officer whose total salary and bonus exceeded $100,000 (collectively, the “Named Executives ”) for services rendered in all capacities to us during the years indicated.


													Change in
													Pension Value &
													Non Qualified
											Non Equity		Deferred
							Stock		Option		Incentive Plan		Compensation		All Other
Name and Principal Position	Year		Salary		Bonus		Awards		Awards		Compensation		Earnings		Compensation			Total
Alan Lipton		2007	$	—	$	—	$	—	$	—	$	—	$	—	$	—		$	—
Chief Executive Officer		2006		159,336		—		—		—		—		—		19,574	(1)		178,910
and President from November 1999 through May 11, 2006

Jeff Kornblum		2007	$	—	$	—	$	—	$	—	$	—	$	—	$	50,000	(2)	$	—
Chief Operating Officer from		2006		241,812		—		—		—		—		—		24,917	(1)		266,729
November 1999 through January 15, 2007, Chief Executive Officer and President from May 11, 2006 through January 15, 2007

Amerisa Kornblum		2007		30,000	$	—	$	—	$	—	$	—	$	—	$	50,000	(3)	$	80,000
Chief Financial Officer		2006		212,019		—		—		—		—		—		18,673	(1)		230,692
and Treasurer since November 1999, Secretary since November 2005 and Chief Executive Officer since January 15, 2007


(1)		Includes lease payments, insurance and maintenance expenses for one automobile and medical insurance premiums.

(2)		Represents amounts paid in January 2007 in connection with a Separation Agreement entered between the Company and Mr. Kornblum.

(3)		Represents amounts paid in January 2007 in connection with a Termination Agreement entered between the Company and Ms. Kornblum.

Stock Options /Equity Awards

No stock options or equity awards were granted, exercised or outstanding in favor of any of the Named Executives during our fiscal year ended December 31, 2007.

Pension Benefits

We do not have any plan that provides for payments or other benefits at, following, or in connection with, retirement.

Nonqualified Deferred Compensation

We do not have any plan that provides for deferred compensation.

Stock Ownership Guidelines

We have not implemented stock ownership guidelines for our executive officers.

Compensation Committee Interlocks and Insider Participation

Director Compensation

We do not pay directors compensation but have in the past, reimbursed directors for certain expenses incurred by them in connection with their duties to the Company.

Communications with Directors

Stockholders may communicate with our Board of Directors or one or more directors by sending a letter addressed to our Board or to any one or more directors in care of our Corporate Secretary, Odimo Incorporated, 14051 NW 14th Street, Sunrise, Florida 33323, in an envelope clearly marked “Stockholder Communication.” Our Corporate Secretary’s office will forward such correspondence unopened to Mr. Feltenstein or Mr. Tishman, or another independent director as the Board of Directors may specify from time to time, unless the envelope specifies that it should be delivered to another director. If multiple communications are received on a similar topic, our Corporate Secretary may, in her discretion, forward only representative correspondence.

Compensation Committee Report

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Stock Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of March 20, 2008, certain information with respect to the beneficial ownership of Odimo’s Common Stock by (i) each stockholder known by Odimo to be the beneficial owner of more than 5% of Odimo’s Common Stock, (ii) each director of Odimo, (iii) each executive officer named in the Summary Compensation Table above, and (iv) all directors and executive officers of Odimo as a group. This table is based upon information supplied by officers, directors and principal stockholders and Schedules 13D and 13G filed with the SEC.

Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock held by them.

Applicable percentage ownership in the following table is based on 7,753,242 shares of common stock outstanding as of March 20, 2008.

PRINCIPAL STOCKHOLDERS


	Shares
	Beneficially
Beneficial Owner	Owned		Percentage
5% STOCKHOLDERS
ELAO, LLC(1)		3,096,058		39.93	%
c/o Odimo Incorporated
14051 NW 14th Street, Sunrise, FL 33323
Lily Maya Lipton Family Trust (1)		3,274,629		42.24	%
c/o Odimo Incorporated
c/o Alan Lipton, Trustee
14051 NW 14th Street, Sunrise, FL 33323
Austin W. Marxe(2)		537,756		6.94	%
527 Madison Avenue, Suite 2600, New York, NY 10022
David M. Greenhouse(2)		537,756		6.94	%
527 Madison Avenue, Suite 2600, New York, NY 10022
Rima Management, LLC(3)		436,619		5.63	%
Richard Mashaal
110 East 55th Street, Suite 1600, New York, NY 10022
Bruce Galloway(5)		1,078,115		13.91	%
c/o Galloway Capital Management, LLC
720 Fifth Avenue, New York, NY 10019

DIRECTORS AND EXECUTIVE OFFICERS
Alan Lipton(1)(4)		3,274,629		42.24	%
14051 NW 14th Street, Sunrise, FL 33323
Amerisa Kornblum(6)		178,571		2.3	%
14051 NW 14th Street, Sunrise, FL 33323
Stanley Stern		4,000		*
c/o Odimo Incorporated
14051 NW 14th Street, Sunrise, FL 33323
Sidney Feltenstein
c/o Odimo Incorporated		2,498		*
14051 NW 14th Street, Sunrise, FL 33323
Steven Tishman		—		—
c/o Rothschild Inc.
1251 Avenue of the Americas, New York, NY 10020
All directors and executive officers as a group (5 persons)		3,459,698		44.62	%


*		Denotes less than 1%.

(1)		Lily Maya Family Trust (the “Lily Trust”) is the sole member of Elao, LLC, a Florida limited liability company. Alan Lipton is the sole trustee of the Lily Trust and his minor daughter Lily Maya Lipton is the sole lifetime beneficiary. Both the Lily Trust and Alan Lipton have shared voting and dispositive power over the shares owned by Elao, LLC. Alan Lipton has shared voting and dispositive over the shares owned by the Lily Trust.

(2)		Messrs. Marxe and Greenhouse have shared voting and investment power over 119,042 shares of Common Stock owned by Special Situations Cayman Fund, L.P., 33,737 shares of Common Stock owned by Special Situations Fund III, L.P. and 384,977 shares of Common Stock owned by Special Situations Fund III QP, L.P. Messrs. Marxe and Greenhouse are the controlling principals of AWM Investment Company, Inc. (“AWM”), the general partner of and investment adviser to Special Situations Cayman Fund, L.P. AWM also serves as the general partner of MGP Advisers Limited Partnership, the general partner of and investment adviser to Special Situations Fund III, L.P. and general partner of Special Situations Fund III QP, L.P.

(3)		Rima Management, LLC and Richard Mashaal have shared voting and dispositive power over these shares.

(4)		Includes 1,682 shares held by Lipton Partnership, a general partnership in which Alan Lipton has a beneficial interest.

(5)		Represents 747,382 shares of Common Stock held by Mr. Galloway’s Individual Retirement Account which Mr. Galloway had sole power to vote and dispose and 91,462 shares of Common Stock held by Finvest Yankee, LP and 239,271 shares of Common Stock held by Strategic Turnaround Equity Partners, LP (Cayman) (“STEP”) for which Mr. Galloway has the shared power to vote and dispose. Mr. Galloway is a managing member of Galloway Capital Management, LLC, the general partner of STEP. Mr. Galloway disclaims beneficial ownership of the shares of Common Stock directly beneficially owned by STEP except for: (i) indirect interests therein by virtue of being a member of Galloway Capital Management LLC, and (ii) the indirect interests of Mr. Galloway by virtue of being a limited partner of STEP.

(6)		Does not include shares held by Elao, LLC. Ms. Kornblum has a contingent contractual right to receive 33.3% of the proceeds upon sale of these shares.

Changes In Control

We are not aware of any arrangement that might result in a change of control in the future.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

As of March 20, 2008 we have borrowed from Alan Lipton, our Chairman of the Board of Directors the sum of $555,000, of which $30,000 has been repaid. We issued to Mr. Lipton an 8% promissory note in exchange for the funds (the “Note”). Under the Note, $525,000 plus all interest under the Note is repayable by the Company upon the earlier to occur of (a) January 16, 2010; or (ii) the occurrence of a change in control of the Company. Our repayment obligation under the First Note is secured by all of the Company’s assets. We used the proceeds of the loans from Mr. Lipton for working capital purposes, including payment of our existing liabilities.

Our audit committee is charged with monitoring and reviewing issues involving potential conflicts of interests and reviewing and approving all related party transactions. In general, for purposes of the Company’s written policy, a related party transaction is a transaction, or a material amendment to any such transaction, involving a related party and the Company involving $120,000 or more. Our policy required the audit committee to review and approve related party transactions. In reviewing and approving any related party transaction or material amendment to any such transaction, the audit committee must satisfy itself that it has been fully informed as to the related party’s relationship to the Company and interest in the transaction and as to the material facts of the transaction, and must determine that the related party transaction is fair to the Company.

Director Independence

The board of directors has determined that, with the exception of Alan Lipton, the Chairman of our board of directors, all of the members of our board are “independent directors” as that term is defined in the listing standards of the American Stock Exchange. Such independence definition includes a series of objective tests, including that the director is not an employee of the company and has not engaged in various types of business dealings with the company. In addition, as further required by the American Stock Exchange listing standards, the board of directors has made a subjective determination as to each independent director that no relationships exist which, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit and Non-Audit Fees

The following table sets forth fees billed to us by Rachlin LLP for services provided during the period for the years ended December 31, 2007 and 2006:


	2007		2006
Audit Fees	$	77,000	$	216,215
Audit Related Fees		0		0
Tax Fees		0		0
All Other Fees		0		0

Total	$	77,000	$	216,215

Audit Fees. Consists of fees billed for professional services rendered for the audit of Odimo’s consolidated financial statements and review of the interim financial statements included in quarterly reports and services that are normally provided by its independent registered accounting firms in connection with statutory and regulatory filings or engagements.

Audit-Related Fees. Odimo did not incur any additional fees under this category.

Tax Fees. Odimo did not incur any additional fees under this category.

All Other Fees. Odimo did not incur any additional fees under this category.

Audit Committee Pre-Approval Policies And Procedures

The Audit Committee’s policy is to pre-approve all audit, audit-related and permissible non-audit services provided by the independent registered public accountants in order to assure that the provision of such services does not impair the auditor’s independence. These services may include audit services, audit-related services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Management is required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accountants in accordance with this pre-approval, and the fees for the services performed to date. During fiscal year 2007, all services were pre-approved by the Audit Committee in accordance with this policy.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as part of this report.

1. The following financial statements of Odimo Incorporated and Report of Rachlin LLP independent registered public accounting firm, are included in this report:


		Page
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets		F-2
Consolidated Statements of Operations		F-3
Consolidated Statements of Stockholders’ Equity		F-4
Consolidated Statements of Cash Flows		F-5
Notes to Consolidated Financial Statements		F-6

2. Financial statement schedule:

None

3. List of exhibits required by Item 601 of Regulation S-K. See part (b) below.

(b) Exhibits. The following exhibits are filed as a part of this report:


Exhibit Number		Description

2.1(1)		Asset Purchase Agreement among registrant and Ashford.com, Inc. dated December 6, 2002
3.1(1)		Amended and Restated Certificate of Incorporation
3.2(1)		Amended and Restated Bylaws
4.1(1)		Form of Specimen Stock Certificate
4.2.1(1)		Investors’ Rights Agreement dated November 18, 1999 by and between the registrant and certain holders of the registrant’s capital stock
4.2.2(1)		Amended and Restated Registration Rights Agreement dated March 30, 2004 by and between the registrant and certain holders of the registrant’s capital stock


Exhibit Number		Description
10.1.1(1)		Odimo Incorporated Amended and Restated Stock Incentive Plan
10.1.2(1)		Form of Stock Option Agreement pursuant to the Odimo Incorporated Stock Incentive Plan
10.2(1)		Amended and Restated Series C Convertible Preferred Stock Purchase Agreement dated as of March 30, 2004 between the registrant and SDG Marketing, Inc.
10.3.1(1)		Promissory Note dated December 6, 2002 by the registrant in favor of GSI Commerce Solutions, Inc.
10.3.2(1)		Security Agreement dated December 6, 2002 between the registrant and GSI Commerce Solutions, Inc., as assignee
10.3.3(1)		Patents, Trademarks, Copyrights and Licenses Security Agreement dated December 6, 2002 between the registrant and GSI Commerce Solutions, Inc., as assignee
10.4.1(1)		Lease Agreement dated December 14, 1999 between the registrant and MDR Fitness Corp.
10.4.2(1)		Lease Amendment and Extension Agreement dated January 8, 2003 between the registrant and MDR Fitness Corp.
10.5.1(1)		Employment Agreement dated July 12, 2004 between the registrant and Alan Lipton
10.5.2(1)		Employment Agreement dated July 12, 2004 between the registrant and Jeff Kornblum
10.5.3(1)		Employment Agreement dated July 12, 2004 between the registrant and Amerisa Kornblum
10.5.4(1)		Employment Agreement dated July 12, 2004 between the registrant and George Grous
10.5.5(1)		Lock-up Agreement dated July 12, 2004, between the registrant and Alan Lipton
10.5.6(1)		Lock-up Agreement dated July 12, 2004, between the registrant and Jeff Kornblum
10.5.7(1)		Lock-up Agreement dated July 12, 2004, between the registrant and Amerisa Kornblum
10.5.8(1)		Lock-up Agreement dated July 12, 2004, between the registrant and George Grous
10.5.9(1)		Lock-up Agreement dated July 12, 2004, between the registrant and Michael Dell’Arciprete
10.5.10(1)		Amended and Restated Employment Agreement dated August 27, 2004 between the registrant and Alan Lipton
10.6(1)		Form of Indemnification Agreement between the registrant and each of its directors and executive officers
10.7(1)		Supply Agreement dated March 30, 2004 between the registrant and SDG Marketing, Inc.
10.8.1(1)		Loan and Security Agreement dated as of July 31, 2004 by and among Silicon Valley Bank, the registrant and its subsidiaries Ashford.com, Inc. and D.I.A. Marketing, Inc.
10.8.2(1)		Revolving Promissory Note dated as of July 31, 2004 in favor of Silicon Valley Bank, by the registrant and its subsidiaries Ashford.com, Inc. and D.I.A. Marketing, Inc.
10.8.3(1)		Intellectual Property Security Agreements dated as of July 31, 2004 in favor of Silicon Valley Bank, by each of the registrant and Ashford.com, Inc.
10.8.4(1)		Unconditional Guaranties dated as of July 31, 2004 of Softbank Capital LP, Softbank Capital Partners LP and Softbank Capital Advisors Fund LP
10.9(1)		Commercial Lease dated as of January 1, 2006 between the registrant and IBB Realty, LLC
10.10(1)		First Loan Modification Agreement dated as of November 13, 2004 by and among Silicon Valley Bank, the registrant and its subsidiaries Ashford.com, Inc. and D.I.A. Marketing, Inc.
10.11(1)		First Amended and Restated Note dated as of November 13, 2004 in favor of Silicon Valley Bank by the registrant and its subsidiaries Ashford.com, Inc. and D.I.A. Marketing, Inc.
10.12(1)		Amendment and Reaffirmation of Guaranty dated as of November 13, 2004 of Softbank Capital, LP, Softbank Capital Partners, LP and Softbank Capital Advisors Fund LP
10.13(1)		Second Loan Modification Agreement dated as of January 7, 2005 by and among Silicon Valley Bank, the registrant and its subsidiaries Ashford.com, Inc. and D.I.A. Marketing, Inc.
10.14(1)		Second Amended and Restated Note dated as of January 7, 2005 in favor of Silicon Valley Bank, by the registrant and its subsidiaries Ashford.com, Inc. and D.I.A. Marketing, Inc.
10.15(1)		Second Amendment and Reaffirmation of Guaranty dated as of January 7, 2005 of Softbank Capital, L.P., Softbank Capital Partners, LP and Softbank Capital Advisors Fund LP
10.16(1)		Confirmation letter dated January 7, 2005 from Softbank Capital Partners LP, regarding financial support.
10.17(5)		Termination Agreement dated March 29, 2006 by and between Odimo Incorporated and SDG Marketing, Inc.
10.18(5)		Third Amendment to Loan and Security Agreement dated March 30, 2006, by and among Silicon Valley Bank, Odimo Incorporated, Ashford.com, Inc. and D.I.A. Marketing, Inc.


Exhibit Number		Description
10.19(6)		Asset Purchase Agreement dated as of May 11, 2006 by and among Ice.com, Inc., Ice Diamond, LLC, and Odimo Incorporated.
10.20(6)		Transition Services Agreement dated as of this May 11, 2006, by and between Ice Diamond, LLC, Ice.com, Inc., and Odimo Incorporated.
10.21(6)		Separation Agreement dated May 11, 2006 by Odimo Incorporated and Alan Lipton.
10.22(6)		Amendment No. 1 to Employment Contract dated as of May 11, 2006, by and among Odimo Incorporated and Jeffrey Kornblum.
10.23(7)		Modification and Settlement Agreement dated November 6, 2006 by and between IBB Realty, LLC and Odimo Incorporated.
10.24(8)		Asset Purchase Agreement dated as of December 1, 2006 by and among Odimo Incorporated, Worldofwatches.com, Inc. and ILS Holdings, LLC.
10.25(9)		Separation Agreement dated as of January 16, 2007 by and among Odimo Incorporated and Jeff Kornblum.
10.26(9)		Separation Agreement dated as of January 16, 2007 by and among Odimo Incorporated and George Grous.
10.27(9)		Termination Agreement dated as of January 15, 2007 by and among Odimo Incorporated and Amerisa Kornblum.
10.30(11)		8% Secured Promissory Note in the Principal Amount of $300,000
10.31(11)		Amended and Restated 8% Promissory Note in the Principal Amount of $500,000
10.32(11)		8% Demand Promissory Note in the Principal Amount of $30,000
10.33(10)		Asset Purchase Agreement dated as of April 6, 2007 by and among Odimo Incorporated, Ashford.com, Inc. and Luxi Group, LLC.
10.34(4)		Amended and Restated 8% Promissory Note in the Principal Amount of $525,000
14.1(2)		Code of Business Conduct and Ethics
16.1(3)		Letter of Deloitte & Touche LLP dated September 2, 2005
16.2 (3)		Letter of Rachlin Cohen & Holtz LLP dated September 2, 2005
21.1(1)		Subsidiaries of Odimo Incorporated
23.1(4)		Consent of Rachlin LLP
31.1(4)		Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated pursuant to the Securities Exchange Act of 1934, as amended
31.2(4)		Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated pursuant to the Securities Exchange Act of 1934, as amended
32.1(4)		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2(4)		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


(1)		This exhibit was previously filed as an exhibit to the Registration Statement on Form S-1 (File No. 333-117400) originally filed with the Securities and Exchange Commission on July 16, 2004, as amended thereafter, and is incorporated herein by reference.

(2)		This exhibit was previously filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange Commission on March 31, 2005 and is incorporated herein by reference.

(3)		This exhibit was previously filed as an exhibit to the Form 8-K dated August 31, 2005 filed with the Securities and Exchange Commission on September 2, 2005 and is incorporated herein by reference.

(4)		Filed herewith.

(5)		This exhibit was previously filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 2005 filed with the Securities and Exchange Commission on March 31, 2006 and is incorporated herein by reference.

(6)		This exhibit was previously filed as an exhibit to the Form 8-K dated May 11, 2006 filed with the Securities and Exchange Commission on May 12, 2006 and is incorporated herein by reference.

(7)		This exhibit was previously filed as and exhibit to the Quarterly Report on form 10-Q for the period ended September 30, 2006 filed with the Securities and Exchange Commission on November 14, 2006 and is incorporated herein by reference.

(8)		This exhibit was previously filed as an exhibit to the Form 8-K dated December 1, 2006 filed with the Securities and Exchange Commission on December 4, 2006 and is incorporated herein by reference.

(9)		This exhibit was previously filed as an exhibit to the Form 8-K dated January 11, 2007 filed with the Securities and Exchange Commission on January 18, 2007 and is incorporated herein by reference.

(10)		This exhibit was previously filed as an exhibit to the Form 8-K dated April 11, 2007 filed with the Securities and Exchange Commission on April 12, 2007 and is incorporated herein by reference.

(11)		This exhibit was previously filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 2006 filed with the Securities and Exchange Commission on April 2, 2007 and is incorporated herein by reference. incorporated herein by reference.

ODIMO INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)


	December 31,
	2007			2006
ASSETS
Current Assets:
Cash and cash equivalents	$	1		$	75
Deposits with credit card processing company		—			108
Escrow deposit		—			30
Prepaid expense and other current assets		17			67

Total current assets		18			280
Property and Equipment, Net		—			294
Intangible and Other Assets, Net		—			24

Total	$	18		$	598


LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
Current Liabilities:
Accounts payable	$	304		$	728
Accrued interest to related party		38			—
Accrued liabilities		25			46

Total liabilities		367			774


Note Payable to Related Party		515			300


Commitments, Contingencies and Subsequent Events
Stockholders’ Equity (Deficiency):
Preferred stock, $0.001 par value, 50 million shares authorized, none issued and outstanding		—			—
Common stock, $0.001 par value, 300 million shares authorized, 7,039 shares issued and outstanding		7			7
Additional paid-in capital		103,705			103,705
Accumulated deficit		(104,576	)		(104,188	)

Total stockholders’ equity (deficiency)		(864	)		(476	)

Total	$	18		$	598

See notes to consolidated financial statments.

F-2

ODIMO INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)


	Year Ended December 31,
	2007			2006
Cash Flows from Operating Activities:
Net loss	$	(388	)	$	(11,824	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		44			3,598
Interest on note payable to related party		38			—
Gain on sale of assets		(424	)		(7,185	)
Impairment of long lived assets		—			5,385
Provision for bad debts		—			432
Amortization of supply agreement		—			206
Changes in operating assets and liabilities:
(Increase) decrease in:
Deposits with credit card processing company		108			646
Escrow deposit		30			(30	)
Accounts receivable		—			(124	)
Inventories		—			6,915
Prepaid expenses and other current assets		50			589
Other assets		24			134
Increase (decrease) in:
Accounts payable		(424	)		(7,154	)
Accrued liabilities		(21	)		(2,124	)

Net cash used in operating activities		(963	)		(10,536	)


Cash Flows from Investing Activities:
Proceeds from sale of assets, net of expenses		674			7,185
Purchase of property and equipment		—			(705	)

Net cash provided by investing activities		674			6,480


Cash Flows from Financing Activities:
Proceeds from notes payable to related party		245			300
Payments on stockholder notes		(30	)		—

Net cash provided by financing activities		215			300


Net (Decrease) in Cash and Cash Equivalents		(74	)		(3,756	)

Cash and Cash Equivalents, Beginning		75			3,831


Cash and Cash Equivalents, Ending	$	1		$	75


Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest	$	—		$	28

See notes to consolidated financial statments.

F-5

ODIMO INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business — Prior to May 2006, the Company was an online retailer of high quality diamonds and fine jewelry, current season brand name watches and luxury goods through three websites, www.diamond.com, www.worldofwatches.com and www.ashford.com. In May 2006, the Company sold assets related to its online diamond and jewelry business operations, including the domain name www.diamond.com. In December 2006, the Company sold assets related to its online watch business operations, including its domain name www.worldofwatches.com. In February 2007, the Company entered into a renewable arrangement with Ice.com, Inc. (“Ice”) which initially ran through December 31, 2007, whereby Ice hosted the Company’s www.ashford.com homepage and visitors to its www.ashford.com website were redirected to websites owned and operated by Ice. The Company earned commissions based on a percentage of gross sales made to customers of Ice’s websites who clicked through from www.ashford.com. Ice paid the Company a $70,000 refundable down payment against these commissions. Under this arrangement with Ice, the Company was not the seller of record of any products sold. In addition, pursuant to this arrangement and for so long as the arrangement existed, the Company granted to Ice a right of first refusal to acquire www.ashford.com. From January 1, 2007 through April 11, 2007, the Company’s online retail operations consisted solely of earning commissions based on a percentage of gross sales made to visitors to its www.ashford.com homepage who were redirected to websites owned and operated by others.

On April 11, 2007 the Company sold to Luxi, Group, LLC certain specified assets, including all of its rights to the domain name www.ashford.com and related trademarks, copyrights, product images and other intangibles in exchange for $400,000 pursuant to the terms of an Asset Purchase Agreement and related agreements entered contemporaneous therewith. As a result of such sale, the Company is a non-operating public shell company. The Company is seeking suitable candidates for a business combination with a private company. The Company previously was an online retailer of watches, luxury goods, diamonds and jewelry through three websites, www.diamond.com, www.ashford.com and www.worldofwatches.com. The Company’s operating results disclosed in this Annual Report on Form 10 K are not meaningful to its future results.

Basis of Presentation — The consolidated financial statements reflect the financial position and results of operations of Odimo Incorporated and its wholly-owned subsidiaries on a consolidated basis. Intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates include the reserve for sales returns, goodwill and other long-lived assets, the deferred tax asset valuation reserve, and the estimated fair value of stock based compensation. Actual results could differ from those estimates.

Concentration of Risk — The Company maintains the majority of its cash and cash equivalents in accounts with one high quality financial institution in the United States of America, in the form of demand deposits and money market accounts. Deposits in this bank may exceed the amounts of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash and cash equivalents.

During the year ended December 31, 2006, the Company purchased a significant portion of its diamonds from several affiliated diamond suppliers. In addition, the Company purchased watches, jewelry and luxury goods from unaffiliated vendors with whom the Company did not maintain a contractual relationship. During the year ended December 31, 2006, the Company did not purchase goods from any unaffiliated vendor that represented more than 10% of the Company’s total purchases from unaffiliated vendors.

Other Risks — Through May 2006, the Company was subject to certain risks which included, but was not limited to: brand owners’ objections to the Company’s pricing on sales of merchandise purchased in the parallel markets, non-guaranteed supply of watches and luxury goods, the sale of decoded watches in certain states, susceptibility to general economic downturns, competition from traditional retailers, dependence on third-party carriers, dependence on the Internet and related security risks, and the uncertain ability to protect proprietary intellectual property.

F-6

Cash and Cash Equivalents — The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Deposits with Credit Card Processing Company — Deposits with credit card processing company consists of cash pledged as collateral to a credit card processing company.

Inventories — Inventories, which consisted of brand name watches, luxury goods, diamonds, and diamond-related and fine jewelry were stated at the lower of cost (using the first-in, first-out method) or market. The Company recorded a write-down, as needed, to adjust the carrying amount of the specific inventory item to lower of cost or market. During the year ended December 31, 2006, the Company recorded approximately $181,000 of inventory write-downs.

Property and Equipment — Property and equipment were stated at cost less accumulated depreciation. Maintenance costs were expensed as incurred. Depreciation was calculated on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements were amortized by the straight-line method over the remaining term of the applicable lease or their useful lives, whichever was shorter. The cost and related accumulated depreciation or amortization of assets sold or otherwise disposed of was removed from the accounts and the related gain or loss was reported in the consolidated statement of operations.

Software and Website Development Costs — The Company capitalized internally developed software and website development costs in accordance with Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use and Emerging Issues Task Force Issue 00-2, Accounting for Web Site Development Costs. Capitalized costs were amortized on a straight-line basis over the estimated useful life of the software once it was available for use. The ongoing assessment of recoverability of capitalized software development costs required considerable judgment by management with respect to estimated economic life and changes in software and hardware technologies. During 2006, the Company recorded impairment charges related to capitalized software and development costs of approximately $3.2 million.

Long-Lived Assets — Long-lived assets, including property and equipment and intangible assets, were reviewed for impairment whenever events or changes in circumstances indicated that the carrying amount may not be recoverable. Recoverability of assets was initially estimated by comparison of the carrying amount of the asset to the net future undiscounted cash flows expected to be generated by the asset. To the extent future undiscounted cash flows was less than the carrying amount, an impairment loss would be recognized. During 2006, the Company recorded impairment charges related to its property and equipment of approximately $2.2 million.

Intangible Assets — Intangible assets were recorded at amortized cost and consisted primarily of marketing-related intangible assets (trademarks, trade-names and Internet domain names). Intangible assets were amortized on a straight-line basis over their estimated useful life which ranged from 4 to 5 years.

Warranty Costs — The Company recorded an accrual for costs that it estimated would be needed to cover future product warranty obligations for watches sold. This estimate was based upon the Company’s historical experience as well as current sales levels at the time.

Revenue Recognition — Net sales consisted of revenue from the sale of the Company’s products and upgrades to the Company’s standard free shipping, net of estimated returns and promotional discounts. The Company recognized revenues when all of the following had occurred: persuasive evidence of an agreement with the customer exists; products were shipped and the customer have taken delivery and assumed the risk of loss; the selling price was fixed or determinable; and collectibility of the selling price was reasonably assured. The Company has evaluated Emerging Issues Task Force Issue 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, and has determined that through December 31, 2006 it did not function as an agent or broker for its suppliers; therefore, the Company has recorded the gross amount of product sales and related costs instead of a net amount earned. Effective January 2007, under the terms of a renewable agreement with Ice (see Business note above) the Company recorded the net amount earned as revenue.

Cost of Sales — Cost of sales included the cost of products sold to customers, including inbound shipping costs and assembly costs. Cost of sales also included amortization of the inventory-related intangible asset. For the year ended December 31, 2006, the Company recorded amortization of approximately $206,000 related to the inventory-related intangible asset, which is included in cost of sales in the accompanying consolidated statements of operations.

F-7

Fulfillment Expenses — Fulfillment expenses (approximately $1.4 million for the year ended December 31, 2006) included outbound freight paid by the Company, commissions paid to sales associates, credit card processing fees and packaging and other shipping supplies. Commissions were paid based on a percentage of the price of goods sold and were expensed when the goods were sold.

Marketing Expenses — Marketing expenses consisted primarily of online advertising costs, affiliate program fees and commissions, public relations costs and other marketing expenses. Advertising costs were expensed as incurred. Costs of advertising associated with print and other media were expensed when such services were used. Costs associated with web portal advertising contracts were amortized over the period such advertising was expected to be used. Advertising expense was approximately $1.2 million for the year ended December 31, 2006.

General and Administrative Expenses — General and administrative expenses include payroll and related employee benefits (including employee stock-based compensation), costs to maintain the Company’s websites, professional fees, insurance, rent, travel and other general corporate expenses.

Stock-Based Compensation — The Company historically accounted for stock-based compensation paid to employees using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25 (“APB Opinion 25”), Accounting for Stock Issued to Employees and related interpretations including Financial Accounting Standards Board (“FASB”) Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25 (“FIN 44”). Compensation for stock options granted to employees (including members of the board of directors), if any, was measured as the excess of the market price of the Company’s stock at the date of grant over the amount the employee must pay to purchase the stock. Any compensation expense related to such grants was deferred and amortized to expense over the vesting period of the related options.

Compensation expense related to options granted to non-employees was calculated using the fair-value based method of accounting prescribed by Statement of Financial Accounting Standards No. 123 Accounting for Stock-Based Compensation (“SFAS No. 123”). SFAS No. 123 established accounting and disclosure requirements using a fair-value based method of accounting for stock-based employee compensation plans. The Company elected to account for stock options granted to employees, as prescribed by APB Opinion 25, and adopted the disclosure-only requirements of SFAS No. 123. Accordingly, prior to January 1, 2006, no employee compensation cost related to share-based awards was recognized in net income of the Company for these plans. However, on January 1, 2006, the Company prospectively adopted the provisions of SFAS 123R, Share-Based Payments, which requires all share-based awards to employees be recognized in the income statement based on their fair values. The Company had no unvested stock options as of January 1, 2006. No stock options were granted during 2007 or 2006 nor were any options exercised during the period. As a result, there was no impact of SFAS 123R on the Company’s Consolidated Statements of Operations for the year ended December 31, 2007 or 2006.

Income Taxes — The Company accounts for income taxes in accordance with the provisions of SFAS No. 109, Accounting for Income Taxes. SFAS No. 109 requires an asset and liability approach. Under this method, a deferred tax asset or liability is recognized with respect to all temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities and with respect to the benefit from utilizing tax loss carryforwards. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefit, or that future deductibility is prohibited or uncertain.

Loss Per Share — Basic loss per share is computed based on the average number of common shares outstanding and diluted earnings per share is computed based on the average number of common and potential common shares outstanding under the treasury stock method. The calculation of diluted loss per share was the same as the basic loss per share for each period presented since the inclusion of potential common stock in the computation would be antidilutive.

Segments — The Company had one operating segment, online retail of brand name watches, other luxury goods, diamonds, and fine jewelry. No foreign country or geographic area accounted for more than 10% of net sales in any of the periods presented and the Company does not have any long-lived assets located in foreign countries.

Recently Issued Accounting Standards — In December 2007 the FASB issued 141R, “Business Combinations” (“SFAS 141R”) which requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair value as of the date. SFAS 141R requires, among other things, that in a business combination achieved in stages (sometimes referred to as a “step acquisition”), that the acquirer recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of their fair values (or other amounts determined in accordance with this Statement).

F-8

In February 2007, the Financial Accounting Standards Board (the “FASB”) issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities Including an amendment of FASB Statement No. 115 (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company expects to adopt SFAS No. 159 on January 1, 2008 and does not expect the adoption will have a material effect on the consolidated financial statements.

In July 2006, the FASB issued Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (“FIN 48”), which is a change in accounting for income taxes. FIN 48 specifies how tax benefits for uncertain tax positions are to be recognized, measured, and derecognized in financial statements; requires certain disclosures of uncertain tax matters; specifies how reserves for uncertain tax positions should be classified on the statement of financial condition; and provides transition and interim-period guidance, among other provisions. The provisions of FIN 48 are effective as of the beginning of the Company’s first fiscal year that begins after December 15, 2006. The Company evaluated the impact of adopting FIN 48 on the consolidated financial statements and determined the adoption did not have a material effect on the Company’s financial condition, cash flows or results of operations.

2. GOING CONCERN CONSIDERATIONS

The financial statements have been prepared assuming that the Company will continue as a going concern. As shown in its historical financial statements, the Company has incurred significant recurring net losses for the past several years and as of December 31, 2007, its financial statements reflect negative working capital and a stockholders’ equity deficiency. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters include the following causes of action.

F-9

As of December 31, 2007 the Company had borrowed from Alan Lipton, its Chairman of the Board of Directors the sum of $545,000. The Company issued to Mr. Lipton two separate 8% promissory notes in exchange for the funds (the “Notes”). Under one of the Notes (the “First Note”), $515,000 plus all interest under the First Note was repayable by the Company upon the earlier to occur of (a) January 16, 2010; or (ii) the occurrence of a change in control of the Company. The Company’s repayment obligation under the First Note is secured by all of its assets. Under the other note, (the “Second Note”), $30,000 plus accrued interest is payable by the Company to Mr. Lipton on demand. The Company’s repayment obligation under the Second Note is unsecured. The Company used the proceeds of the loans from Mr. Lipton for working capital purposes, including payment of its existing liabilities. The Company used $30,000 of the proceeds from the sale of www.ashford.com to repay certain of the amounts owing to Mr. Lipton and as of December 31, 2007, the Company owes to Mr. Lipton the sum of $553,000, including accrued interest. In January 2008, Mr. Lipton loaned an additional $10,000 to the Company.

As of December 31, 2006, the Company sold substantially all of its remaining inventory and ceased operations as an online retailer. Upon cessation of its online retail operations, the Company became a public shell company with limited, if any, operations and is considering all available alternatives, including the acquisition of a new business and/or the redeployment of its remaining business assets. There can be no assurances that the Company will be successful in identifying acquisition candidates or that if identified it will be able to consummate a transaction on terms acceptable to the Company.

The Company is a non-operating public shell company and is seeking suitable candidates for a business combination with a private company. The Company’s repayment obligations to Mr. Lipton are secured by all of its assets. The Company may seek to raise additional capital through the issuance of equity or debt, including loans from related parties, to acquire sufficient liquidity to satisfy its future liabilities. Such additional capital may not be available timely or on terms acceptable to the Company, if at all. The Company’s plans to repay its liabilities as they become due may be impacted adversely by its inability to have sufficient liquid assets to satisfy its liabilities. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

3. SALE OF ASSETS

Sale of Diamond.com URL and Certain Assets— On May 11, 2006 the Company sold to Ice.com, (“Ice”): (i) certain specified assets, including all if its rights to the domain name www.diamond.com, and related trademarks, copyrights, product images and other intangibles in exchange for $7.5 million; and (ii) the remaining diamond and jewelry inventory and corporate packaging for an additional $2.0 million, which represented the cost for the inventory and packaging, pursuant to the terms of an Asset Purchase Agreement and related agreements entered contemporaneous therewith.

Under the terms of the Asset Purchase Agreement with Ice, the Company received $9.0 million at the closing and Ice delivered $500,000 to an escrow agent to be held for six months as security for the Company’s indemnification and other obligations under the Purchase Agreement and related agreements. As a result of the sale, the Company became prohibited from engaging in the online retail sale of jewelry and diamonds. Copies of the Asset Purchase Agreement and the Transition Services Agreement were filed as Exhibits 10.1 and 10.2 to the Form 8-K the Company filed with the Securities and Exchange Commission on May 12, 2006.

In connection with the sale of the assets to Ice, the Company entered into a Transition Services Agreement which provides that for a period of up to 60 days, the Company shall provide to Ice certain services relating to the maintenance and operation of the diamond.com website, including technology support and fulfillment services. The Transition Services Agreement was terminated on June 9, 2006.

The Company paid a $300,000 fee for advisory and other related services in connection with this sale to Ice.com to a firm of which a member of the Board of Directors is the head of investment banking.

Contemporaneous with the closing of the sale of the assets to Ice, Alan Lipton and the Company entered into a Separation Agreement whereby, effective immediately, Mr. Lipton resigned as the Company’s Chief Executive Officer. Mr. Lipton remains as the Chairman of the Board of Directors of the Company. Under the Separation Agreement, Mr. Lipton received his salary through the effective date of his resignation and the Company agreed to pay up to $18,000 over a one year period for Mr. Lipton’s and his dependents’ health insurance premiums. In connection with his resignation as an officer of the Company, all of Mr. Lipton’s stock options granted to him by the Company have been cancelled. The Company appointed Jeff Kornblum, its Chief Operating Officer as Chief Executive Officer and President of the Company. A copy of the Separation Agreement between the Company and Mr. Lipton and the Amendment No.1 to Employment Contract between the Company and Mr. Kornblum were filed as Exhibit 10.3 and 10.4 to the Form 8-K filed with the Securities and Exchange Commission on May 12, 2006.

F-10

Contemporaneous with the closing of the sale of assets to Ice, the Company’s credit facility with Silicon Valley Bank was paid in full and terminated.

Sale of Worldofwatches.com URL and Certain Assets — On December 1, 2006, the Company sold to ILS Holdings, LLC, certain specified assets including all of its rights to the domain name www.worldofwatches.com and related trademarks, copyrights, images and other intangibles and selected equipment in exchange for $410,000 pursuant to the terms of an asset purchase agreement.

Sale of Computer Equipment — On January 5, 2007, the Company entered into an agreement with Ice.com for the sale of certain machinery and equipment for $250,000. As a result of the sale to Ice.com, the Company recorded an impairment charge of $5.4 million related to the sale of the Company’s computers, software and equipment as of December 31, 2006.

Sale of Ashford.com URL and Certain Assets — On April 11, 2007 the Company sold to Luxi, Group, LLC certain specified assets, including all of its rights to the domain name www.ashford.com and related trademarks, copyrights, product images and other intangibles in exchange for $400,000 pursuant to the terms of an Asset Purchase Agreement and related agreements entered contemporaneous therewith. The Company terminated its agreement dated February 5, 2007 with Ice.com to host the Company’s www.ashford.com homepage and returned to Ice.com $61,000 of its $70,000 down payment. The Company recorded commissions earned for approximately $9,000 during the time period that Ice.com hosted the Company’s www.ashford.com homepage.

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in thousands) as of:


	Estimated
	Useful Lives		December 31,		December 31,
	(in Years)		2007		2006
Computers, software and equipment		3	$	—	$	315
Less: accumulated depreciation				—		(21	)

			$	—	$	294

Depreciation expense amounted to approximately $44,000 and $1.9 million for the years ended December 31, 2007 and 2006, respectively.

On January 5, 2007, the Company entered into an agreement with Ice.com for the sale of certain machinery and equipment for $250,000. As a result of the sale to Ice.com, the Company recorded an impairment charge of $5.4 million related to the sale of the Company’s computers, software and equipment as of December 31, 2006.

5. INTANGIBLE AND OTHER ASSETS

Intangible and other assets consisted of the following (in thousands) as of:


	December 31,
	2006
Marketing-related:
www.ashford.com domain name	$	7,186

		7,186
Less: accumulated amortization		(7,186	)

Intangibles — net		—
Other assets		24

Total	$	24

F-11

Amortization expense for marketing-related intangible assets amounted to approximately $1.6 million for the year ended December 31, 2006.

The www.diamond.com domain name and the affinity phone number assets were fully amortized and the Company sold these assets during 2006 (see Note 3). In addition, during 2006, the Company terminated the 2004 Supply Agreement and the balance of $206,000 was written off.

6. STOCK OPTION PLAN

The Company adopted its employee stock option plan in 1999. The Plan was amended in April 2004 and renamed the Odimo Incorporated Amended and Restated Stock Incentive Plan (the “Plan”) and reserved for issuance an aggregate of 559,391 shares under the Plan. The Plan is administered by the compensation committee of the board of directors, which has discretion over who will receive awards, the type of the awards, the number of shares awarded, and the vesting terms of the awards. Options granted under the Plan generally vest ratably over the vesting period, which is generally 3 years. Vested options expire 2 to 10 years after vesting. Once vested, the options become exercisable upon the occurrence of a “realization” event (i.e., an IPO, merger, etc.) as defined in the Plan. Upon either an involuntary or voluntary termination of employment, vested options are not forfeited, and must be exercised within three months after a “realization” event. Options granted under the Plan are generally granted at fair value on the date of the grant. The Company has historically determined the fair value of its shares through the consideration of previous sales of shares to third parties and independent appraisals.

There were no stock options granted to non-employees during 2007 and 2006.

The stock option transactions related to the Plan are summarized as follows (in thousands, except weighted average exercise price) for the years ended December 31, 2007 and 2006:


	December 31, 2007						December 31, 2006
				Weighted						Weighted
				Average						Average
				Exercise						Exercise
	Options			Price			Options			Price
Outstanding at beginning of year		131		$	24.43			404		$	9.90
Granted		—			—			—			—
Exercised		—			—			—			—
Canceled		(105	)		(8.99	)		(273	)		(8.50	)

Outstanding at December 31, 2007		26		$	24.48			131		$	24.43

Options exercisable at December 31, 2007		26		$	24.48			131		$	24.43

The weighted average remaining life of outstanding stock options is 3 years.

7. INCOME TAXES

A reconciliation of the statutory Federal income tax rate to the effective income tax rate for the year ended December 31 is as follows (in thousands, except tax rates):


	2007						2006
	Amount			Rate			Amount			Rate
Income taxes at statutory rate	$	(132	)		34.0	%	$	(4,020	)		34.0	%
State income taxes, net of federal benefit		(14	)		3.6			(406	)		3.4
Increase in taxes:
Penalties and fines		0.7			(0.2	)		2			0.0
Meals and entertainment		0.3			0.0			5			0.0
Intangible amortization		—			0.0			210			(1.8	)
Adjustment of deferred balances		(91.0	)		23.6			—			0.0
Other		—			0.0			12			(0.1	)
Valuation allowance		236			(61.0	)		4,197			(35.5	)

	$	—			—	%	$	—			—	%

F-12

Deferred income taxes reflect the net tax effect of temporary differences between amounts recorded for financial reporting purposes and amounts used for tax purposes. The major components of deferred tax assets are as follows (in thousands) as of:


	December 31,
	2007			2006
Deferred tax assets (liabilities):
Noncurrent:
Net operating loss carryforwards	$	29,413		$	27,961
Property and equipment		—			(16	)
Intangible assets		—			1,233

Gross deferred tax assets		29,413			29,178
Valuation allowance		(29,413	)		(29,178	)

Net deferred tax assets	$	—		$	—

The Company has net operating loss carryforwards of approximately $78.1 million as of December 31, 2007. The Company’s net operating loss carryforwards will expire beginning in 2019 through 2027. Because it is not more likely than not that sufficient tax earnings will be generated to utilize the net operating loss carryforwards and other deferred tax assets, a corresponding valuation allowance of approximately $29.4 million and $29.2 million was established as of December 31, 2007, and 2006 respectively.

Section 382 of the Internal Revenue Code generally imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in its stock ownership. The Company has preliminarily internally reviewed the applicability of the annual limitations imposed by Section 382 caused by changes that occurred prior to, as well as, during the year ended December 31, 2007 in its stock ownership and believe the availability of the net operating loss carryforwards is substantially limited. There can be no assurance that the Company will be able to utilize any net operating loss carryforwards in the future.

8. COMMITMENTS AND CONTINGENCIES

Asset Purchase — In December 2002, the Company purchased the www.ashford.com domain name and related trademarks from GSI Commerce, Inc. (GSI). Pursuant to the Agreement, GSI had the right to receive 10% of the Company’s annual consolidated EBITDA, if positive, as defined in the Agreement (the “EBITDA Payment”), from 2003 through 2007 up to a maximum aggregate amount of $2.0 million. As of December 31, 2007 and 2006, the Company determined that the conditions requiring the EBITDA Payment were not met and therefore did not record a liability.

Leases — During July 2004, the Company entered into a new non-cancelable operating lease for an additional warehouse facility and distribution center that expires in 2010. The Company moved its corporate offices to this facility in March 2006.

In December 2006, the Company terminated its lease agreement for its corporate office space by delivering to its landlord $500,000 and releasing its rights to a security deposit of approximately $80,000. The Company has relocated its office space and leases offices on a month to month basis. Rent expense under these operating leases totaled approximately $632,000 for the year ended December 31, 2006 and includes payments for operating expenses, such as sales and property taxes and insurance.

F-13

Employment Agreements — In July 2004 (and as amended in August 2004), the Company entered into employment agreements with four of its executives which provide for an initial term of three years with successive one year extensions unless the Company or the employee provides notice of the intent not to renew the agreement. Under such agreements, the base salaries of these executives collectively amount to $910,000 per year, plus discretionary annual cash bonuses determined by the Company’s board of directors. The agreements also contain certain “non-compete” and “change of control” provisions.

In May 2006, Alan Lipton and the Company entered into a Separation Agreement whereby, effective immediately, Mr. Lipton resigned as the Company’s Chief Executive Officer. Mr. Lipton remains as the Chairman of the Board of Directors of the Company. Under the Separation Agreement, Mr. Lipton received his salary through the effective date of his resignation and the Company agreed to pay up to $18,000 over a one year period for Mr. Lipton’s and his dependents’ health insurance premiums. In connection with his resignation as an officer of the Company, all of Mr. Lipton’s stock options granted to him by the Company have been cancelled. The Company appointed Jeff Kornblum, its Chief Operating Officer as Chief Executive Officer and President of the Company. A copy of the Separation Agreement between the Company and Mr. Lipton and the Amendment No.1 to Employment Contract between the Company and Mr. Kornblum were filed as Exhibit 10.3 and 10.4 to the Form 8-K filed with the Securities and Exchange Commission on May 12, 2006.

On January 16, 2007, Jeffrey Kornblum, the Company’s Chief Executive Officer and President and George Grous, the Company’s Chief Technology Officer each entered into Separation Agreements with the Company whereby, effective immediately, Messrs. Kornblum and Grous resigned their positions with the Company. Under the Separation Agreements, Messrs. Kornblum and Grous received their salaries through January 15, 2007 and $50,000. In addition, all stock options granted to each of Messrs. Kornblum and Grous have been cancelled.

On January 16, 2007, the Company and Amerisa Kornblum, its Chief Financial Officer and Treasurer entered into a Termination Agreement whereby Ms. Kornblum’s employment agreement was terminated. Under the Termination Agreement, Ms. Kornblum received her salary through January 15, 2007 and $50,000. In addition, all stock options granted to Ms. Kornblum have been cancelled. During 2007, Ms. Kornblum had agreed to continue to be employed by the Company as its Chief Financial Officer and in addition, serve as its Acting Chief Executive Officer for an annual base salary of $30,000.

9. LEGAL PROCEEDINGS

In January 2006, the Company was served with a complaint which was a consolidation of two previously served complaints. The consolidated complaint named the Company, Alan Lipton, the former Chief Executive Officer and President and Chairman of the Board of Directors and Amerisa Kornblum, the Chief Financial Officer as defendants and was pending in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida on behalf of a purported class of purchasers of the Company’s common stock in or traceable to the initial public offering. The complaint generally alleged that the Company and the other defendants violated Sections 11, 12(a) (2) and 15 of the Securities Act of 1933 due to allegedly false and misleading statements in public disclosures in connection with the initial public offering regarding the impact to its operations of advertising expenses. The Company believed that the lawsuit was without merit and intended to vigorously defend it. The Company was unable to predict the outcome of the actions or the length of time it would take to resolve the actions. On June 6, 2007, Odimo, Alan Lipton and Amerisa Kornblum entered into a Stipulation of Settlement, for the settlement of this litigation. The settlement provided for the payment of $1.25 million by the defendants to a class of purchasers (other than those who timely and validly request exclusion from the class) who purchased Odimo common stock in Odimo’s February 15, 2005 initial public offering through August 15, 2005. All amounts payable by defendants are to be paid by defendants’ insurers. On June 8, 2007 the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida entered its Order Preliminarily Approving Settlement and Providing for Notice which, among other things, certified a class for settlement purposes only and approved preliminarily the settlement, subject to further consideration at a final settlement hearing set for September 25, 2007 (the “Settlement Hearing”). At the Settlement Hearing, the Court determined the proposed settlement is fair, reasonable and adequate and a final order approved the settlement.

In May 2007, the Company was served with a complaint from a former vendor alleging that the Company owed this former vendor approximately $174,000 plus interest on such amount since December 2006, for goods and services provided by this vendor to us, which amount has been accrued in accordance with Generally Accepted Accounting Principles. In December 2007, the Company settled this lawsuit by paying the former vendor $25,000 and agreeing to be contingently liable for an additional amount equal to the difference between $136,000 and amounts paid to the vendor over a two year period by the entity who purchased from the Company the domain name www.ashford.com.

F-14

10. RELATED PARTY TRANSACTIONS

Diamond and Jewelry Purchases and Sales — The Company purchased certain of its diamonds from SDG, and certain other entities (collectively, the “Suppliers”) affiliated with certain stockholders and directors of the Company. During the year ended December 31, 2006, purchases from the Suppliers totaled approximately $584,000.

Stock Purchase and Supply Agreement — In March 2004, the Company entered into an agreement with SDG, pursuant to which SDG was to provide the Company with $4.0 million of independently certified diamonds through April 2007 at cash market prices with extended payment terms. In addition, during June 2004 the Company entered into a separate supply agreement which obligated SDG to supply inventory that included similar terms related to the supply of available inventory through 2006. Due to the decreasing percentage of the Company’s diamond sales being derived from diamonds supplied by SDG, and the comparably greater risks of holding and carrying inventory, during the first quarter of 2006, the Company commenced discussions to wind down the supply agreement with SDG Marketing with the objective of reducing the risks and carrying costs of holding inventory. In March 2006, the Company entered into a Termination Agreement with SDG Marketing, Inc. whereby the Supply Agreement was terminated. As part of the termination of the Supply Agreement, in March 2006 the Company returned approximately $4.0 million of diamond inventory against a related party payable to SDG Marketing and approximately $700,000 of diamond inventory as payment in kind to satisfy a $700,000 payable.

Note Payable to Related Party — As of March 20, 2008, the Company has borrowed from Alan Lipton, its Chairman of the Board of Directors the sum of $555,000, of which $30,000 has been repaid. The Company issued to Mr. Lipton an 8% promissory note in exchange for the funds (the “Note”). Under the Note, $525,000 plus all interest is repayable by the Company upon the earlier to occur of (a) January 16, 2010; or (ii) the occurrence of a change in control of the Company. The Company’s repayment obligation under the Note is secured by all of the Company’s assets. The Company used the proceeds of the loans from Mr. Lipton for working capital purposes, including payment of its existing liabilities. Inasmuch as it is presently undeterminable as to if and when a change in control may occur, this obligation has been presented as a long-term obligation in the accompanying financial statements as of December 31, 2007.

Sale of Common Stock — On February 4, 2008 the Company sold 714,284 newly issued shares of its common stock, par value $.001, to three investors for a gross purchase price of $100,000. An entity controlled by Alan Lipton, the Company’s Chairman of the Board, and Amerisa Kornblum, its President and Chief Financial Officer each purchased 178,571 of these shares. There were no underwriting discounts or commissions paid in the sale

F-15


Large accelerated filer o	Accelerated filer o		Non-accelerated filer o	Smaller reporting company x
		(Do not check if a smaller reporting company)


	Page
PART I
FORWARD-LOOKING STATEMENTS		1
ITEM 1. Business		1
Item 1A. Risk factors		2
Item 2. Properties		6
Item 3. Legal Proceedings		6
Item 4. Submission of Matters to a Vote of Security Holders		6

PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		7
Item 6. Selected Financial Data		8
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		8
Item 7A. Quantitative and Qualitative Disclosures About Market Risk		14
Item 8. Financial Statements and Supplementary Data		14
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures		14
Item 9A(T). Controls and Procedures		14
Item 9B. Other Information		15

PART III
Item 10. Directors, Executive Officers and Corporate Governance		16
Item 11. Executive Compensation		17
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		19
Item 13. Certain Relationships and Related Transactions, and Director Independence		21
Item 14. Principal Accountant Fees and Services		21

PART IV
Item 15. Exhibits and Financial Statement Schedules		22

SIGNATURES		25
EX-10.34 Amended & Restated 8% Promissory Note
EX-23.1 Consent of Rachlin LLP
EX-31.1 Section 302 CEO Certification
EX-31.2 Section 302 CFO Certification
EX-32.1 Section 906 CEO Certification
EX-32.2 Section 906 CFO Certification


	ODIMO INCORPORATED
Dated: March 31, 2008	By:	/s/ Amerisa Kornblum
		Name:	Amerisa Kornblum
		Title:	Chief Executive Officer and Chief Financial Officer


Name	Title	Date

/s/ Amerisa Kornblum Amerisa Kornblum	Chief Executive Officer and Chief Financial Officer (Principal Executive and Principal Financial and Accounting Officer )	March 31, 2008
/s/ Alan Lipton Alan Lipton	Chairman of the Board of Directors	March 31, 2008
/s/ Sidney Feltenstein Sidney Feltenstein	Director	March 31, 2008
/s/ Stanley Stern Stanley Stern	Director	March 31, 2008
/s/ Steven Tishman Steven Tishman	Director	March 31, 2008


Date: January 8, 2008	ODIMO INCORPORATED
	By:	/s/ Amerisa Kornblum
		Name:	Amerisa Kornblum
		Title:	Chief Financial Officer


										Additional					Total
	Preferred Stock				Common Stock					Paid-In		Accumulated			Stockholders’
	Shares		Par Value		Shares			Par Value		Capital		Deficit			Equity (Deficiency)
BALANCE—December 31, 2005		—	$	—		7,163		$	7	$	103,705	$	(92,364	)	$	11,348

Forfeiture of common stock		—		—		(124	)		—		—		—			—
Net loss		—		—		—			—		—		(11,824	)		(11,824	)

BALANCE—December 31, 2006		—		—		7,039			7		103,705		(104,188	)		(476	)
Net loss		—		—		—			—		—		(388	)		(388	)

BALANCE—December 31, 2007		—	$	—		7,039		$	7	$	103,705	$	(104,576	)	$	(864	)



Date: March 31, 2008	/s/ Amerisa Kornblum
	Amerisa Kornblum
	Chief Executive Officer (Principal Executive Officer)


January 8, 2008		$525,000