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

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 ¨ No ý

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 ý No ¨

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. ¨

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

Indicate by check mark if the registrant is a shell company, in Rule 12b(2) of the Exchange Act. Yes ¨ No x

The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing price of its Common Stock on June 30, 2006 as reported by Nasdaq, was approximately $4.78 million. Shares of voting stock held by each officer and director and by each person who owns 10% or more of the outstanding voting stock as of such date have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of March 20, 2007, 7,038,958, shares of the registrant’s Common Stock were outstanding.

     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.

Background

     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 February 2007, we entered into a renewable arrangement with Ice.com, Inc. (“Ice”) which initially runs through December 31, 2007, whereby Ice hosts our www.ashford.com homepage and visitors to our www.ashford.com website are redirected to websites owned and operated by Ice. We earn commissions based on a percentage of gross sales made to customers of Ice’s websites who click thru from www.ashford.com. Ice paid us a $70,000 refundable down payment against these commissions. Under this arrangement with Ice, we are not be the seller of record of any products sold. In addition, pursuant to this arrangement and for so long as the arrangement exists, we have granted to Ice a right of first refusal to acquire www.ashford.com. On March 27, 2007, we entered into a letter of intent with an unrelated third party to sell all of our rights to the domain name www.ashford.com and related intellectual property rights, product images and other intangibles for $300,000 which purchase price was increased to $400,000 on April 1, 2007 subject to the transaction closing on or prior to April 11, 2007. As part of the letter of intent, we received a non-refundable deposit of $100,000 against the anticipated purchase price. The closing of the sale of these assets is subject to the execution of a definitive agreement and due diligence. There can be no assurances that we will close the sale of these assets.

     Except for our arrangement with Ice to host our www.ashford.com website, 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.

     Our independent registered public accounting firm’s report on our financial statements for the fiscal year ended December 31, 2006 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 for the past several years and as of December 31, 2006, 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.

     As of March 26, 2007 we have borrowed from Alan Lipton, our Chairman of the Board of Directors the sum of $530,000. We issued to Mr. Lipton two separate 8% promissory notes in exchange for the funds (the “Notes”). Under one of the Notes (the “First Note”), $500,000 plus all interest under the First 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. Under the other note, (the “Second Note”), $30,000 plus accrued interest is payable by the Company to Mr. Lipton on demand. Our repayment obligation under the Second Note is unsecured. We used the proceeds of the loans from Mr. Lipton for working capital purposes, including payment of our existing liabilities. 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.

     Amerisa Kornblum, our Chief Executive Officer and Chief Financial Officer and two other administrative employees are our only employees.

     We make available free of charge on or through our Internet website 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. Our corporate Internet address is www.odimo.com. The information found on our website is not part of this or any other report filed with or furnished to the SEC. 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.

     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.

Except for our arrangement with a third party to host our www.ashford.com website, we are a non-operating shell company.

     Except for our limited operations needed in connection with Ice hosting our www.ashford.com website, 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.

Legal claims against us could be costly and result in substantial liabilities or the loss of significant rights.

     We are currently a party to a proceeding with an uncertain outcome, which could result in significant judgments against us. In January 2006, we were served with a complaint which was a consolidation of two previously served complaints. The complaint names the Company, Alan Lipton, and Amerisa Kornblum as defendants and is 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 our common stock in or traceable to our initial public offering. The complaint generally alleges that we 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 our initial public offering regarding the impact to our operations of advertising expenses. We believe that the lawsuits are without merit and intend to vigorously defend ourselves. We are currently unable to predict the outcome of the actions or the length of time it will take to resolve the actions.

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 SmallCap 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:

     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, owns approximately 41% 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 internally reviewed the applicability of the annual limitations imposed by Section 382 caused by previous changes in our stock ownership and believe such limitations may be significant. This limitation may adversely effect our ability to attract certain business combination candidates and/or consummate a business combination with an operating business.

     None.

     Our corporate office is located in Sunrise, Florida, where we lease approximately 900 square feet pursuant to a month to month agreement. We pay approximately $850 per month for this office space.

     We are currently a party to a proceeding with an uncertain outcome, which could result in significant judgments against us. In January 2006, we were served with a complaint which was a consolidation of two previously served complaints. The consolidated complaint names the Company, Alan Lipton, our former Chief Executive Officer and President and current Chairman of the Board of Directors and Amerisa Kornblum, our current Chief Executive Officer and Chief Financial Officer as defendants and is pending in the Circuit Court of the 17^th Judicial Circuit in and for Broward County, Florida on behalf of a purported class of purchasers of our common stock in or traceable to our initial public offering. The complaint generally alleges that we 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 our initial public offering regarding the impact to our operations of advertising expenses. We believe that the lawsuits are without merit and intend to vigorously defend ourselves. We and the individual defendants filed a motion to dismiss the complaint which was granted in part and denied in part. We and the individual defendants have filed an answer to the complaint and have exchanged initial discovery and interrogatories with the plaintiffs. The plaintiffs have filed a motion for class certification which has not yet been heard. As discovery has only proceeded through the very preliminary stages, we are currently unable to predict the outcome of the actions or the length of time it will take to resolve the actions.

     None.

     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.

     The approximate number of holders of record of our common stock as of March 2, 2007 is 47, 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).

     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.

     The following table details our equity compensation plan as of December 31, 2006:

None

Repurchases of Equity Securities

None

     The selected financial data set forth below is derived from our audited consolidated financial statements and is not indicative of future operating results since we currently only engage in limited operations. The following selected financial data should be read in conjunction with the Consolidated Financial Statements for Odimo Incorporated and notes thereto and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere herein. Amounts are in thousands, except per share amounts.

     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.

     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 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.

     Our independent registered public accounting firm’s report on our financial statements for the fiscal year ended December 31, 2006 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 for the past several years and as of December 31, 2006, 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. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

     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 fluctuates 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 is typically greater in the fourth quarter. In general, we realize higher gross profit on the sale of our luxury goods, jewelry and watches in comparison to diamonds.

     Fulfillment expenses include outbound freight costs paid by us, commissions paid to sales associates, credit card processing fees and packaging and other shipping supplies. Commissions are paid based on a percentage of the price of the goods sold and are expensed when the goods are sold.

     Marketing expenses consist primarily of online advertising expenses, affiliate program fees and commissions, public relations costs and other marketing expenses.

     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.

     The following table sets forth information for years ended December 31, 2006, 2005 and 2004 about our net sales, cost of sales, gross profit, operating expenses, losses from operations, net interest income (expense), and net losses both in dollars and as a percentage of net sales:

     Net Sales. Net sales for the year ended December 31, 2006 decreased to $19.0 million from $51.8 million for the year ended December 31, 2005. In the aggregate, across our three websites, we experienced a significant decrease in visitors to our websites during the year ended December 31, 2006 as compared to the year ended December 31, 2005. This substantial decrease in customer traffic resulted in substantially lower number of orders in 2006 as compared with 2005. In addition, to attract online customers and to sell through our inventory, during 2006, we offered discounts and promotions on our product offerings. This resulted in sales of items at reduced prices, in certain cases, below cost.

     Gross Profit. Gross profit for the year ended December 31, 2006 decreased 75.0% to $3.1 million from $12.5 million for the year ended December 31, 2005 due to our exiting the diamond and jewelry business in May 2006, the sale of our www.worldofwatches.com website in December 2006, the discounts and promotions offered on the sale of products through 2006 and the liquidation of our remaining inventory during the fourth quarter of 2006. Our gross profit as a percentage of net sales decreased to 16.5% for the year ended December 31, 2006 compared to 24.2% during the year ended December 31, 2005. The decrease in gross profit as a percentage of net sales for the year ended December 31, 2006 was primarily the result of our discounts and promotions offered on the sale of products through 2006 and the liquidation of our remaining inventory during the fourth quarter of 2006.

     Fulfillment. Fulfillment expenses for the year ended December 31, 2006 decreased to $1.4 million from $3.6 million for the year ended December 31, 2005. As a percentage of net sales, fulfillment expenses for the year ended December 31, 2006 increased slightly to 7.4% compared to 7.0% for the year ended December 31, 2005. This was primarily driven by higher shipping costs and the addition of third party drop shippers during the fourth quarter of 2006.

     Marketing. Marketing expenses for the year ended December 31, 2006 decreased 72.4% to $2.1 million from $7.6 million for the year ended December 31, 2005. The decrease was primarily due to a significant reduction in our online advertising for the year ended December 31, 2006, partially due to our winding down the operations of www.worldofwatches.com and www.ashford.com. As a percentage of net sales, marketing expenses for the year ended December 31, 2006 decreased to 11.4% compared to 14.7% for the year ended December 31, 2005.

     General and Administrative. General and administrative expenses for the year ended December 31, 2006 decreased 15.5% to $9.6 million from $11.3 million for the year ended December 31, 2005. This decrease was due to decreased salary and related expenses associated with the termination, during 2006, of substantially all of our workforce. As a percentage of net sales, general and administrative expenses for the year ended December 31, 2006 increased to 50.5% compared to 21.8% for the year ended December 31, 2005.

     Depreciation and Amortization. Depreciation and amortization expense for the year ended December 31, 2006 and 2005 was $3.6 million. As a percentage of net sales depreciation and amortization increased to 19.0% from 6.9% due to decreased net sales in 2006.

     Goodwill Impairment. For the year ended December 31, 2005 we recorded an impairment charge of $9.8 million related to the impairment of goodwill.

     Impairment of Long-Lived Assets. In December 2006, we recorded an impairment charge of $5.4 million related to our 2007 sale of machinery and equipment, including computers, software and equipment, for $250,000.

     Gain on Sale of Assets. In connection with the May 2006 sale of assets related to our online diamond and jewelry business operations, including our domain name www.diamond.com, we recorded a net gain on sale of assets of $6.9 million in the second quarter of 2006. In connection with the December 2006 sale of assets related to our online watch business operations, including our domain name www.worldofwatches.com, we recorded a net gain on sale of assets of $281,000.

     Interest Expense, Net. Interest expense, net, for the year ended December 31, 2006 decreased 75.8% to $16,000 from $66,000 for the year ended December 31, 2005. This decrease is due to a decrease in borrowed capital for the year ended December 31, 2006.

     Net Loss. Net loss for the year ended December 31, 2006 was $11.8 million as compared to $23.5 million for the year ended December 31, 2005. The decrease was primarily attributable to a decrease in gross profit and a decrease in online marketing costs for the year ended December 31, 2006 compared to the year ended December 31, 2005. In addition, net loss for the year ended December 31, 2005 includes a non-cash charge of $9.8 million, related to the impairment of goodwill. For the year ended December 31, 2006, net loss includes a gain on sale of assets of $1.8 million related to the sale of certain assets of the Company. Excluding the gain on sale of assets during 2006 and non-cash charges incurred during the year ended December 31, 2005, our net loss would be $13.6 million for each of the years ended December 31, 2006 and December 31, 2005.

     Net Sales. Net sales for the year ended December 31, 2005 decreased slightly to $51.8 million from $52.2 million for the year ended December 31, 2004.

     Number of orders for the year ended December 31, 2005, decreased 2.7% to 151,700 from 155,840 for the year ended December 31, 2004. This slight decrease resulted from a 2.1% decrease in new customers offset by increased sales to existing customers. However, for the year ended December 31, 2005, our average order value increased 3.4% to $387 from $374 for the year ended December 31, 2004. In the aggregate,

however, across our three websites, we experienced a 24.7 % decrease in visitors to our websites during the year ended December 31, 2005 as compared to the year ended December 31, 2004.

     This increase in average order value is due to our increased sales of diamonds and jewelry in 2005 which have greater average order values than watches and luxury goods. In 2005 we offered promotions and discounts which resulted in sales of certain items, including handbags, at reduced prices resulting in an offset to our increase in average order value in 2005.

     Gross Profit. Gross profit for the year ended December 31, 2005 decreased 17.0% to $12.5 million from $15.1 million for the year ended December 31, 2004 due to discounts and promotions offered on the sale of luxury goods in 2005. Our gross profit as a percentage of net sales decreased to 24.2% for the year ended December 31, 2005 compared to 28.9% during the year ended December 31, 2004. The decrease in gross profit as a percentage of net sales for the year ended December 31, 2005 was primarily the result of an increased proportion of net sales being derived from diamonds which had a lower margin than luxury goods and the sale of luxury goods discounted through promotions and offers on www.ashford.com.

     Fulfillment. Fulfillment expenses for the year ended December 31, 2005 increased slightly to $3.6 million from $3.5 million for the year ended December 31, 2004. As a percentage of net sales, fulfillment expenses for the year ended December 31, 2005 increased slightly to 7.0% compared to 6.7% for the year ended December 31, 2004. This was primarily driven by a shift in our product mix towards diamonds and fine jewelry in 2005 which had higher shipping costs per order.

     Marketing. Marketing expenses for the year ended December 31, 2005 increased 15.0% to $7.6 million from $6.6 million for the year ended December 31, 2004. The increase was primarily due to significantly increased online advertising costs. As a percentage of net sales, marketing expenses for the year ended December 31, 2005 increased to 14.7% compared to 12.7% for the year ended December 31, 2004.

     General and Administrative. General and administrative expenses for the year ended December 31, 2005 decreased 19.8% to $11.3 million from $14.1 million for the year ended December 31, 2004. The general and administrative expense for the year ended 2004 includes $4.7 million of stock-based compensation expense due to the granting of immediately vested options to purchase 290,000 shares of common stock to employees. No stock based compensation expense was incurred for the year ended December 31, 2005. Excluding the $4.7 million of stock-based compensation expense in 2004, our general and administrative expense increased by approximately $1.8 million for the year ended December 31, 2005 compared to the year ended December 31, 2004. This increase was due to an increase in insurance expenses, professional fees and public company costs.

     As a percentage of net sales, general and administrative expenses for the year ended December 31, 2005 decreased to 21.8% compared to 27.1% for the year ended December 31, 2004. Excluding the stock-based compensation expense of $4.7 million incurred for year ended December 31, 2004, general and administrative expenses as a percentage of net sales for the year ended December 31, 2004 would have been 18.1%.

     Depreciation and Amortization. Depreciation and amortization expense for the year ended December 31, 2005 increased 33.4% to $3.6 million from $2.7 million for the year ended December 31, 2004. This increase is attributable to the addition of computer equipment and software development costs placed in service during the year ended December 31, 2005.

     Goodwill Impairment. For the year ended December 31, 2005 we recorded an impairment charge of $9.8 million related to the impairment of goodwill.

     Interest Expense, Net. Interest expense, net, for the year ended December 31, 2005 decreased 89.0% to $66,000 from $585,000 for the year ended December 31, 2004. This decrease is due to a decrease in borrowed capital for the year ended December 31, 2005.

     Net Loss. Net loss for the year ended December 31, 2005 was $23.5 million as compared to $12.5 million for the year ended December 31, 2004. The increase was primarily attributable to a decrease in gross profit and an increase in online marketing costs for the year ended December 31, 2005 compared to the year ended December 31, 2004. In addition, net loss for the year ended December 31, 2005 includes a non-cash charge of $9.8 million related to the impairment of goodwill. Excluding non-cash charges incurred during the years ended December 31, 2005 and December 31, 2004, our net loss increased by $5.0 million for the year ended December 31, 2005 compared to the year ended December 31, 2004.

     The following tables set forth quarterly consolidated statements of operations data for each of the eight quarters ended December 31, 2006, including amounts expressed as a percentage of net sales. This quarterly information is unaudited, but has been prepared on the same basis as the annual consolidated financial statements and, in the opinion of our management, reflects all adjustments necessary for a fair presentation of the information for the periods presented. This quarterly statement of operations data should be read in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this report. Operating results for any quarter are not necessarily indicative of results for any future period.

     Historically, our net sales were highly seasonal, with increased sales around the major gift-giving holidays. A large percentage of our net sales was generated during the December holiday season and to a lesser extent in February and May due to Valentine’s Day and Mother’s Day. During the fourth quarter, our fulfillment costs typically increased as a percentage of net sales primarily as a result of shipping upgrades. Our general and administrative expenses were also seasonal as we increased our staffing in anticipation of increased sales activity.

     Historically, we funded our operations primarily through private placements of securities, with borrowings under our bank credit facility, from the net proceeds of $22.4 million from the initial public offering of our common stock in February 2005, and approximately $1.4 million from the exercise of warrants prior to the closing of our initial public offering.

     Net cash used in operating activities for the year ended December 31, 2006 was $10.5 million compared to net cash used in operating activities for the year ended December 31, 2005 of $11.4 million. Included in the net cash used in operating activities for the year ended December 31, 2006 is a $12.6 million reduction in accounts payable and accrued liabilities offset by a $10.0 million decrease in inventory.

     Net cash provided by investing activities in the year ended December 31, 2006 was $6.5 million compared to net cash used in investing activities of $3.4 million in the year ended December 31, 2005. 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, 2006 was $300,000 as compared to $16.9 million of net cash provided by financing activities during the year ended December 31, 2005. Included in net cash provided by financing activities for the year ended December 31, 2005 is $24.8 million in net proceeds from our public offering (which when netted with initial public offering costs of $2.4 million incurred in 2004 results in net proceeds from our initial public offering of $22.4 million) and $1.3 million in proceeds from the exercise of warrants in February 2005 offset by repayment of our bank credit facility of $9.3 million. Net cash provided by financing activities in 2006 consists of $300,000 in proceeds from a related party notes payable.

     If and to the extent that our net income before income taxes, interest income and expense, depreciation expense, amortization expense, and other non-cash expenses (as defined in the agreement with GSI) is positive during 2007, we will be obligated to make a payment to GSI Commerce, Inc., the entity from which we purchased the www.ashford.com domain name in December 2002, equal to 10% of such amount for such year, up to a maximum aggregate amount of $2.0 million. To the extent that we are required to make any such payments, our cash flow will be reduced accordingly.

     Our principal sources of short-term liquidity consist of cash and cash equivalents, our borrowings and to a much lesser extent, our cash generated from our limited operations.

     As of December 31, 2006, we had $75,000 of cash and cash equivalents (and $108,000 of deposits with a credit card processing company) compared to $3.8 million of cash and cash equivalents (and $755,000 of deposits with a credit card processing company) as of December 31, 2005. 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 26, 2007 we have borrowed from Alan Lipton, our Chairman of the Board of Directors the sum of $530,000. We issued to Mr. Lipton two separate 8% promissory notes in exchange for the funds (the “Notes”). Under one of the Notes (the “First Note”), $500,000 plus all interest under the First 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. Under the other note, (the “Second Note”), $30,000 plus accrued interest is payable by the Company to Mr. Lipton on demand. Our repayment obligation under the Second Note is unsecured. We used the proceeds of the loans from Mr. Lipton for working capital purposes, including payment of our existing liabilities. 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.

     Our independent registered public accounting firm’s report on our financial statements for the fiscal year ended December 31, 2006 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 for the past several years and as of December 31, 2006, 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.

     Future payments due under contractual obligations as of December 31, 2006 are listed below:

     We do not have any off balance sheet arrangements.

     As of December 31, 2006, we had outstanding vested options to purchase approximately 131,525 shares of common stock, at a weighted average exercise price of $ 12.26 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 at the dates of the grant of the options (also referred to as intrinsic value), ranges from $0 to $16.25 per share.

     The fair market values of the shares at the dates of grant were originally estimated by our board of directors, with input from management. We did not obtain contemporaneous valuations by an unrelated valuation specialist because we based these valuations on preliminary, informal discussions with the investment banks in our initial public offering. Determining the fair value of our stock requires making complex and subjective judgments. We used two separate valuation approaches for our valuations. These approaches were the Comparable Company Analysis (or Market Multiple) Approach and the Discounted Cash Flow Approach. Using these approaches we calculated an enterprise value range.

     Under the Market Multiple Approach, we utilized external market pricing evidence for companies involved in lines of business similar to us. Pricing multiples, in particular enterprise value to revenue, were calculated using publicly available information. We selected multiples based on a risk assessment of Odimo relative to companies deemed comparable to us. Under the Discounted Cash Analysis Approach, we utilized our projected financial statements and estimates of working capital to estimate free cash flows. The free cash flows (on a debt-free basis) were discounted at a rate that reflected the uncertainty associated with achievement of such cash flows. A value was calculated assuming a sale of Odimo in year two (2005) and this amount was discounted to the present at the same risk-adjusted rate utilized for the cash flows. The results of each approach were weighted (the Market Multiple was weighted 75% and the Discounted Cash Flow was weighted 25%).

     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.

     We recognize 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, are recorded when the products are delivered and title passes to customers. We require payment before shipping products, so we estimate receipt of delivery by our customers based on shipping time data provided by our carriers. Retail items sold to customers are made pursuant to a sales contract that provides for transfer of both title and risk of loss upon delivery to the customer. Return allowances, which reduce product revenue by our best estimate of expected product returns, are estimated using historical experience.

     Inventories, consisting of products available for sale, are accounted for using the first-in first-out method, and are valued at the lower of cost or market value. This valuation requires 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 record a valuation write-down, when needed, to adjust the carrying amount of our inventories to lower of cost or market value.

     Our long-lived assets include goodwill and other intangible assets. Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (“SFAS 142”) requires 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 have determined that we have 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”), requires 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 measure 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 require significant judgment based on our historical results and anticipated results and are subject to many factors. During 2006, we recorded impairment charges related to long lived assets of approximately $5.4 million.

     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.

     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 nor were any options exercised during the period. As a result, there was no impact of SFAS 123R on our Consolidated Statements of Operations for the year ended December 31, 2006.

     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 has not yet determined the impact on the consolidated financial statements.

     In September 2006, the SEC issued Staff Accounting Bulleting (SAB) No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” SAB No. 108 provides interpretive guidance on how the effects of prior-year uncorrected misstatements should be considered when quantifying misstatements in the current year financial statements. SAB No. 108 requires registrants to quantify misstatements using both an income statement and balance sheet approach and evaluate whether either approach results in a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. If prior year errors that have been previously considered immaterial now are considered material based on either approach, no restatement is required so long as management properly applied its previous approach and all relevant facts and circumstances were considered. If prior years are not restated, the cumulative effect adjustment is recorded in opening accumulated earnings as of the beginning of the fiscal year of adoption. We have reviewed, and implemented, the provisions of SAB No. 108 as of December 31, 2006, and have determined that it did not have a material impact on its 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 is currently evaluating the impact of the adoption of this pronouncement; however, it is not expected to have a material impact on our consolidated financial position, results of operation or cash flows.

     Given our current limited operations, we do not believe we have any substantial exposure to market risk due to changes in interest rates. Our limited exposure relates primarily to the increase or decrease in the amount of interest income we can earn on our cash on hand and the amount of interest expense we incur for borrowed capital. Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes.

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

     On August 31, 2005, we were notified by Deloitte & Touche LLP (“Deloitte”) that effective August 31, 2005 Deloitte had resigned as our independent registered public accounting firm.

     The audit report of Deloitte on Odimo’s financial statements for the fiscal year ended December 31, 2004 did not contain an adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles. The audit report of Deloitte on Odimo’s financial statements for the fiscal year ending December 31, 2003 contained an explanatory paragraph for the restatement of the financial statements.

     During the two most recent fiscal years and the subsequent interim period through the date of Deloitte’s resignation, Odimo had no disagreements with Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to their satisfaction, would have caused Deloitte to make reference to the subject matter of the disagreement in connection with their reports. In addition, during that time there were no reportable events (as defined in Item 304(a)(1)(iv) of Regulation S-K).

     Odimo provided Deloitte with a copy of the disclosures, and requested Deloitte to furnish Odimo with a letter addressed to the Securities and Exchange Commission stating whether Deloitte agreed with the statements made by Odimo. The letter was attached to Odimo’s Report on Form 8-K filed on September 2, 2005, as Exhibit 16.1 thereto.

     Effective September 2, 2005, we retained Rachlin Cohen & Holtz LLP as our independent registered public accounting firm.

     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, management recognizes 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.

     We carried out an evaluation, under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

     Commencing 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. Subsequent to the end of the period covered by this report, Ms. Kornblum has 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, management believes that financial statements to be included in future reports will fairly present, in all material respects, the Company’s financial condition, results of operations and cash flows for the periods and dates then presented.

     None

     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 28, 2007.

     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. Since June 2005, Mr. Feltenstein has been 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. From 2002 to May 2004, Mr. Feltenstein pursued personal investment opportunities. 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, a venture capital company that was affiliated with Beny Steinmetz. From 1990 until January 2000, Mr. Stern was employed at CIBC Oppenheimer, a financial services company. 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. From July 1993 to November 1999, he was a Senior Managing Director of Bear, Stearns & Co. Inc., an investment banking firm. Mr. Tishman is also a director of Cedar Fair, L.P., an operator of amusement parks, and Claire’s Stores, Inc., a specialty retailer of costume jewelry, accessories and cosmetics.

     The compensation of our executive officers for the year ended December 31, 2006 was determined by our Compensation Committee based on performance. No member of our Compensation Committee serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or compensation committee.

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

     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 DISCUSSION AND ANALYSIS

Compensation Philosophy and Objectives

     Amerisa Kornblum currently serves as our only executive officer at a salary of $2500 per month. She serves us in this capacity with no written employment agreement. Due to our severely limited resources we are unable to attract other executive talent. 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.

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

     The following table sets forth for each of our Named Executive Officers (i) the aggregated options exercised in the last fiscal year, (ii) the number of shares underlying unexercised options at December 31, 2006 and (iii) the option values of unexercised in-the-money options at December 31, 2006. As of January 15, 2007, all options granted to Jeff Kornblum, Amerisa Kornblum and George Grous have been cancelled and are no longer outstanding.

     We employ Amerisa Kornblum as our Chief Executive Officer and Chief Financial Officer on a month to month basis, pursuant to an oral agreement, at a base salary of $2500 per month.

     The following is the report of our Compensation Committee with respect to the compensation paid to our executive officers during the fiscal year ended December 31, 2006.

     The Compensation Committee of the Board of Directors establishes Odimo’s general compensation policies, approves and evaluates the compensation plans and specific compensation levels for executive officers and directors and administers its stock incentive plan. Odimo’s executive compensation philosophy is to attract and retain executive officers capable of leading Odimo to fulfillment of its business objectives by offering competitive compensation opportunities that reward individual contributions as well as corporate performance.

     Base Salary. The Committee approves and evaluates base salaries for executive officers, and reviews such salaries when it deems appropriate. In general, the salaries of executive officers are based upon the Compensation Committee’s goal of ensuring that our executive compensation programs are competitive with those companies in our industry and of a similar size to Odimo.

     Bonuses. The Committee approves and evaluates bonuses for executive officers. Each executive officer is evaluated individually to determine a bonus for the fiscal year based on performance criteria, including, among other criteria, progress towards or achievement of business milestones in such executive’s area of responsibility and with respect to our financial and operating performance generally. No bonuses were given to executive officers for their performance during fiscal year 2006.

     Stock Options and Restricted Stock Awards. The Committee believes that stock options and restricted stock awards provide additional incentive to officers to work towards maximizing stockholder value. The Compensation Committee views stock options and restricted stock grants as one of the more important components of Odimo’s long-term, performance-based compensation philosophy. Stock options have typically been provided through initial grants at or near the date of hire and through subsequent periodic grants. Stock options granted to our executive officers and other employees have exercise prices equal to the fair market value at the time of grant. This approach is designed to focus executives on the enhancement of stockholder value over the long term and encourage equity ownership in the Company. Options vest and become exercisable at such time as determined by the Compensation Committee. The initial option grant is designed to be competitive with those of comparable companies for the level of the job that the executive holds and motivate the executive to make the kind of decisions and implement strategies and programs that will contribute to an increase in our stock price over time. Periodic additional stock options within the comparable range for the job may be granted to reflect the executives’ ongoing contributions to the Company, to create an incentive to remain at the Company and to provide a long-term incentive to achieve or exceed the Company’s financial goals. To date, the Compensation Committee has not granted restricted stock awards as additional compensation to our executive officers but may do so in the future.

     Alan Lipton served as our President and Chief Executive Officer from November 1999 through May 11, 2006. Jeff Kornblum served as our President and Chief Executive Officer from May 12, 2006 through January 15, 2007. Amerisa Kornblum has served as our Chief Executive Officer since January 16, 2007.

     Both Mr. Lipton’s and Mr. Kornblum’s compensation for 2006, were determined within the same framework established for all of our executives. Neither Mr. Lipton nor Mr. Kornblum received a bonus for 2006.

     The Compensation Committee considered the potential future effects of Section 162(m) of the Internal Revenue Code on the compensation paid to the Company’s executive officers. Under Section 162(m) of the Internal Revenue Code, and regulations adopted thereunder by the Internal Revenue Service, publicly-held companies may be precluded from deducting certain compensation paid to an executive officer in excess of $1.0 million in a year. The regulations exclude from this limit performance-based compensation and stock options provided certain requirements, such as stockholder approval, are satisfied. The potential tax implications of Section 162(m) will continue to be evaluated with respect to Odimo’s strategies involving executive compensation.

     The following table sets forth, as of March 30, 2007, 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.

     Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the shares. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or warrants held by that person that are currently exercisable or will become exercisable within 60 days after April 21, 2006, are deemed outstanding, while the shares are not deemed outstanding for purposes of computing percentage ownership of any other person. 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 7,038,958 shares of common stock outstanding as of March 30, 2007.

     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 under the section entitled Investor Relations — SEC Filings. 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 2006.

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

     Stanley Stern, a member of our Board of Directors is head of investment banking at Oppenheimer & Co. In May 2006, we paid Oppenheimer & Co. $300,000 as a fee for advisory and other related services in connection with our sale of our diamond and jewelry business assets to Ice.com.

     As of March 26, 2007 we have borrowed from Alan Lipton, our Chairman of the Board of Directors the sum of $530,000. We issued to Mr. Lipton two separate 8% promissory notes in exchange for the funds (the “Notes”). Under one of the Notes (the “First Note”), $500,000 plus all interest under the First 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. Under the other note, (the “Second Note”), $30,000 plus accrued interest is payable by the Company to Mr. Lipton on demand. Our repayment obligation under the Second Note is unsecured. We used the proceeds of the loans from Mr. Lipton for working capital purposes, including payment of our existing liabilities. 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.

     During 2005, we paid Mey-Al Corporation an aggregate amount of approximately $84,000 for the use of the aircraft. All amounts reimbursed were based on actual variable costs such as hourly fees for use of aircraft and fuel costs incurred by Mey-Al Corporation in connection with our usage of its aircraft. We did not reimburse Mey-Al Corporation for any fixed expenses such as management fees or aircraft maintenance fees. We made no payments to Mey-Al Corporation during 2006 for use of the aircraft.

     We believe that all of the transactions set forth above that were consummated with parties that may be deemed to be affiliated with us were made on terms no less favorable to us than could have been obtained from unaffiliated third parties.

Audit and Non-Audit Fees

     The following table sets forth fees billed to us by Rachlin Cohen & Holtz LLP for services provided during the period from September 2, 2005 until December 31, 2005 and for the year ended December 31, 2006:

     The following table sets forth fees billed to us by Deloitte & Touche LLP for audit and audit related services provided for the period from January 1, 2005 until September 1, 2005. Audit related services consisted of accounting assistance related to our filing of a registration statement on Form S-1 and our initial public offering generally, which initial public offering closed in February 2005.

     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. Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of Odimo’s financial statements and are not reported under “Audit Fees.” These services include audits of financial statements of employee benefit plans, accounting consultations related to acquisitions, attest services that are not required by statute or regulation and consultations regarding financial accounting and reporting standards.

     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.

     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 2006, all services were pre-approved by the Audit Committee in accordance with this policy.