- Amended Quarterly Report (10-Q/A)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the period ended September 30, 2009

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

Commission file Number: 000-50995

Enable Holdings, Inc.

(Formerly known as uBid.com Holdings, Inc.)

(Exact name of registrant as specified in its charter)

Delaware	52-2372260
(State or Other Jurisdiction of	(IRS Employer
Incorporation or Organization)	Identification No.)

1140 W. Thorndale Avenue, Itasca, Illinois 60143

(Address of principal executive offices and zip code)

Registrant’s telephone number including area code:

(773) 272-5000

Indicate by check mark whether the registrant (1) has filed all reports 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 filing requirements for the past 90 days. Yes x No ¨

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

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x

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

The number of shares outstanding of the registrant’s Common Stock, par value $0.001, as of September 30, 2009 was 19,726,678 .

ENABLE HOLDINGS, INC.

TABLE OF CONTENTS

	PART I. FINANCIAL INFORMATION
Item 1	Financial Statements
	Consolidated Condensed Balance Sheets - September 30, 2009 (unaudited) and December 31, 2008	3
	Consolidated Condensed Statements of Operations – Three Months and Nine months Ended September 30, 2009 and 2008 (unaudited)	4
	Consolidated Condensed Statement of Shareholders’ Equity – Nine Months Ended September 30, 2009 (unaudited)	5
	Consolidated Condensed Statements of Cash Flows – Nine Months ended September 30, 2009 and 2008 (unaudited)	6
	Notes to Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4	Controls and Procedures	26

	PART II. OTHER INFORMATION
Item 1	Legal Proceedings	26
Item 1A	Risk Factors	26
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3	Default Upon Senior Securities	27
Item 4	Submission of Matters to a Vote of Security Holders	27
Item 5	Other Information	27
Item 6	Exhibits Index	27
	Signatures	28

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ENABLE HOLDINGS, INC. and Subsidiaries

Consolidated Condensed Balance Sheet

(Dollars in Thousands, except per share amounts)

(Unaudited)

	As of
	September 30, 2009			December 31, 2008
	(unaudited)
Assets

Current Assets
Cash and cash equivalents	$	293		$	99
Restricted investments		-			462
Accounts receivable, less allowance for doubtful accounts of $2 and $494, respectively		546			820
Merchandise inventories, less reserve for obsolescence of $72 and $85, respectively		920			2,274
Prepaid expenses and other current assets		1,400			384

Total Current Assets		3,159			4,039

Property and Equipment, net		2,363			2,143
Purchased Intangible Assets, net		202			202

Total Assets	$	5,724		$	6,384

Liabilities and Shareholders' Equity

Current Liabilities
Accounts payable	$	7,683		$	4,016
Bridge loan payable		2,450			1,563
Accrued expenses:
Product cost		-			619
Other		1,156			692
Deferred rent		15			30
Flooring facility		869			370
Total Current Liabilities		12,173			7,290

Derivative liability		82			-
Convertible debenture, net of discount of $499		816			-

Total Liabilities		13,071			7,290

Shareholders' Deficit
Common stock, $.001 par value (200,000,000 shares authorized;19,726,678 and 18,826,678 shares issued and outstanding, respectively		21			20
Treasury stock, 2,135,550 shares of common stock, at cost		(2,242	)		(2,242	)
Stock warrants		3,474			10,249
Additional paid-in-capital		45,131			39,368
Accumulated deficit		(53,731	)		(48,301	)

Total Shareholders' Deficit		(7,347	)		(906	)

Total Liabilities and Shareholders' Equity	$	5,724		$	6,384

The accompanying notes are an integral part of these consolidated condensed financial statements.

ENABLE HOLDINGS, INC. and Subsidiaries

Consolidated Condensed Statement of Operations

(Dollars in Thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
Net Revenues	$	7,441		$	8,917		$	15,514		$	24,484
Cost of Revenues		5,891			8,428			11,689			20,809

Gross Profit		1,550			489			3,825			3,675

Operating Expenses
General and administrative		3,278			3,916			9,002			11,087
Sales and marketing		198			1,059			786			2,353
Total operating expenses		3,476			4,975			9,788			13,440

Loss From Operations		(1,926	)		(4,486	)		(5,963	)		(9,765	)
Interest Expense, net		(702	)		(219	)		(1,932	)		(377	)
Miscellaneous Income/(expense)		(134	)		20			(156	)		95
Gain/(loss) on financial instruments		396			-			(8	)		-

Net Loss	$	(2,366	)	$	(4,685	)	$	(8,059	)	$	(10,047	)

Net Loss per share - Basic and Diluted	$	(0.12	)	$	(0.25	)	$	(0.41	)	$	(0.55	)

Weighted Average Shares - Basic and Diluted		19,726,678			18,638,678			19,482,722			18,387,426

The accompanying notes are an integral part of these consolidated condensed financial statements.

ENABLE HOLDINGS, INC. and Subsidiaries

Consolidated Statement of Shareholders’ Equity

(Dollars in Thousands)

(Unaudited)

	Common Stock				Stock			Paid-in			Treasury Stock					Accumulated
	Shares		Dollars		Warrants			Capital			Shares		Dollars			Deficit			Total
Balance, December 31, 2008		18,826,678	$	20	$	10,249		$	39,367			2,135,550	$	(2,242	)	$	(48,300	)	$	(906	)
Cumulative effect of change in accounting principle – 1/1/2009 reclassification of equity linked financial instruments to derivative liabilities[1]		-		-		(7,486	)		5,386			-		-			2,028			(72	)
Stock compensation expense		-		-		-			177			-		-			-			177
Common stock issuance[2]		900,000		1		-			269			-		-			-			270
Warrants issued for services[3]		-		-		765			(68	)		-		-			-			697
Warrants issued in conjunction with debt [4]		-		-		623			-			-		-			-			623
Warrants surrendered[5]		-		-		(77	)		-			-		-			-			(77	)
Expired warrants [6]		-		-		(600	)		-			-		-			600			-
Net Loss		-		-		-			-			-		-			(8,059	)		(8,059	)

Balance, September 30, 2009		19,726,678	$	21	$	3,474		$	45,131			2,135,550	$	(2,242	)	$	(53,731	)	$	(7,347	)

1 Reclassify warrants from equity to liability in conjunction with ASC 815-10-63-5. See Note 3 for additional discussion.

2 900,000 shares of common stock issued to an investor relations firm.

3 Warrants issued to purchase 150,000 shares of common stock at $0.10/share.

4 5,260,000 warrants issued in conjunction with convertible debenture.

5 1,600,000 warrants surrendered by an investor that were originally issued in conjunction with the bridge loan in October 2008.

6 333,333 warrants expired that were originally issued in December 2005 with an exercise price of $4.50.

ENABLE HOLDINGS, INC. and Subsidiaries

Consolidated Condensed Statement of Cash Flows

(Dollars in Thousands)

(Unaudited)

	Nine months ended September 30,

	2009			2008

Net loss	$	(8,059	)	$	(10,047	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		425			419
Loss on disposal of fixed assets		134
Stock compensation expense		177			315
Common stock and warrants issued for services		967			32
Loss on derivative liability		8			-
Interest on warrants issued for debt		1,038			-
Changes in assets and liabilities:
Accounts receivable		274			33
Merchandise inventories		1,354			1,390
Prepaid expenses and other current assets		(1,016	)		127
Accounts payable		3,667			1,411
Accrued expenses		(171	)		302

Net cash used in operating activities		(1,202	)		(6,018	)

Cash Flows From Investing Activities
Capital expenditures		(780	)		(1,229	)
Change in restricted cash		462			-

Net cash used in investing activities		(318	)		(1,229	)

Cash Flows From financing Activities
Change in flooring facility		499			(29	)
Credit Line Borrowings		-			4,550
Proceeds from convertible debenture		1,315			-
Payments on Bridge Loan		(100	)		-

Net cash provided by financing activities		1,714			4,521

Net Increase (decrease) in Cash and Cash Equivalents		194			(2,726	)

Cash and Cash Equivalents, beginning of period		99			7,724

Cash and Cash Equivalents, end of period	$	293		$	4,998

Supplemented Cash Flow Disclosure
Cash paid for interest	$	1,859		$	171
Non-cash Investing Activity - Shares issued for domain name acquisition		-			203

The accompanying notes are an integral part of these consolidated condensed financial statements.

Notes to Consolidated Financial Statements

Note 1. Basis of presentation

Enable Holdings, Inc. (the "Company" or "Enable"), operates leading on-line websites that enable itself, certified merchants, manufacturers, retailers, distributors and small businesses to offer high quality excess, new, overstock, close-out, refurbished and limited supply brand name merchandise to consumer and business customers. Through the Company's websites, located at www.uBid.com and www.RedTag.com, the Company offers merchandise across a wide range of product categories including but not limited to computer products, consumer electronics, apparel, housewares, watches, jewelry, travel, sporting goods, automobiles, home improvement products and collectibles. The Company's marketplace employs a combination of auction style and fixed price formats.

During 2008, Enable Holdings commenced its efforts to change its business model. Concurrent with this change, the Company changed its name to Enable Holdings, Inc. and reorganized the segments based on the business units. Each segment provides a combination of seller solutions for sellers to efficiently liquidate their excess inventory. The segments are listed below:

1)	uBid.com: The Company’s flagship website, which has operated for 11 years. The website allows merchants to sell excess inventory and allows consumers to buy products in an auction as well as fixed price format.

2)	RedTag.com: The Company’s fixed price internet site offers name brand merchandise with a low shipping and handling fee of only $1.95.

3)	RedTag Live: The Company’s live liquidation group, dedicated to selling through the traditional in-store sales and live liquidation sales.

Dibu Trading Company: A wholesale inventory liquidation company dedicated to Business-to-Business solutions, providing manufacturers and distributors the ability to sell large quantities of excess inventory. For example, when a retailer needs to liquidate a large quantity of inventory, they contact the Company to find a buyer that will buy the entire inventory in a single transaction. The Company’s B2B experience allows it to present deals to multiple interested buyers to attain the most profitable one.

Commerce Innovations: A software service company which licenses auction software to third party companies. Companies, businesses and governments can use the Company’s platform to sell excess furniture, appliances, autos, and other surplus. This allows them to utilize a trusted platform while reducing live auction costs, as well as an efficient way to reach a wider target audience.

The Company’s unaudited consolidated condensed financial statements reflect normal recurring adjustments that are necessary to present fairly the Company’s financial position and results of operations on a basis consistent with that of the prior audited consolidated financial statements. As permitted by rules and regulations of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, the Company has condensed or omitted certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Results for interim periods are not necessarily indicative of the results that may be expected for a full year. These interim financial statements should be read along with the audited consolidated financial statements included in our Form 10-K/A for the year ended December 31, 2008. The consolidated condensed financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s Consolidated Condensed Financial Statements and accompanying notes. Actual results could differ materially from those estimates.

Note 2. New accounting pronouncements

Throughout 2009, the FASB Accounting Standards Codification (Codification) was issued. The Codification is the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. The Codification is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The implementation of this standard did not have a material impact on our financial position and results of operations.

In September 2006, the FASB issued SFAS 157 which is primarily codified into Topic 820, “Fair Value Measurements and Disclosures” which defines fair value, and establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820-10 were effective January 1, 2008. The FASB has also issued Staff Position (FSP) SFAS 157-2 (FSP No. 157-2), which delayed the effective date of SFAS 157 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until fiscal years beginning after November 15, 2008. For the nine months ended September 30, 2009, the Company used the guidance provided in ASC 820-10, to value and present the derivative liability. In August 2009, the FASB issued Accounting Standards Update No. 2009-05, "Measuring Liabilities at Fair Value" ("ASU 2009-05"). This update provides amendments to ASC Topic 820, "Fair Value Measurements and Disclosure" for the fair value measurement of liabilities. The Company will adopt ASU 2009-05 for all financial liabilities in the fourth quarter of 2009. The Company will adopt ASU 2009-05 for all non-financial liabilities in the first quarter of 2010 when the Company fully adopts SFAS 157. Although the Company will continue to evaluate the application of SFAS 157 and this update for its non-financial liabilities, the Company does not expect the adoption of ASU 2009-05 will have a material effect on its consolidated financial statements.

In May 2008, the FASB issued ASC 470-20 (formerly FSP APB 14-1), “Accounting for Debt Instruments with Conversion and Other Options That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).” ASC 470-20 requires issuers of convertible debt that may be settled wholly or partly in cash upon conversion to account for the debt and equity components separately. ASC 470-20 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning on or after December 15, 2008. The Company evaluated ASC 470-20 against the outstanding debt and concluded that it does not need to account for any changes since the outstanding convertible debt is convertible at the holder’s option but does not have a settlement option.

In June 2008, the FASB ratified ASC 815-10-65-3 (formerly EITF No. 07-5, "Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity's Own Stock"). ASC 815-10-65-3 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument's contingent exercise and settlement provisions. ASC 815-10-65-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company adopted ASC 815-10-65-3 in the first quarter of fiscal year 2009. In accordance with the pronouncement, the Company identified three tranches of warrants that were not indexed to the Company’s common stock and thus were required to be reclassified as a liability, as stated in Note 3 below.

In June 2008, the FASB issued ASC 260-10 (formerly EITF 03-6-1), “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities.” The provisions of ASC 260-10 require that all outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends or dividend equivalents (such as restricted stock units granted by the Company) be considered participating securities. Because the awards are participating securities, the Company is required to apply the two-class method of computing basic and diluted earnings per share (the “Two-Class Method”). The Company does not have any outstanding unvested restricted stock as all of the Company’s restricted stock vested in October 2008. Thus, the Company will not state its earnings per share using the two-class method stated above.

In June 2009, the FASB issued SFAS No. 168, Accounting Standards Update (“ASC”) 2009-01 "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162 ("SFAS 168"). SFAS 168 establishes the FASB Accounting Standards Codification ("ASC") as the source of authoritative accounting principles recognized by the FASB. Following this statement, the FASB will issue new standards in the form of Accounting Standards Updates ("ASUs"). SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009 and therefore is effective for the Company in the third quarter of 2009. The issuance of SFAS 168 will not change GAAP and therefore the adoption of SFAS 168 will only affect the specific references to GAAP literature in the notes to consolidated financial statements.

Note 3. Summary of significant accounting policies

1) Revenue recognition

The Company’s business model currently consists of three distinct business channels: Certified Merchant (CM), Managed Supply and Cash Recovery. The Company sells merchandise through the CM Program channel by allowing prescreened third party merchants to sell their product through our online marketplace to consumers and business. On this merchandise, the Company does not take title and therefore does not bear the related inventory risk. In the CM Program, the Company is the primary obligor to whom payment is due, but it bears no inventory or returns risk, so the Company records only its commission as revenue. Through the Managed Supply channel, the Company sells inventory that is consigned to it. The inventory is either stored at the Company’s warehouse or at the sellers’. The Company purchases merchandise outright in the Cash Recovery channel and sells to consumers and businesses. On this merchandise, the Company bears the inventory, return and credit risk. The full sales amount is recorded as revenue upon verification of the credit card transaction and shipment of the merchandise. In all instances where the credit card authorization has been received but merchandise has not been shipped, the Company defers revenue recognition until the merchandise is shipped.

2) Derivative financial instruments

As a result of the adoption of ASC 815 (formerly EITF 07-5), the Company is required to “Determine the Fair Value of a Financial Asset When The Market for That Asset Is Not Active”, and to disclose the fair value measurements required by ASC 820-10,

“Fair Value Measurements and Disclosures.” The derivative liability recorded at fair value in the balance sheet as of September 30, 2009 is categorized based upon the level of judgment associated with the inputs used to measure its fair value. Hierarchical levels, defined by ASC 820-10, are directly related to the amount of subjectivity associated with the inputs to fair valuations of these liabilities are as follows:

Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable; and

Level 3 — Unobservable inputs, for which little or no market data exist, therefore require an entity to develop its own assumptions.

The following table summarizes the financial liabilities measured at fair value as of September 30, 2009, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

		Level 1				Level 2				Level 3				Total
Derivative Liability			-			$	82				-			$	82

The derivative liability consists of stock warrants issued by the Company that contain a strike price adjustment feature, as stated below. In accordance with ASC 815, the Company calculated the fair value of the warrants using the Black–Scholes–Merton valuation model, at January 1, 2009, with a corresponding reduction of additional paid in capital of $5,386 and $2,028 to accumulated deficit. At September 30, 2009, the Company revalued the estimated liability and reduced the additional liability on financial instruments in the Statement of Operations as follows:

(Dollars in thousands, except per share price)

Warrants	Original Exercise Price		Adjusted Warrants		Adjusted Exercise Price		Liability Recorded 1/1/2009		Additional Liability Recorded 9/30/2009		Fair Value 9/30/2009
2,669,065	$	5.85		9,741,267	$	1.60	$	61	$	7	$	68
320,000	$	4.50		1,157,755	$	1.24	$	12	$	2	$	14

The Company used the following assumptions in calculation of the Black-Scholes model: no expected dividend yield, estimated volatility 66.7%, risk-free interest rate of 1.82% and maturity of two years.

During the quarter ended September 30, 2009, a gain of $396 was recorded under ASC 815. The total loss resulting for the nine months ended September 30, 2009 is $8. The Company evaluates the liability each reporting period and records the appropriate gain or loss resulting from the change in the fair value of such warrants.

3) Shipping and handling costs

Shipping costs that are billable to the customer are included in revenue and shipping costs that are payable to vendors and are included in the cost of revenues in the accompanying consolidated statements of operations. Handling costs consisting primarily of the third party logistics warehouse costs are included in general and administrative expenses and for the quarters ended September 30, 2009 and 2008, were $44 and $155, respectively. Handling costs for the nine months ended September 30, 2009 and 2008 were $234 and $434 respectively.

4) Intangibles

Each reporting period, the Company will evaluate the useful life of intangible assets to determine whether events and circumstances continue to support an indefinite useful life, and record impairment if needed. No impairment was recorded at September 30, 2009.

Note 4. Earnings (loss) per share

The Company computes both the basic and diluted loss per share. Basic loss per share is computed by dividing the loss available to common shareholders by the weighted average common shares outstanding. Dilutive earnings per share would include all common stock equivalents unless anti-dilutive.

Due to losses in each period presented, the Company has not included the following common stock equivalents in its computation of diluted loss per share as their input would have been anti-dilutive.

September 30,	2009		2008
Shares subject to stock warrants		59,249,022		3,412,398
Shares subject to stock options		4,296,023		1,705,000

		63,545,045		5,117,398

The EPS for the three months ended September 30, 2009 and 2008 were $(0.12) and $(0.25), respectively. EPS for the nine months ended September 30, 2009 and 2008 were $(0.41) and $(0.55) respectively.

Note 5. Financing Arrangements

During the fourth quarter of 2008, the Company received a $2,550,000 bridge loan provided by multiple accredited investors. The bridge loan is in the form of Senior Secured Debentures and bears interest at the rate of 18% per annum. In consideration, the investors received warrants to purchase 12,750,000, 25,500,000 and 3,200,000 shares of the Company’s common stock at an exercise price of $0.20, $0.10 and $0.25 per share, respectively, for an aggregate of 41,450,000 shares of the Company’s common stock. The warrants are exercisable immediately for a period of five years from the agreement date. The investors may elect to convert the accrued and unpaid interest into the common stock of the Company. The Company is in default of this agreement. See Note 8 for details on the bridge loan.

In March 2009, the Company initiated a private placement offering to accredited investors. Investors may purchase units, with each unit consisting of a senior convertible debenture for one share of common stock of the Company, and a warrant, depending on the date of investment, to acquire either two shares or one share of Common Stock for ten years at a purchase price of $0.25 per share. The Debentures will pay interest at a rate of 12% per annum, have a term of 30 months and are convertible into the Company’s common stock at any time at the option of the investor. The minimum and maximum number of units that may be sold in the private placement is 2,000,000 units and 15,000,000 units, respectively. As of September 30, 2009, the Company has received investments in aggregate of $1,315,000 which were held in an escrow account until April 29, 2009. The Company then used the proceeds for inventory needs and for outstanding vendor payables.

In March 2009, the Company entered into an independent twelve month consulting agreement with Salzwedel Financial Communications, Inc (“Salzwedel”), with the term expiring May 15, 2010. Salzwedel will represent the Company in investors’ communications and relations with existing shareholders, brokers, dealers and other investment professionals as to the Company’s current and proposed activities and to consult with management concerning such Company activities. For undertaking the engagement, for previous services rendered and for other good and valuable consideration, the Company issued Salzwedel a Commencement Bonus of 900,000 shares of Common Stock and a five-year warrant to purchase 3,000,000 shares of Common Stock at $0.25 per share. Additionally the Company has agreed to pay Salzwedel $8,000 cash per month, during the term of the engagement, unless terminated early. Pursuant to the terms of the engagement at no time will Salzwedel beneficially own five percent or more of the Company.

Note 6. 2005 Equity Incentive Plan and Stock Based Compensation

The Company’s 2005 Equity Incentive Plan (“2005 Equity Incentive Plan”) is an equity-based compensation plan in-place to provide incentives, and to attract, motivate and retain the highest qualified employees, directors, consultants and other third party service providers. The 2005 Equity Incentive Plan enables the board to provide equity-based incentives through grants or awards of stock options and restricted stock (collectively, “Incentive Awards”) to present and future employees, consultants, directors, and other third party service providers.

A minimum of 7,000,000 and a maximum of 10,500,000 shares of common stock, subject to the discretion of the Company’s Board of Directors, have been reserved for issuance under the 2005 Equity Incentive Plan. If an Incentive Award granted pursuant to the 2005 Equity Incentive Plan expires, terminates, expires and is unexercised or is forfeited, or if any shares are surrendered to the Company in connection with an Incentive Award, the shares subject to such award and the surrendered shares will become available for future awards under the 2005 Equity Incentive Plan. Options generally vest over a period of four years and have a ten year contractual life.

Effective January 1, 2006, the Company adopted ASC Topic 718 , “Stock- Based Compensation” . This pronouncement requires companies to measure the cost of employee service received in exchange for a share based award (stock options and restricted stock) based on the fair value of the award. The Company has elected to use the “modified prospective” transition method for stock options granted prior to January 1, 2006, but for which the vesting period is not complete. Under this transition method, the Company accounts for such awards on a prospective basis, with expense being recognized in its statement of operations beginning in the first quarter of 2006 and continuing over the remaining requisite service period based on the estimated grant date fair value . The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award which is generally the option vesting term of four years.

Stock options

Stock option activity under the Company’s 2005 Equity Incentive Plan for the nine months ended September 30, 2009 is summarized as follows:

	Shares			Weighted- Average exercise price per share
Outstanding at December 31, 2008		1,568,500			1.18
Granted		56,000			0.29
Exercised		-			-
Surrendered		(80,000	)		0.99
Outstanding at March 31, 2009		1,544,500			1.15
Granted		3,872,194			0.38
Exercised		-			-
Surrendered		-			-
Outstanding at June 30, 2009		5,416,694			0.60
Granted		-
Exercised		-
Surrendered		(1,120,671	)		0.54
Outstanding at September 30, 2009		4,296,023			0.62

Exercisable at September 30, 2009		1,013,875			1.24

The fair value of the stock options granted under the Company’s 2005 Equity Incentive Plan was estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	September 30,
	2009			2008
Risk - free interest rate		4.0	%		5.0	%
Dividend yield		0.0	%		0.0	%
Expected volatility		85.8	%		68.0	%
Expected life (years)		6.0			6.0
Weighted average grant date fair value	$	0.22		$	0.77
Estimated forfeiture rate		0.0	%		31.8	%

The risk-free interest rate is based on the U.S. Treasury Bill rates. The dividend reflects the fact that the Company has never paid a dividend on its common stock and does not expect to do so in the foreseeable-future. Expected volatility was based on a market-based implied volatility. The expected term of the options is based on what the Company believes will be representative of future behavior. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the Company’s actual forfeiture rate is materially different from its estimate, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.

The following table summarizes additional information regarding outstanding and exercisable options at September 30, 2009.

Outstanding							Exercisable
Exercise Price	Number Outstanding at September 30, 2009		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Number Exercisable at September 30, 2009		Weighted Average Exercise Price

.01-2.00		4,231,023	$	0.58		9.6		967,625	$	1.15
2.01 - 4.00		55,000	$	2.89		8.3		38,750	$	2.90
4.01 - 5.00		10,000	$	4.50		6.3		7,500	$	4.50
		4,296,023	$	0.62		9.57		1,013,875	$	1.24

As of September 30, 2009 there was $686,000 of total unrecognized compensation cost related to the non-vested option awards under the 2005 Equity Incentive Plan. That cost is expected to be recognized over the remaining vesting period of the non-vested option awards.

Restricted Stock

As of September 2009, there was no unvested restricted common stock outstanding.

Stock–based Compensation Expense

Stock-based compensation expense recognized related to the 2005 Equity Incentive Plan for the three months and nine months ended September 30, 2009 and 2008 was as follows:

	Dollars in Thousands
	Three Months Ended September 30, 2009				Nine Months Ended September 30, 2009
	2009		2008		2009		2008
Stock Options	$	78	$	92	$	177	$	315

Note 7. Common Stock warrants

Warrants were issued in conjunction with the private offering in 2005, with a 3-year term expired in October 2008. These warrants were issued to purchase 333,333 shares of common stock with an exercise price of $4.50 per share and had a life of three years.

In March 2009, the Company issued a warrant to purchase 3,000,000 shares of common stock to an investor relations firm. See Note 5 for further discussion. Pursuant to this agreement, an investor who owns greater than 5% of our common stock, surrendered 1.6 million warrants that were issued in conjunction with the bridge loan in 2008.

In March 2009, the Company issued a five year warrant to purchase 150,000 shares of common stock to a consultant of the Company as compensation for consulting services.

In April 2009, the Company issued five year warrants to purchase 5,260,000 shares of common stock to investors that participated in the senior secured debenture discussed in note 5 above.

In conjunction with stock warrant issuances in 2008 and 2009, the Company adjusted the exercise price and the shares of warrants that were issued in December 2005 and February 2006. The warrants that are adjusted are as follows:

Warrants	Original Exercise Price		Adjusted Number of Warrants		Adjusted Exercise Price
2,669,065	$	5.85		9,741,267	$	1.60
320,000	$	4.50		1,157,755	$	1.24

Note 8. Debt

On July 25, 2008, Wells Fargo Bank notified the Company of the Company’s failure to meet the minimum excess availability requirement of $3.5 million. Since the Company did not meet the minimum excess availability requirement as stated in the agreement, the financial covenants went into effect which required that we demonstrate net earnings at the levels stated in the agreement. Due to the restructuring of the Company in 2008, the Company was unable to meet the financial covenants.

On October 15, 2008, the Company paid off-the outstanding balance owed to Wells Fargo Bank terminating the Credit Agreement specified above. Pursuant to the pay-off agreement, the Company paid a forbearance agreement fee of $50,000 and early termination fee of $125,000. Wells Fargo Bank has also released its security interest in the Company’s collateral.

During the fourth quarter of 2008, the Company received a $2,550,000 bridge loan provided by multiple accredited investors of which $2,450,000 is currently outstanding. The bridge loan is in the form of a Senior Secured Debenture and bears interest at the rate of 18% per annum. In consideration for the loan, the investors received warrants to purchase an aggregate of 12,750,000, 25,500,000 and 3,200,000 shares of the Company's common stock at an exercise price of $0.20, $0.10 and $0.25 per share, respectively, for an aggregate of 41,450,000 shares of the Company's common stock. The warrants are exercisable immediately for a period of five years from the agreement date. The investors may elect to convert the accrued and unpaid interest into common stock of the Company. The Company engaged an independent valuation company to assist in determining the fair market value of the warrants that were issued in conjunction with the bridge loan. The fair market value of the warrants was determined to be $8,752,000 based on a volatility range of 66.71%-83.60% and an interest rate range of 1.22%-4.08%.

Per ASC 470-20 the Company recorded fair value of the warrants using a relative fair value of the warrants and debt. The resulting discount of $1,975,000 was amortized $987,000, $531,000, $303,000 and $154,000 in the three months ended December 31, 2008, March 31, 2009, June 30, 2009 and September 30, 2009, respectively. At September 30, 2009 the discount was fully amortized.

On January 14, 2009, July 16, 2009 and subsequently on August 19, 2009 the Company received extensions from certain accredited investors who previously made total commitments for an aggregate of $2,550,000. During the first quarter of 2009, the Company paid off $100,000 associated with the bridge loan.

In March 2009, the Company initiated a private placement offering to accredited investors. Investors may purchase units, with each unit consisting of a senior convertible debenture for one share of common stock of the Company, and a warrant, depending on the date of investment, to acquire either two shares or one share of Common Stock for ten years at a purchase price of $0.25 per share. The Debentures pay interest at a rate of 12% per annum, have a term of 30 months and are convertible into the Company’s common stock at any time at the option of the investor. The Company received investments in aggregate of $1,315,000 which were held in an escrow account until April 29, 2009. The Company used the proceeds based on the corporate strategy and immediate inventory needs. Of the $1,315,000 proceeds received, $25,000 was used for legal expenses while $60,000 was paid to the brokers who assisted with the offering.

An aggregate of 1,600,000 warrants were surrendered by an investor in the bridge loan financing in conjunction with the agreement with the investor relations firm, described previously. These warrants were exercisable at $0.25 per share.

During the nine months ended September 30, 2009 the Company maintained short term secured inventory flooring facilities with private individuals. Outstanding balances on the flooring facilities bear interest between 36.0% to 52.0% on an annual percentage basis. The balance outstanding as of September 30, 2009 was $869,000.

Note 9. Segment Information

During 2008, the Company commenced efforts to change its business model. Concurrent with this change, the Company reorganized the segments based on the business units. Each segment provides a combination of seller solutions for sellers to efficiently liquidate their inventory. The seller solutions offered by the Company are: Certified Merchant (CM), Managed Supply and Cash Recovery. Each of the business segments, except commerce innovations, can offer the three seller solutions.

The revenue and gross profit breakdown of the Company based on the five business segments, after the transition is as follows:

(The Company does not summarize expenses based on the segments).

	(Dollars in Thousands)
	Three months Ended September 30,										Nine months Ended September 30,
	2009					2008					2009					2008
Net Revenue
uBid,com	$	814		10.9	%	$	4,925		55.2	%	$	5,078		32.7	%	$	15,742		64.3	%
RedTag.com		325		4.4	%		-		-			571		3.7	%		-		-
RedTag Live		4,682		62.9	%		1,284		14.4	%		5,485		35.4	%		1,284		5.2	%
Dibu Trading Co.		1,620		21.8	%		2,708		30.4	%		4,380		28.2	%		7,458		30.5	%
Commerce Innovations		-		-			-		-			-		-			-		-
Total	$	7,441		100.0	%	$	8,917		100.0	%	$	15,514		100.0	%	$	24,484		100.0	%

Gross Profit
uBid,com	$	520		33.5	%	$	1,286		263.0	%	$	2,323		60.7	%	$	3,800		103.4	%
RedTag.com		48		3.1	%		-		-			82		2.1	%		-		-
RedTag Live		811		52.3	%		189		38.7	%		997		26.1	%		189		5.1	%
Dibu Trading Co.		171		11.0	%		(986	)	(201.6	)%		423		11.1	%		(314	)	(9	)%
Commerce Innovations		-		-			-		-			-		-			-		-
Total	$	1,550		100.0	%	$	489		100.0	%	$	3,825		100.0	%	$	3,675		100.0	%

Gross Profit %
uBid,com		63.9	%				26.1	%				45.7	%				24.1	%
RedTag.com		14.8	%				-					14.4	%				-
RedTag Live		17.3	%				14.7	%				18.2	%				14.7	%
Dibu Trading Co.		10.6	%				(36.4	)%				9.7	%				(4.2	)%
Commerce Innovations		-					-					-					-
Total		20.8	%				5.5	%				24.7	%				15.0	%

Note 10. Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, considering the Company realizes the assets and liquidates the liabilities in the normal course of business. As of September 30, 2009 the Company had accumulated a deficit of approximately $53,731,000. The Company has incurred losses in the last 11 years, significantly so in the last two years, attributable to operations and the change in the business model. The Company has managed its liquidity during this time through a series of cost reduction initiatives and short-term financing transactions. However, the current credit market remains volatile which affects the Company’s ability to raise long-term capital financing and inventory financing needed in its business.

The Company’s plans to alleviate this condition consist of, but are not limited to the following:

Restructuring all secured and unsecured debt,

Enter into an asset based lending credit line (ABL) of approximately $3,000,000,

Increase revenues through the introduction of diversified product lines to serve the asset recovery industry,

Increase revenues through the introduction of customer transaction fees and restructuring of CM vendor rate card, and

Cost reduction plans including completing the consolidation of corporate, warehouse and customer care facilities and reducing head count.

However, there is no assurance that the Company will be successful in these efforts, which raises substantial doubt as to its ability to continue as a going concern.

Note 11. Subsequent Events

The Company has evaluated subsequent events through November 20 , 2009 the date the financial statements were issued.

The existing bridge loan expired on September 15, 2009. The Company is in discussion with the investors on restructuring the loan.

On August 4, the Company received a notice from the SEC notifying the Company that the Company’s 2008 Form 10-K and the Form 10-Q for the period ended March 31, 2009 have been selected for review. Management replied to the SEC comments and filed an amended Form 10-KA and the Form 10-QA for the period ended March 31, 2009 on October 5, 2009. On October 27, 2009, the Company received a second notice from the SEC with additional questions on Form 10KA and Form 10QA for the period ended March 31, 2009. Management has reviewed the SEC comments and does not anticipate any material adjustments.

On October 9, 2009 Robert T. Geras resigned from his position as a director of the Company for personal reasons. The remaining four members of the Company’s Board of Directors have initiated the process of replacing this open board seat as soon as possible.

On October 9, 2009, the Company received total commitments for a $500,000 loan in the form of 2009 Convertible Promissory Notes (the “Loan”) provided by Hdibu LLC, Theodore Deikel and Talos Partners LLC (collectively, the “Investors”). The Loan bears interest at a rate of the then-posted U. S. Prime Rate plus 500 basis points per annum and is due on November 30, 2009. The Loan is convertible into the Company’s Series A Preferred Stock, at the option of the Investors, at a conversion price of $0.10 per share, upon at least 30 days’ notice to the Company. The Company intends to use the Loan for working capital. The rights and preference of the Company’s Series A Preferred Stock is set forth in the Certificate of Amendment of Certificate of Incorporation which is attached hereto as Exhibit 3.1, which has not yet been filed with the Delaware Secretary of State. The Loan was made pursuant to the terms of an Interim Loan Agreement which was filed along with Form 8-K on October 16, 2009.

The Company is negotiating a financial restructuring with its secured and unsecured creditors which is being done at the same time the Company is attempting to secure further financing. There is no assurance the Company will be successful with the financial restructuring. If the Company is not successful, substantial doubt exists as to its ability to continue as a going concern.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated condensed financial statements and related notes included in Item 1 of Part 1 of this Quarterly Report and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2008. Enable Holdings, Inc. is a holding company for uBid, Inc., Dibu Trading Corp., RedTag, Inc., RedTag Live, Inc., Enable Payment Systems, Inc. and uSaas, Inc., our operating businesses. For purposes of this Quarterly Report, unless otherwise indicated or the context otherwise requires, all references herein to “Enable,” “we,” “us,” and “our” refer to Enable Holdings, Inc. and our subsidiaries.

Information in the following Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements provide current expectations or forecasts of future events and can be identified by the use of terminology such as “believe,” “estimate,” “expect,” “intend,” “may,” “could,” “will,” and similar words or expressions. Any statement that is not a historical fact, including statements regarding estimates, projections, future trends and the outcome of events that have not yet occurred, is a forward-looking statement. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including but not limited to the risk factors detailed in our filings with the SEC, including our Annual Report on Form 10-K/A for the year ended December 31, 2008. We assume no obligation to update such forward-looking statements or to update the reasons actual results could differ materially from those anticipated in such forward-looking statements.

Overview

We operate leading online websites located at www.uBid.com and www.RedTag.com . The two websites offer high quality excess, new, overstock, close-out, recertified and limited supply brand name merchandise to both consumers and businesses using auction style and fixed price formats. We offer consumers a trustworthy buying environment in which we continually monitor and certify activity to minimize the potential for fraud by certifying all merchants and processing 100% of all transactions between buyers and sellers. Our online properties offer brand-name merchandise from over 200 product categories including but not limited to, computer products, consumer electronics, apparel, housewares, watches, jewelry, travel, sporting goods, automobiles, home improvement products and collectibles.

Our current business model provides value for consumers, manufacturers, distributors, retailers and other approved third party merchants. Consumers shop in a trustworthy and secure online environment and have the opportunity to bid their own prices on popular, brand-name products realizing product savings of generally 20%-80% off retail prices. Our online properties provide merchants with an efficient and economical distribution channel for maximizing revenue on their merchandise. Merchants can monetize overstock and close-out inventory, expand their customer base and increase sales without compromising existing distribution channels.

Our business model currently consists of three distinct business channels: Certified Merchant (CM), Managed Supply and Cash Recovery.

We sell merchandise through the CM Program channel by allowing prescreened third party merchants to sell their products through our online marketplace to consumers and businesses. On this merchandise, we do not take title and therefore do not bear the related inventory risk. In the CM Program, we are the primary obligor to whom payment is due, but we bear no inventory or returns risk, so we record only our commission as revenue. Through the Managed Supply channel, we sell inventory that is consigned to us. The inventory is either stored at our warehouse or at the sellers'. We purchase merchandise outright in the Cash Recovery channel and sell to consumers and businesses. On this merchandise, we bear the inventory, return and credit risk. The full sales amount is recorded as revenue upon verification of the credit card transaction and shipment of the merchandise. In all instances where the credit card authorization has been received but merchandise has not been shipped, we defer revenue recognition until the merchandise is shipped.

Our online properties are available 24 hours a day; seven days a week and we currently offer over 200,000 items each day. Since the first offer of product in December 1997, our marketplace has facilitated over $1 billion in net revenues and has registered over five million members.

We conduct live liquidation events at various times throughout the year. Live sales are conducted over a short period of time (usually a week) and all the merchandise is sold locally.

In the first quarter of 2008, the Company began transforming its business model from a seller marketplace to an asset recovery solution. Asset recovery is a rapidly growing industry with revenues of $38.5 billion in 2004 and is expected to climb to over $63.1 billion in 2009, according to D.F. Blumberg Associates Inc., a logistics research and consulting firm.

We began changing our business model in the first quarter of 2008 and continued implementing those changes through the end of 2008. The seven proprietary selling solutions within the five operating divisions are:

uBid.com: Our flagship website, which has operated for 11 years. The website allows merchants to sell excess inventory and allows consumers to buy products in an auction as well as fixed price format.

RedTag.com : Our fixed price internet site offers name brand merchandise with a low shipping and handling fee of only $1.95.

RedTag Live: Our live liquidation group, dedicated to selling through the traditional in-store sales and live liquidation sales.

Dibu Trading Co.: A wholesale inventory liquidation company dedicated to Business-to-Business solutions, providing manufacturers and distributors the ability to sell large quantities of excess inventory. For example, when a retailer needs to liquidate a large quantity of inventory, they contact us to find a buyer that will buy the entire inventory in a single transaction. Our B2B experience allows us to present deals to multiple interested buyers to achieve the most profitable transaction.

Commerce Innovations: A software service company which licenses auction software to third party companies. Companies, businesses and governments can use our platform to sell excess furniture, appliances, autos, and other surplus. This allows them to utilize a trusted platform while reducing live auction costs, as well as an efficient way to reach a wider target audience.

Our financial results in 2008 and the first three quarters of 2009 were negatively impacted by the planned change in the business model and the severe global economic downturn. To achieve the objective of becoming the leading excess inventory provider, we made significant investments in increased staffing levels and information technology infrastructure, specifically in the first nine months of 2008. We also made major changes to our traditional operations as we transition to the new business model.

As part of the transition to a new business model, we significantly reduced our marketing spending while realigning the marketing and advertising resources to better position them to each new operating division. We also made the strategic decision to eliminate outside advertisement on our website. Historically advertisement sales have added a revenue stream but have negatively impacted overall sales by redirecting visitor traffic from our website to competing websites.

The transition from an auction marketplace to an asset solutions company also required that operationally we improve the efficiency of our platform to enhance the user experience. We significantly decreased the number of listings, eliminating the unprofitable listings, while preparing to migrate fixed price listings to the RedTag platform based on the new business model. The reduction in the number of unprofitable listings improved our auction success rate and provides efficiencies to both buyers and sellers on our platform.

Executive Commentary

Our management believes that the most important financial and non-financial measures that track our progress include sales, website traffic, total average order value, gross margin, customer acquisition costs, advertising expense, personnel costs, and fulfillment costs.

Key Business Metrics : We periodically review key business metrics to evaluate the effectiveness of our operational strategies and the financial performance of our business. These key metrics include the following:

	2009									2008												2007
		Q3			Q2			Q1			Q4			Q3			Q2			Q1			Q4
uBid.com
GMS (in Thousands)	$	5,113		$	9,555		$	11,821		$	12,374		$	14,385		$	17,117		$	16,671		$	21,765
Number of orders (in thousands)		52			70			81			94			95			97			95			115
Average Order Value	$	98		$	137		$	145		$	131		$	152		$	176		$	175		$	188
Bidders to Visitors Percentage		1.8	%		3.3	%		3.1	%		2.9	%		3.3	%		3.6	%		4.1	%		3.1	%
Auctions Closed (in Thousands)		371			373			377			383			215			181			455			780
Auction Success rate		10.0	%		13.0	%		14.4	%		15.0	%		26.6	%		30.9	%		12.9	%		8.6	%

RedTag.com
GMS (in Thousands)	$	386		$	140		$	143		$	474		$	304		$	-		$	-		$	-
Number of orders (in thousands)		3			2			2			5			3			-			-			-
Average Order Value	$	122		$	88		$	83		$	96		$	119		$	-		$	-		$	-
Bidders to Visitors Percentage		10.4	%		3.5	%		9.6	%		30.2	%		15.1	%		-			-			-

(1) RedTag.com was first launched in August 2008.

(Auctions in these metrics refer to auctions and fixed price listings)

Gross Merchandise Sales (GMS): Gross Merchandise Sales differ from GAAP revenue in that gross bookings represents the gross sales price of goods sold by us (including sales through our CM Program) before returns, sales discounts, and cancellations.

Number of Orders: This represents the total number of orders shipped in a specified period. We analyze the number of orders by category to evaluate the effectiveness of our merchandising and advertising strategies as well as to monitor our inventory management.

Average Order Value: Average order value is the ratio of gross sales divided by the number of orders shipped within a given time period. We analyze average order value by category primarily to manage costs and other operating expenses.

Visitors to Bidder %: The percentage of visitors that bid on an auction item. We use this as a measure of the effectiveness of advertising.

Auctions Closed: A closed auction is an auction that has ended because it reached the scheduled closing time for that auction. Auctions closed include both successful auctions and auctions with no bids.

Auction Success Rate: The percentage of closed auctions that were successful and received at least one bid.

Revenue Source: We derive most of our revenue from sales of products to consumers and businesses as well as commission revenue earned for sales of merchandise under revenue sharing agreements with third party sellers. We believe that the principal drivers of our revenue consist of the average order value placed by our customers, the number of orders placed by both existing and new customers, special offers we make available that result in incremental orders, our ability to attract new customers and advertising that impacts our revenue drivers. Sales consist of orders placed through our uBid.com and RedTag.com websites, live sales events and direct business to business sales. We further generate revenue from shipping fees we charge our customers and advertising sales. We record our revenue net of returns and other discounts. Our revenues may fluctuate from period to period as a result of special offers we provide such as free shipping, and other special promotions.

Our revenue is dependent in part on sales of products produced by or purchased from several vendors. The following vendors accounted for revenues greater than 5% of our total revenues in the nine months ended September 2009 and 2008. No other supplier represented more than 5% of our net revenues for any period presented.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Vendor	2009			2008			2009			2008
Always - at - Market		10.5	%		5.5	%		7.1	%		6.3	%
Hewlett Packard Company		7.9	%		29.8	%		35.3	%		36.7	%
Ecom Electronics		6.2	%		0.6	%		2.2	%		0.3	%
Recoupit		5.2	%		1.9	%		1.7	%		3.2	%
Westinghouse Digital		0.3	%		5.4	%		1.7	%		2.0	%
Dealtree		0.1	%		6.8	%		0.0	%		4.3	%

Cost of Revenues : Cost of revenues primarily consists of the cost of the product and inbound and outbound shipping. There is no cost of revenues for UCM Program revenue. Cost of revenues does not include order fulfillment costs, which are included in general and administrative expenses.

Gross Profits: Our gross profit margins are impacted by a number of factors including the category of merchandise, the introduction of new product categories, the mix of sales among our product categories, pricing of products by our vendors, pricing strategies, promotional programs, market conditions, packaging, excess and obsolete inventory charges and other factors. Gross profits and gross profit percentages are not comparable to gross profit and gross profit percentages reported by companies that include order fulfillment costs in the cost of revenues.

Results of Operations (Dollars in Thousands)

Comparison of three months ended September 30, 2009 and 2008

(Dollars in thousands, except per share data and average order value)

The below sets forth certain data from our statement of operations as a percentage of net revenues as well as the increase (decrease) in quarter ended September 2009 as compared to September 2008. This information should be read in conjunction with our financial statements and notes thereto included elsewhere in this report.

	(Dollars in Thousands)
	Three months ended September 30,
	2009					2008					Increase (Decrease)
Net Revenues:
uBid.com	$	814		10.9	%	$	4,925		55.2	%	$	(4,111	)	(83.5	)%
RedTag.com		325		4.4	%		-		-			325		100.0	%
RedTag LIVE		4,682		62.9	%		1,284		14.4	%		3,398		264.6	%
Dibu Trading Co.		1,620		21.8	%		2,708		30.4	%		(1,088	)	(40.2	)%
Total Net Revenues		7,441		100.0	%		8,917		100.0	%		(1,476	)	(16.6	)%

Gross Profit:
uBid.com		520		7.0	%		1,286		14.4	%		(766	)	(59.6	)%
RedTag.com		48		0.6	%		-		-			48		100.0	%
RedTag LIVE		811		10.9	%		189		2.1	%		622		329.1	%
Dibu Trading Co.		171		2.3	%		(986	)	(11.1	)%		1,157		117.3	%
Total Gross Profit		1,550		20.8	%		489		5.5	%		1,061		217.0	%

General and administrative		3,278		44.1	%		3,916		43.9	%		(638	)	(16.3	)%
Sales and marketing		198		2.7	%		1,059		11.9	%		(861	)	(81.3	)%
Total operating expenses		3,476		46.7	%		4,975		55.8	%		(1,499	)	(30.1	)%
Loss from operations		(1,926	)	(25.9	)%		(4,486	)	(50.3	)%		2,560		57.1	%
Interest Expense, net		(702	)	(9.4	)%		(199	)	(2.2	)%		503		252.8	%
Other Expense		(134	)	(1.8	)%		-		-			(134	)	100.0	%
Gain/(loss) on financial instruments		396		5.3	%		-		-			396		100.0	%
Net Loss	$	(2,366	)	(31.8	)%	$	(4,685	)	(52.5	)%	$	2,319		(49.5	)%

Revenue

Web Properties: uBid.com and RedTag.com

Net revenue decreased 83.5% and gross profit decreased 59.6% in the quarter ended September 30, 2009 compared to the same period in 2008. The decreased revenue was primarily attributable to capital constraints impacting the Company’s ability to purchase inventory for sale and pay the certified merchants on a timely basis. Inventory available for website sales decreased 59.5% to $920 at September 30, 2009 compared to $2,274 at September 30, 2008. The liquidity constraints were the primary factor causing a decrease in the number of orders to 52 in the three months ended September 30, 2009 compared to 95 in the three months ended September 30, 2008. Reduced product offerings due to the decrease in inventory availability during the three months ended September 2009 resulted in a decrease in the number of visitors which negatively impacted the average order value, visitor to bidder ratio and auctions closed.

Offline Sales Channels: Dibu Trading Co. and RedTag Live

Net revenue for the offline sales channels increased approximately 224.5% in the third quarter of 2009 as compared to 2008, which was due to a higher number of live liquidation events in 2009 versus 2008. Dibu trading revenues decreased $1,088 or 40.2% as a result of the liquidity constraints.

Sales, General and Administrative Expenses

Sales and marketing, general and administrative (“SG&A”) expenses consist primarily of sales and marketing expenses, including online marketing activities, order fulfillment and other costs, such as personnel, rent, warehouse and handling, common area maintenance, depreciation, credit card processing charges, insurance, legal and accounting fees. The following is a summary of the SG&A expenses:

	(Dollars in Thousands)
	Three Months Ended
					Increase
SG&A Expenses:	September 30, 2009		September 30, 2008		(Decrease)
Salary and benefits	$	1,155	$	1,596	$	(441	)
Advertising		153		752		(599	)
RedTag Live Events		744		386		358
Credit card fees		145		366		(221	)
Legal, audit, insurance, and other regulatory fees		525		335		190
Consulting and outside services		84		267		(183	)
Warehouse		58		237		(179	)
Stock-based compensation		78		92		(14	)
Telecommunications, hardware and storage		156		171		(15	)
Depreciation & amortization		146		110		36
Other SG&A		75		257		(182	)
Facilities		103		65		38
Bad Debt		-		200		(200	)
Travel		50		80		(30	)
Dues & Subscriptions		4		61		(57	)
	$	3,476	$	4,975	$	(1,499	)

SGA expenses decreased $1,499 or 30.14% in the quarter ended September 2009 as compared to the quarter ended September 2008. The primary reason for the decrease in these expenses was the company-wide transition to an asset recovery model, and the implementations of several cost reduction projects. The primary categories contributing to the decrease are as follows:

·	Advertising expenses decreased $599 or 79.6% due to the elimination of unprofitable and ineffective advertising campaigns, as previously described.

·	Salary and benefits expenses decreased $441 or 27.6% due to staff reductions and salary reductions.

·	RedTag Live event expenses increased $358 or 92.7% as a result of an increase in live liquidation events.

·	Credit card fees decreased $221 or 60.4% due to the decrease in sales volume at the web properties.

·	Legal, audit, insurance, and other regulatory fees increased $190 or 56.7% primarily due to fees incurred in the convertible debt issuance.

·	Consulting and outside services decreased $183 or 68.5% as we eliminated outside services related to market research and analysis that were engaged in 2008.

·	Warehouse expense decreased $179 or 75.5% as a result of the lower sales volumes and the move to a multi use facility that includes a warehouse.

·	Bad Debt decreased $200. During September 2008 the Company wrote off an aged receivable.

·	Other SG&A decreased $182 or 70.8%. During the prior year the Company paid $175 to Wells Fargo to terminate their loan agreement.

Net Losses

The Company experienced a net loss of $2,366 or $0.12 per share for the three months ended September 30, 2009 compared to a net loss of $4,685 or $0.25 per share for the three months ended September 30, 2008. Net loss increased due to the aforementioned change in the business model and the capital constraints resulting in an increase in interest expense.

Interest expense

Interest expense increased $483 due to higher rates being charged on inventory loans.

Comparison of nine months ended September 30, 2009 and 2008

(Dollars in thousands, except per share data and average order value)

The below sets forth certain data from our statement of operations as a percentage of net revenues as well as the increase (decrease) in the nine months ended September 2009 as compared to September 2008. This information should be read in conjunction with our financial statements and notes thereto included elsewhere in this report.

	Nine months ended September 30,
	2009					2008					Increase (Decrease)
Net Revenues:
uBid.com	$	5,078		32.7	%	$	15,742		64.3	%	$	(10,664	)	(67.7	)%
RedTag.com		571		3.7	%		-		-			571		100.0	%
RedTag LIVE		5,485		35.4	%		1,284		5.2	%		4,201		327.2	%
Dibu Trading Co.		4,380		28.2	%		7,458		30.5	%		(3,078	)	(41.3	)%
Total Net Revenues		15,514		100.0	%		24,484		100.0	%		(8,970	)	(36.6	)%

Gross Profit:

uBid.com		2,323		15.0	%		3,800		15.5	%		(1,477	)	(38.9	)%
RedTag.com		82		0.5	%		-		-			82		100.0	%
RedTag LIVE		997		6.4	%		189		0.8	%		808		427.5	%
Dibu Trading Co.		423		2.7	%		(314	)	(1.3	)%		737		234.7	%
Total Gross Profit		3,825		24.7	%		3,675		15.0	%		150		4.1	%

General and administrative		9,002		58.0	%		11,087		45.3	%		(2,085	)	(18.8	)%
Sales and marketing		786		5.1	%		2,353		9.6	%		(1,567	)	(66.6	)%
Total operating expenses		9,788		63.1	%		13,440		54.9	%		(3,652	)	(27.2	)%
Loss from operations		(5,963	)	(38.4	)%		(9,765	)	(39.9	)%		3,802		(38.9	)%
Interest Expense, net		(1,932	)	(12.5	)%		(282	)	(1.2	)%		(1,650	)	(585.1	)%
Other Expense		(156	)	(1.0	)%		-		-			(156	)	(100.0	)%
Gain/(loss) on financial instruments		(8	)	(0.1	)%		-		-			(8	)	(100.0	)%
Net Loss	$	(8,059	)	(51.9	)%	$	(10,047	)	(41.0	)%	$	1,988		(19.8	)%

Revenue

Web Properties: uBid.com and RedTag.com

Net revenue decreased 67.7% and gross profit decreased 38.9% in the nine months ended September 30, 2009 compared to the same period in 2008. The decreased revenue was primarily attributable to capital constraints impacting the Company’s ability to purchase inventory for sale and pay certified merchants on a timely basis. The liquidity constraints were the primary factor causing a decrease in the number of orders to 203 in the nine months ended September 30, 2009 compared to 287 in the nine months ended September 30, 2008. The Company launched a fixed price online property (RedTag.com) in August 2008 which added $571 in revenue for the nine months ended September 2009.

Offline Sales Channels: Dibu Trading Co. and RedTag Live

Net revenue for the offline sales channels increased 285.9% in the nine months ended September 30, 2009 as compared to 2008. The lower inventories in the offline channels resulted in lower Dibu revenues. RedTag Live revenue increased $4,201 or 427.5% in the nine months ended September 30, 2009 compared to September 2008. The increase resulted from an increased number of live liquidation events conducted in the current period compared to the same period of the prior year.

Sales, General and Administrative Expenses

	(Dollars in Thousands)
	Nine Months Ended
SG&A Expenses:	September 30, 2009		September 30, 2008		Increase (Decrease)
Salary and benefits	$	3,531	$	4,934	$	(1,403	)
Advertising		589		1,524		(935	)
RedTag Live Events		1,205		1,012		193
Credit card fees		683		1,161		(478	)
Legal, audit, insurance, and other regulatory fees		1,423		1,057		366
Consulting and outside services		318		776		(458	)
Warehouse		361		646		(285	)
Stock-based compensation		177		315		(138	)
Telecommunications, hardware and storage		495		518		(23	)
Depreciation & amortization		424		419		5
Other SG&A		121		356		(235	)
Facilities		275		194		81
Travel		119		211		(92	)
Bad Debt		-		200		(200	)
Dues & Subscriptions		67		117		(50	)
	$	9,788	$	13,440	$	(3,652	)

SGA expenses decreased $3,652 or 27.2% for the nine months ended September 2009 as compared to the same period September 2008. The primary categories contributing to the decrease are as follows:

·	Advertising expenses decreased $935 or 61.4% due to the elimination of unprofitable and ineffective advertising campaigns, as previously described.

·	Salary and benefits expenses decreased $1,403 or 28.4% due to staff reductions and salary cuts.

·	Credit card fees decreased $478 or 41.2% due to the decrease in sales volume at the web properties.

·	Legal, audit, insurance, and other regulatory fees increased $366 or 34.6% primarily due to fees incurred in the convertible debt issuance.

·	Consulting and outside services decreased $458 or 59% as we eliminated outside services related to market research and analysis that were engaged in 2008.

·	Warehouse expense decreased $285 or 44.1% primarily as a result of the decreased sales volumes.

·	Bad Debt decreased $200 from the prior period as the Company wrote off an aged receivable in 2008.

·	Other SG&A decreased $235 or 66.0%. During 2008 the Company paid termination fees on its loan.

Interest Expense

Interested expense increased $1,932 primarily due to the aforementioned capital constraints. The interest expense related to the amortization of bridge loan discount is $988 and $0 for the nine months ended September 2009 and 2008 respectively. Interest expense related to inventory financing was $472 and $0 for the nine months ended September 2009 and 2008, respectively.

Net Losses

The Company experienced a net loss of $8,059 or $0.41 per share for the nine months ended September 30, 2009 compared to a net loss of $10,047 or $0.55 per share for the nine months ended September 30, 2008. The net loss decreased primarily due to cost reductions as gross profit remained relatively constant.

Liquidity and Capital Resources

Net cash used in operating activities for the nine months ended September 30, 2009 was $1,202 compared to $6,018 used in the nine months ended September 30, 2008. Net losses decreased $1,988 from reported for September 30, 2009 and 2008 operating cash flows improved due to non cash charges of $2,749 for the nine months ended September 30, 2009. Cash was also provided by changes in working capital items of approximately $3,686.

Net cash used in investing activities was $318 and $1,229 for the nine months ended September 30, 2009 and 2008, respectively. Restricted cash changed by $462 as a $212 security deposit for real estate was returned to the Company and credit line guarantees of $250 were cancelled. The net cash used was due to capital expenditures. The Company continues to implement a new back office system which will eliminate costs and provide greater efficiencies. Restricted cash decreased $462 due to the reduction of existing letters of credit.

Net cash provided by financing activities was $1,714 for the nine months ended September 30, 2009, compared to $4,521 for the same period last year. The cash provided was primarily from the proceeds of the convertible debenture discussed in Note 5 and proceeds from inventory financing.

On May 9, 2006, the Company and its subsidiaries entered into a Credit and Security Agreement with Wells Fargo Bank, National Association acting through Wells Fargo Business Credit and related security agreements and other agreements described in the Credit and Security Agreement (the "Credit Agreement"). The Credit Agreement provided for advances to the Company of up to a maximum of $25,000,000. The amount actually available to the Company varied from time to time, depending on, among other factors, the amount of eligible inventory and the amount of eligible accounts receivable. The obligations under the Credit Agreement and all related agreements were secured by all of the Company's assets. The initial term of the Agreement was three years, expiring on April 28, 2009. Up to $7,000,000 of the maximum amount was available for irrevocable, standby and documentary letters of credit. Advances under the Credit Agreement incurred interest at a base rate (Wells Fargo Bank's prime rate) or LIBOR plus 2.5%. The Credit Agreement required a prepayment fee of $500,000 if the Company terminated the Credit Agreement during its first year, $400,000 if it terminated the Credit Agreement during its second year and $100,000 if the Company terminated the Credit Agreement during the third year. The Credit Agreement required the Company, among other things, to limit capital expenditures and maintain minimum availability on the line. Also, the Company was obligated contractually by a restrictive lock box arrangement. The Credit Agreement also required the Company to pay a variety of other fees and expenses, including minimum monthly interest of $10,000.

On July 25, 2008, Wells Fargo Bank notified the Company of the Company's failure to meet the minimum excess availability requirement of $3,500,000. Since the Company did not meet the minimum excess availability requirement as stated in the agreement, the financial covenants went into effect which required that the Company demonstrate net earnings at the levels stated in the agreement. Due to the change in the business model of the Company in 2008, it was unable to meet the covenants. On October 15, 2008, the Company paid off-the outstanding balance owed to Wells Fargo Bank terminating the Credit Agreement specified above. Pursuant to the pay-off agreement, the Company paid a forbearance agreement fee of $50,000 and early termination fee of $125,000. Wells Fargo Bank has also released its security interest in the Company's collateral.

Due to the recent worldwide economic downturn, the Company continues to experience difficulty raising capital to finance ongoing operations. The difficulty in raising capital during this severe economic downturn was compounded by the fact that the Company's largest shareholder, The Petters Group Worldwide and in particular Thomas J. Petters, is currently the subject of a Federal investigation. Although the Company is not controlled by the Petters Group Worldwide, nor does Thomas J. Petters have any control over the Company's management or day to day operations, the investigation negatively impacted the Company's financing efforts.

During the fourth quarter of 2008, the Company received a $2,550,000 bridge loan provided by multiple accredited investors, a portion of which was provided by related parties (See Note 18). The bridge loan is in the form of Senior Secured Debentures and bear interest at the rate of 18% per annum. In consideration, the investors received warrants to purchase an aggregate of 12,750,000, 25,500,000 and 3,200,000 shares of the Company's common stock at an exercise price of $0.20, $0.10 and $0.25 per share, respectively, for an aggregate of 41,450,000 shares of the Company's common stock. The warrants are exercisable immediately for a period of five years from the agreement date. The investors may elect to convert the accrued and unpaid interest into the common stock of the Company.

As a result of the tightening credit market (including uncertainties with respect to financial institutions and the global credit markets), extreme volatility in energy costs and other macro-economic challenges currently affecting the economy of the United States and other parts of the world, customers or vendors may experience serious cash flow problems and as a result, may modify, delay or cancel plans to purchase the Company’s products and vendors may significantly and quickly increase their prices or reduce their output. Additionally, if the Company has not been successful in securing financing, we may not be able to pay, or may delay payment of, accounts payables owed to our vendors which may adversely affect the Company’s ability to procure additional materials and services needed to meet our customers’ requirements. If the Company is unable to secure long-term financing or capital, the operations will be difficult to continue for the near term. However, there is no assurance that we will be successful in these efforts, which raises substantial doubt as to our ability to continue as a going concern.

On April 6, 2009, in conjunction with the issuance of our annual report, our auditors issued a qualified opinion which raised substantial doubt about our ability to continue as a going concern. Management’s plans to alleviate this condition consist of, but are not limited to the following:

·	Enter into an asset based lending credit line (ABL) of approximately $3,000,000,

·	Increase revenues through the introduction of diversified product lines to serve the asset recovery industry,

·	Increase revenues through the introduction of customer transaction fees and restructuring of CM vendor rate card, and

·	Cost reduction plans include completing the consolidation of corporate, warehouse and customer care facilities and reducing head count.

In March 2009, the Company completed a private placement offering to accredited investors. Investors purchased units, with each unit consisting of a senior convertible debenture for one share of common stock of the Company, and a warrant, depending on the date of investment, to acquire either two shares or one share of Common Stock for ten years at a purchase price of $0.25 per share. The Debentures pay interest at a rate of 12% per annum, have a term of 30 months and are convertible into the Company’s common stock at any time at the option of the investor. The Company received investments in aggregate of $1,315,000 which were held in an escrow account until April 29, 2009. The Company used the proceeds based on the corporate strategy and immediate inventory needs. Of the $1,315,000 proceeds received, $25,000 was used for legal expenses while $60,000 was paid to the brokers who assisted with the offering.

On April 16, 2009 and on July 16, 2009, the Company received extensions from certain accredited investors who previously made total commitments for an aggregate of $2,550,000 in the form of a 90 day bridge loan. The original maturity date of such loans was January 12, 2009, January 29, 2009, February19, 2009, April 16, 2009, July 14, 2009 and August 14, 2009. The investors made such extensions pursuant to Debenture Modification and Extension Agreements which call for an extension of the loans for 90-days after their original 90-day terms. During the first quarter of 2009, the Company paid off $100,000 associated with the bridge loan.

On October 9, 2009, the Company received total commitments for a $500,000 loan in the form of 2009 Convertible Promissory Notes provided by Hdibu LLC, Theodore Deikel and Talos Partners LLC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has little exposure to risks of fluctuating interest rates or fluctuating currency exchange rates. Accordingly, the Company does not believe that changes in interest or currency rates will have a material effect on the Company’s liquidity, financial condition or results of operations. It is the Company’s policy not to enter into derivative financial instruments.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this report (the "Evaluation Date"). Based on this evaluation, our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to the Company, including our consolidated subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company’s management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive officer and principal financial officer concluded that there has not been any change in our internal control over financial reporting during that quarter that ended September 30, 2009 has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time the Company may be named in claims arising in the ordinary course of business. Currently, no legal proceedings or claims are pending against the Company or involve the Company that, in the opinion of the Company’s management, could reasonably be expected to have a material adverse effect on its business or financial condition.

ITEM 1A. RISK FACTORS

As a result of the tightening credit market (including uncertainties with respect to financial institutions and the global credit markets), increases in energy costs and other macro-economic challenges currently affecting the economy of the United States and other parts of the world, customers and vendors may experience serious cash flow problems and as a result, may modify, delay or cancel plans to purchase the Company’s products and vendors may significantly and quickly increase their prices or reduce their output. Additionally, if the Company is not successful in securing financing, when and as needed, we may not be able to pay, or may delay payment of, accounts payables owed to our vendors which may adversely affect the Company’s ability to procure additional materials and services needed to meet our customer’s requirements. If economic conditions in the United States and other key parts of the world deteriorate further or do not show improvement, the Company may experience material adverse impacts to its business and operating results.

In addition to other information set forth in this report, you should carefully consider the factors discussed in Part 1, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2008, which could materially affect the Company’s business, financial condition or future results. The risks described in the Company’s Annual Report on Form 10-K/A are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that are currently deemed to be immaterial also may materially adversely affect the Company’s business, financial conditions and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

For the nine months ended September 30, 2009, options to purchase an aggregate of 4,296,023 shares of the Company’s common stock were granted to individuals, all of which are employees of Enable Holdings, Inc. The options have a term of ten years and vest over a four year period either quarterly or annually beginning on the first quarter or year respectively after the date of grant.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

The Company is in default under the terms of its Bridge loans and the terms of the Senior secured debentures. The events of default are outlined in Note 8 of the financials.

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

The Company did not submit any matters to a vote of its security holders during the three months ended September 30, 2009.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit No.		Description
31.1		Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized as of November 20, 2009.


	ENABLE HOLDINGS, INC.

	By:	/s/ Miguel A. Martinez, Jr.
		Name: Miguel A. Martinez, Jr. Title: Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)