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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the unaudited
interim condensed consolidated financial statements and related notes appearing
elsewhere in this Form 10-Q.
FORWARD-LOOKING INFORMATION
The matters discussed in this report on Form 10-Q other than historical
information, and, in particular, information regarding future revenue, earnings
and business plans and goals, consist of forward-looking information under the
Private Securities Litigation Reform Act of 1995, and are subject to and involve
risks and uncertainties which could cause actual results to differ materially
from the forward-looking information. These risks and uncertainties include, but
are not limited to, the "Risk Factors" set forth in the Company's Prospectus.
These include, among others, our reliance on the fees generated by the
transaction volume or product sales of our clients, trends in the market for our
services, trends in e-commerce, whether we can continue and manage growth,
changes in the trend toward outsourcing, increased competition, effects of
changes in profit margins, the unknown effects of possible system failures and
rapid changes in technology, trends in government regulation, and our
relationship with and separation from Daisytek. This report on Form 10-Q also
contains other forward-looking statements, including those related to an
anticipated spin-off from Daisytek. Consummation of the spin-off is uncertain
and realization of the anticipated results could take longer than expected and
implementation difficulties and market factors could alter anticipated results.
Actual results could differ materially from those projected in the
forward-looking statements.
OVERVIEW
We are an international provider of transaction management services to both
traditional and e-commerce companies. We derive our revenues from a broad range
of services, including order management, customer care services, billing
services, information management and fulfillment and distribution services. Our
fulfillment and distribution services are conducted at our warehouses and
include picking, packing and shipping our clients' customer orders. We offer our
services as an integrated solution, which enables our clients to outsource their
complete transaction management needs to a single source and to focus on their
core competencies. We currently provide transaction management services to over
30 clients that operate in a range of vertical markets, including apparel,
computer products, printers, sporting goods and consumer electronics, among
others.
We act as a virtual infrastructure for our clients, which helps them
enhance their traditional commerce operations and meet the operational
challenges associated with the deployment of their e-commerce initiatives. We
believe we offer a unique comprehensive integrated solution which handles the
lifecycle of the transaction "from the click of a mouse, to the knock at the
house" (SM). This solution enables our clients to focus on their core business,
products and services while at the same time quickly and efficiently
implementing traditional and e-commerce business initiatives. By utilizing our
services, our clients are able to:
Quickly Capitalize on E-commerce Market Opportunities. Our services enable
our clients to rapidly implement their e-commerce strategies and take advantage
of e-commerce opportunities without lengthy start-up and integration efforts.
Our services allow our clients to deliver consistent quality of service as
transaction volumes grow and to handle daily and seasonal peak periods. Through
our international locations and capabilities, we enable our clients to use the
broad reach of the Internet and e-commerce to sell their products almost
anywhere in the world.
Improve the Customer Experience. We enable our clients to provide their
customers with a positive buying experience thereby maintaining and promoting
brand loyalty. Through our use of advanced technology, we can respond directly
to customer inquiries by e-mail, voice or data communication and assist them
with on-line ordering and product information. We believe we offer our clients a
"world class" level of service, including 24 hour, seven day a week customer
care service centers and a high order accuracy.
Minimize Investment and Improve Operating Efficiencies. We provide our
clients with access to a wide array of services that cover a broad spectrum of
e-commerce transaction management issues, eliminating
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