Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     We believe the following discussion and analysis provides information that is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The discussion and analysis should be read in conjunction with the consolidated financial statements and related notes thereto appearing elsewhere in this Form 10-K. This Management’s Discussion and Analysis will help you understand:

	•		The impact of forward looking statements;
	•		Key transactions that we completed in 2005;
	•		Our financial structure, including our historical financial presentation;
	•		Our results of operations for the last three years;
	•		Our relationship with our subsidiary Supplies Distributors;
	•		Our liquidity and capital resources;
	•		The impact of seasonality, inflation and recently issued accounting standards on our financial statements; and
	•		Our critical accounting policies and estimates.

Forward-Looking Information

     We have made forward-looking statements in this Report on Form 10-K. These statements are subject to risks and uncertainties, and there can be no guarantee that these statements will prove to be correct. Forward-looking statements include assumptions as to how we may perform in the future. When we use words like “seek,” “strive,” “believe,” “expect,” “anticipate,” “predict,” “potential,” “continue,” “will,” “may,” “could,” “intend,” “plan,” “target” and “estimate” or similar expressions, we are making forward-looking statements. You should understand that the following important factors, in addition to those set forth above or elsewhere in this Report on Form 10-K, could cause our results to differ materially from those expressed in our forward-looking statements. These factors include:

	•		our ability to retain and expand relationships with existing clients and attract and implement new clients;
	•		our reliance on the fees generated by the transaction volume or product sales of our clients;
	•		our reliance on our clients’ projections or transaction volume or product sales;
	•		our dependence upon our agreements with IBM;
	•		our dependence upon our agreements with our major clients;
	•		our client mix, their business volumes and the seasonality of their business;
	•		our ability to finalize pending contracts;
	•		the impact of strategic alliances and acquisitions;
	•		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;
	•		our ability to generate more revenue and achieve sustainable profitability;
	•		effects of changes in profit margins;
	•		the customer and supplier concentration of our business;
	•		the unknown effects of possible system failures and rapid changes in technology;
	•		trends in government regulation both foreign and domestic;
	•		foreign currency risks and other risks of operating in foreign countries;
	•		potential litigation;
	•		our dependency on key personnel;
	•		the impact of new accounting standards and rules regarding revenue recognition, stock options and other matters;
	•		changes in accounting rules or the interpretations of those rules;
	•		our ability to raise additional capital or obtain additional financing;
	•		our ability and the ability of our subsidiaries to borrow under current financing arrangements and maintain compliance with debt covenants;
	•		our relationship with and our guarantees of certain of the liabilities and indebtedness of our subsidiaries;
	•		whether outstanding warrants issued in a prior private placement will be exercised in the future;
	•		the transition costs resulting from our merger with eCOST;
	•		our ability to successfully integrate eCOST into our business to achieve the anticipated benefits of the merger;
	•		eCOST’s potential indemnification obligations to its former parent;
	•		eCOST’s ability to maintain existing and build new relationships with manufacturers and vendors and the success of its advertising and marketing efforts; and
	•		eCOST’s ability to increase its sales revenue and sales margin and improve operating efficiencies.