Results of Operations

For the Interim Periods Ended March 31, 2009 and 2008

     The following table sets forth certain historical financial information from our unaudited interim condensed consolidated statements of operations expressed as a percent of net revenues (in millions):

		Three Months Ended
		March 31,
														% of Net Revenues
		2009				2008				Change				2009				2008
Revenues:
Product revenue, net		$	66.3			$	90.3			$	(24.0	)			74.5	%			76.2	%
Service fee revenue			17.1				20.8				(3.7	)			19.2	%			17.6	%
Pass-through revenue			5.5				7.4				(1.9	)			6.3	%			6.2	%
Total net revenues			88.9				118.5				(29.6	)			100.0	%			100.0	%
Cost of Revenues
Cost of product revenue (1)			60.9				84.0				(23.1	)			91.8	%			93.0	%
Cost of service fee revenue (2)			11.3				13.8				(2.5	)			66.1	%			66.5	%
Pass-through cost of revenue (3)			5.5				7.4				(1.9	)			100.0	%			100.0	%
Total cost of revenues			77.7				105.2				(27.5	)			87.4	%			88.8	%
Product revenue gross profit			5.4				6.3				(0.9	)			8.2	%			7.0	%
Service fee gross profit			5.8				7.0				(1.2	)			33.9	%			33.5	%
Pass-through gross profit			—				—				—				—	%			—	%
Total gross profit			11.2				13.3				(2.1	)			12.6	%			11.2	%
Operating Expenses			10.7				12.3				(1.6	)			12.0	%			10.4	%
Income from operations			0.5				1.0				(0.5	)			0.6	%			0.8	%
Interest expense, net			0.3				0.4				(0.1	)			0.4	%			0.3	%
Income before income taxes			0.2				0.6				(0.4	)			0.2	%			0.6	%
Income tax expense, net			0.4				0.2				0.2				0.5	%			0.2	%
Net income (loss)		$	(0.2	)		$	0.4			$	(0.6	)			(0.3	)%			0.3	%

     Product Revenue, net. eCOST product revenue was $20.9 million in the three months ended March 31, 2009, a 25.2% decrease as compared to $28.0 million in the comparable quarter of the prior year. The decrease is primarily due to a decline in sales in its business to business channel resulting from the impact of the current economic environment and eCOST’s reduced emphasis on this lower margin channel. Partially offsetting this decrease was an increase in sales in the higher margin business to consumer sales channel, primarily due to continued emphasis on growth through an expanded product line, improved service capabilities and enhanced website capabilities.

     Supplies Distributors product revenue of $45.4 million decreased $17.0 million, or 27.3% in the three months ended March 31, 2009 as compared to the same quarter of the prior year. The decrease is primarily due to decreased sales volume on certain products resulting from the impact of the overall global economic pressures and inventory rationalization by customers. In addition, product revenue in the March 2009 quarter was negatively impacted by a $1.4 million reduction of revenue arising from a customer bankruptcy.

     Service Fee Revenue. Service fee revenue of $17.1 million decreased $3.7 million, or 17.7%, in the three months ended March 31, 2009 as compared to the same quarter of the prior year. The decrease in