PFSweb has provided certain collateralized guarantees of its subsidiaries’ financings and credit arrangements. These subsidiaries’ ability to obtain financing on similar terms would be significantly impacted without these guarantees.

     The Company has multiple arrangements with IBM and IPS and is dependent upon the continuation of such arrangements. These arrangements, which are critical to the Company’s ongoing operations, include Supplies Distributors’ master distributor agreements and certain of Supplies Distributors’ working capital financing agreements. Substantially all of the Supplies Distributors’ revenue is generated by its sale of product purchased from IPS. Supplies Distributors also relies upon IPS’s sales force and product demand generation activities and the discontinuance of such services would have a material impact upon Supplies Distributors’ business. In addition, Supplies Distributors has product sales to IBM and IPS business units and the Company has an IBM term master lease agreement.

     eCOST’s arrangements with its vendors are terminable by either party at will. Loss of any vendors could have a material adverse effect on eCOST’s financial position, results of operations and cash flows. Sales of HP and HP-related products represented 44% of eCOST’s net revenues in 2009 (11% of consolidated net revenues) and 43% of eCOST’s net revenues in 2008 (9% of consolidated net revenues).

Cash and Cash Equivalents

     Cash equivalents are defined as short-term highly liquid investments with original maturities, when acquired, of three months or less.

Restricted Cash

     Restricted cash includes the following items (in thousands):

		December 31,				December 31,
		2009				2008
Customer remittances		$	1,364			$	458
Bond financing (see note 4)			732				1,550
Total restricted cash		$	2,096			$	2,008

     In conjunction with certain of its financing agreements, Supplies Distributors has granted to its lenders a security interest in certain customer remittances received in specified bank accounts (see Note 4). At December 31, 2009 and 2008, these bank accounts held $1.2 million and $0.2 million, respectively, which was restricted and can only be used to reduce the outstanding debt.

     In conjunction with certain of its financing agreements, eCOST has granted to its lender a security interest in certain customer remittances received in specified bank accounts (see Note 4). In both years ended December 31, 2009 and 2008 these bank accounts held $0.2 million, which was restricted and can only be used to reduce the outstanding debt.

Other Receivables

     Other receivables include $8.0 million and $9.6 million as of December 31, 2009 and 2008, respectively, primarily for amounts due from IPS and IBM for costs incurred by the Company under the master distributor agreements (see Note 6). In addition, other receivables included $3.6 million and $3.5 million as of December 31, 2009 and 2008, respectively, applicable to value added tax receivables.

Inventories

     Inventories (all of which are finished goods) are stated at the lower of weighted average cost or market. The Company establishes inventory reserves based upon estimates of declines in values due to inventories that are slow moving or obsolete, excess levels of inventory or values assessed at lower than cost.

     Supplies Distributors assumes responsibility for slow-moving inventory under certain master distributor