o		Additionally, net loss for the period ended June 30, 2006 included the amortization of identifiable intangible assets of $0.2 million applicable to valuation of assets assigned in conjunction with the purchase of eCOST.com.
	o		Excluding the impact of the items identified above, EBITDA, net loss and net loss per basic and diluted share for the period ended June 30,2006 would have been $3 thousand, $2.3 million and $0.05, respectively.

	•		Merchandise sales totaled approximately $662 million during the June 2006 quarter.
	•		Cash and cash equivalents and restricted cash totaled $19.0 million as of June 30, 2006.

Mark Layton, Chief Executive Officer of PFSweb, said, “We are pleased by the continued improved profitability of our Service Fee and Supplies Distributors businesses. This improvement included (1) improved gross margin performance, including the favorable impact of contracts that became operational in calendar year 2005 and experienced incremental startup related expenses in that year, and (2) reduced selling, general and administrative expenses, including the impact of ongoing cost controls and favorable exchange rates. We continue to experience improved results in the current year in winning new Service Fee business relationships, including the expansion of existing client relationships. During 2006, we have signed new contracts with estimated ongoing annual service fees of approximately $7 million, based on client projections, plus special projects of approximately $1 million. Our solid pipeline of potential new business, including pending proposals, remains a robust $40 million in annual service fees. We are targeting to maintain our steady stream of new business activity and strengthen our existing client relationships going forward.”

Consolidated revenue for the six months ending June 30, 2006 totaled $220.0 million, compared to $166.7 million for the same period last year, an increase of more than 30%. Service Fee revenue rose 5.7% for the six months ended June 30, 2006 to $32.1 million from $30.4 million for the same period in 2005. Supplies Distributors revenue increased 1.7% to $129.3 million in the six months ended June 30, 2006, compared to $127.1 million for the same period last year. eCOST.com revenue, including $12.9 million of revenue for the month of January 2006, prior to the merger, was $63.5 million in the first six months of 2006. eCOST.com reported $96.1 million of revenue for the same period of 2005. On a pro forma basis, total revenues including eCOST.com for the same period last year was $262.8 million.

PFSweb’s consolidated financials for the six months ending June 30, 2006 only reflect five months of operations for eCOST.com, as the merger closed on February 1, 2006. For additional information on PFSweb’s consolidated results for the six months ending June 30, 2006, please refer to the financial tables below.

Layton continued, “We have experienced challenges in achieving our plans to improve the service and financial performance of the eCOST.com business segment since the merger. The time and effort needed to meet certain quality and service targets for eCOST.com has been greater than we expected and has also contributed to lower than targeted revenue and gross profit margins during the June 2006 quarter and this is expected to continue into the September 2006 quarter. In addition, we experienced a significantly higher than normal level of fraudulent credit card activity in June and July, 2006 due in part to problems experienced in the ERP systems conversion. We believe that these system issues have now been resolved. We remain focused on the turnaround of eCOST.com, including the integration of our operations and driving improved financial and service level performance in the future. Profit, not revenue, will be our near term focus with an emphasis on stronger gross profit performance, controlling costs and improving quality of our operations and customer service. Once we achieve that goal, we can then turn our attention towards revenue growth and increased scale and begin to focus on the many exciting opportunities in product and international expansion we see for this business.”

“We are making progress in the turnaround of eCOST.com and plan to complete our integration in the fall of 2006, in time for the holiday season,” Layton added. “Over the past several months, we have made significant improvements in eCOST’s infrastructure, which we believe will increase operating efficiencies and enhance long-term performance. As previously discussed, we anticipate our merger with eCOST.com to produce total cost savings of approximately $4 — $5 million on an annual basis once our integration efforts are fully implemented.”