PFSweb, Inc. Company▲			PFSW Ticker▲			Q1 2008 Earnings Call Event Type▲			May 13, 2008 Date▲

have a proven mature global solution for domestic companies that are looking at markets abroad to fuel their growth as domestic revenues in some cases decline.

As Mark mentioned earlier, our pipeline of pending proposals remains robust, even as we signed a steady stream of wins. Currently our prospective new business pipeline is valued at about $35 million based on client-projected volumes.

Now for some highlights from our growing eCOST.com business I’ll turn the floor back over to Mark. Mark?

Mark C. Layton, Chairman, Senior Partner — Chief Executive Officer

Thank you, Mike. Now turning over to the eCOST.com business, just a few highlights for you from there. We are targeting 2008 to be a solid financial year for eCOST, with both strong revenue growth, improved gross margins and a solid control on costs.

Q1, as it was for the Services Business that Mike just described, was also a very solid quarter for eCOST. Overall we’re pleased to report revenue growth of 29% for the quarter compared to last year, and our gross margins were at about 8%. Now while this is at the lower end of our targeted range we continue to believe that the steps that we’re taking will drive improvement in this area going forward. Our mix this quarter was heavier on notebooks than it had been in the past and had some impact on our gross profit percentage this quarter.

We anticipate achieving cash flow breakeven at a run rate of approximately $10 million in revenue per month at approximately 10% gross profit margins. At this time we believe these goals can be achieved in the near-term as we continue to make improvements to the shopping experience for consumers as we offer a wider selection of merchandise with higher margin potential and the further use of virtual warehouse agreements that allow us to frugally use capital in terms of our inventory investment.

In the past few weeks we launched a very significant site revision. This is the third such major revision in the last 18 months at eCOST. This revision added much improved navigation, search and categorization capabilities, as well as adding PayPal as a checkout payment option. We believe PayPal provides us a safer and more cost-effective payment processing solution than traditional credit cards have previously. The introduction of PayPal has been met with wide acceptance almost immediately as PayPal has become one of our top checkout payment choices by consumers on our site right away.

As part of our growth and financial improvement strategy we recently announced the addition of 60,000 new products in our ‘For the Home’ and ‘Sports and Leisure’ stores. We believe the addition of these new products have allowed us to significantly diversify our product mix beyond consumer technology offerings in a relatively short period of time. We continue to follow the same product strategy of sourcing in order to drive customer activity to our site.

This strategy uses a myriad of daily deals in these new categories as we do in technology and consumer electronics to drive visitor volume by way of our daily HotSheet email marketing, as well as its ongoing effect on viral and our affiliate advertising.

Our long-term strategy is to establish eCOST.com as the web store for deals across a broadening range of product categories. A key factor in achieving our financial goals is being able to acquire new customers in a way that is cost efficient. This is something that we’ve worked very hard on over the last 18 to 24 months during which we have dramatically improved our cost to acquire new customers.