PFSWEB, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

     Current and non-current deferred implementation costs, excluding technology and development costs, are a component of prepaid expenses and other assets, respectively. Current and non-current deferred implementation revenues, which may precede the timing of when the related implementation costs are incurred and thus deferred, are a component of deferred revenue and other liabilities, respectively.

Concentration of Business and Credit Risk

     The Company’s service fee revenue is generated under contractual service fee relationships with multiple client relationships. One product revenue customer represented 11% of the Company’s consolidated total net revenue during each of the years ended December 31, 2010 and 2009. A summary of the customer and client concentrations is as follows:

		December 31,				December 31,
		2010				2009
Product Revenue (as a percentage of Product Revenue):
Customer 1			10	%			14	%
Customer 2			17	%			17	%
Service Fee Revenue (as a percentage of Service Fee Revenue):
Client 1			7	%			15	%
Client 2			7	%			10	%
Accounts Receivable:
Customer/Client 1			7	%			11	%

     PFS previously operated three distinct geographical contract arrangements with Client 1, which are aggregated in the service fee revenue percentages reflected above. As of December 31, 2010, substantially all of Client 1’s contracts with PFS had expired in accordance with their terms and were not renewed.

     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 International Business Machines Corporation (“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 applicable to its financing of certain property and equipment.

Cash and Cash Equivalents

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