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<SEC-DOCUMENT>0000899681-06-000527.txt : 20060829
<SEC-HEADER>0000899681-06-000527.hdr.sgml : 20060829
<ACCEPTANCE-DATETIME>20060829150913
ACCESSION NUMBER:		0000899681-06-000527
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20050331
FILED AS OF DATE:		20060829
DATE AS OF CHANGE:		20060829

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SYSTEMAX INC
		CENTRAL INDEX KEY:			0000945114
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-CATALOG & MAIL-ORDER HOUSES [5961]
		IRS NUMBER:				113262067
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13792
		FILM NUMBER:		061062238

	BUSINESS ADDRESS:	
		STREET 1:		22 HARBOR PARK DR
		CITY:			PORT WASHINGTON
		STATE:			NY
		ZIP:			11050
		BUSINESS PHONE:		5166087000

	MAIL ADDRESS:	
		STREET 1:		22 HARBOR PARK DRIVE
		CITY:			PORT WASHINGTON
		STATE:			NY
		ZIP:			11050

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	GLOBAL DIRECTMAIL CORP
		DATE OF NAME CHANGE:	19950509
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>systemax-10q_070606.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>Form 10-Q</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<P ALIGN=CENTER><FONT SIZE=3><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
WASHINGTON, D.C. 20549</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3><B>FORM 10-Q</B> </FONT></P>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>[X]</TD>
<TD WIDTH=95%><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>For the quarterly period ended March 31, 2005 </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Default" -->
<P ALIGN=CENTER><FONT SIZE=3>or</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>[&nbsp;&nbsp;&nbsp;]</TD>
<TD WIDTH=95%><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3>For the transition period from ____________ to _____________</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>COMMISSION FILE NUMBER 1-13792</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><B>Systemax Inc.</B><BR>
(Exact name of registrant as specified in its charter)</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50% ALIGN=CENTER>Delaware<BR>
(State or other jurisdiction<BR>
of incorporation or organization)</TD>
<TD WIDTH=50% ALIGN=CENTER>11-3262067<BR>
(I.R.S. Employer<BR>
Identification No.)
</TD>
</TR>
</TABLE>
<BR>

<P ALIGN=CENTER><FONT SIZE=3>11 Harbor Park Drive<BR>
Port Washington, New York 11050<BR>
(Address of registrant's principal executive offices)<BR>
(516) 608-7000<BR>
(Registrant's telephone number, including area code)</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Yes&nbsp;&nbsp;[&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;No&nbsp;&nbsp;[X]</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).<BR>
<BR>
Large accelerated filer&nbsp;&nbsp;[&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;
Accelerated filer&nbsp;&nbsp;[&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;Non-accelerated filer&nbsp;&nbsp;[X] </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act)<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Yes&nbsp;&nbsp;[&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;No&nbsp;&nbsp;[X]</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>The number of shares outstanding of the registrant's Common Stock as
of July 31, 2006 was 35,021,391. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B><U>TABLE OF CONTENTS</U></B> </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=5></TH>
     <TH COLSPAN=5></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=80% ALIGN=LEFT>Explanatory Note</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=15% ALIGN=RIGHT>3</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Available Information</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Part I</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Item 1.&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>4</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Item 2.&nbsp;&nbsp;&nbsp;&nbsp;Management's Discussion and Analysis of Financial Condition and Results of Operations</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>12</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Item 3.&nbsp;&nbsp;&nbsp;&nbsp;Quantitative and Qualitative Disclosures About Market Risk</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>17</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Item 4.&nbsp;&nbsp;&nbsp;&nbsp;Controls and Procedures</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>18</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Part II</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Item 1.&nbsp;&nbsp;&nbsp;&nbsp;Legal Proceedings</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>20</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Item 6.&nbsp;&nbsp;&nbsp;&nbsp;Exhibits</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>20</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Signatures</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>21</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><B>Explanatory Note</B></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>The filing of this Quarterly Report on Form 10-Q was delayed
because of the extensive additional work necessary to complete the
previously-announced restatement of our Consolidated Financial Statements for
the year ended December 31, 2004 and the need to engage a new independent
registered public accounting firm as a result of the resignation of Deloitte
&amp; Touche LLP. The restatement is set forth in our amendment to our 2004
Annual Report on Form&nbsp;10-K/A. The Condensed Consolidated Statement of
Operations and the Condensed Consolidated Statement of Cash Flows for the
quarter ended March&nbsp;31, 2004 in this report are presented as restated. For
information on the restatement and the impact of the restatement on our
financial statements for the quarter ended March&nbsp;31, 2004, we refer you to
Item&nbsp;8, "Financial Statements and Supplementary Data,"
Note&nbsp;2, "Restatement," and Note&nbsp;13, "Quarterly
Financial Data," in our amended 2004 Annual Report on Form&nbsp;10-K/A.
</FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><B>Available Information</B></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>We maintain an internet web site at <U>www.systemax.com</U>. We
file reports with the Securities and Exchange Commission ("SEC") and
make available free of charge on or through this web site our annual reports on
Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K,
including all amendments to those reports. These are available as soon as is
reasonably practicable after they are filed with the SEC. All reports mentioned
above are also available from the SEC's web site (<U>www.sec.gov</U>). The
information on our web site is not part of this or any other report we file
with, or furnish to, the SEC. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>Our Board of Directors has adopted the following corporate
governance documents with respect to the Company (the "Corporate Governance
Documents"): </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=95%>Corporate Ethics Policy for officers, directors and employees</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=95%>Charter for the Audit Committee of the Board of Directors
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=95%>Charter for the Compensation Committee of the Board of Directors</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=95%>Charter for the Nominating/Corporate Governance Committee of the
Board of Directors</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=95%>Corporate Governance Guidelines and Principles</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>In accordance with the corporate governance rules of the New
York Stock Exchange, each of the Corporate Governance Documents is available on
our Company web site (<U>www.systemax.com</U>) or can be obtained by writing to
Systemax Inc., Attention: Board of Directors (Corporate Governance), 11 Harbor
Park Drive, Port Washington, NY 11050. </FONT></P>

<PAGE>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<P ALIGN=LEFT><FONT SIZE=3><B>PART I &#151; FINANCIAL INFORMATION<BR>
Item 1.&nbsp;&nbsp;&nbsp;<U>Financial Statements</U></B> </FONT></P>

<P><FONT SIZE=3><B>Systemax Inc.</B><BR>
Condensed Consolidated Balance Sheets<BR>
(In Thousands, except share data)</FONT></P>
<HR SIZE=1 NOSHADE>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=95%>
<TR VALIGN=Top>
     <TH></TH>
     <TH>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;March 31,<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>2005</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Unaudited)</TH>
     <TH>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;December 31,<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>2004</U></TH>
     <TH></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=70% ALIGN=LEFT><BR>ASSETS:</TD>
     <TD WIDTH=15% ALIGN=RIGHT>&nbsp;</TD>
     <TD WIDTH=15% ALIGN=RIGHT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;CURRENT ASSETS:</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents</TD>
     <TD ALIGN=RIGHT>$56,350&nbsp;</TD>
     <TD ALIGN=RIGHT>$36,257&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net</TD>
     <TD ALIGN=RIGHT>140,112&nbsp;</TD>
     <TD ALIGN=RIGHT>137,706&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories, net</TD>
     <TD ALIGN=RIGHT>180,995&nbsp;</TD>
     <TD ALIGN=RIGHT>192,774&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets</TD>
     <TD ALIGN=RIGHT>20,363&nbsp;</TD>
     <TD ALIGN=RIGHT>22,096&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax assets, net</TD>
     <TD ALIGN=RIGHT>9,364&nbsp;</TD>
     <TD ALIGN=RIGHT>9,594&nbsp;</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets</TD>
     <TD ALIGN=RIGHT>407,184&nbsp;</TD>
     <TD ALIGN=RIGHT>398,427&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;PROPERTY, PLANT AND EQUIPMENT, net</TD>
     <TD ALIGN=RIGHT>63,678&nbsp;</TD>
     <TD ALIGN=RIGHT>65,563&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;DEFERRED INCOME TAXES AND OTHER ASSETS, net</TD>
     <TD ALIGN=RIGHT>21,032&nbsp;</TD>
     <TD ALIGN=RIGHT>19,206&nbsp;</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL ASSETS</TD>
     <TD ALIGN=RIGHT>$491,894&nbsp;</TD>
     <TD ALIGN=RIGHT>$483,196&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=RIGHT></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>LIABILITIES AND SHAREHOLDERS' EQUITY:</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;CURRENT LIABILITIES:</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term borrowings, including current portions of long-term debt</TD>
     <TD ALIGN=RIGHT>$32,045&nbsp;</TD>
     <TD ALIGN=RIGHT>$25,020&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable</TD>
     <TD ALIGN=RIGHT>164,394&nbsp;</TD>
     <TD ALIGN=RIGHT>165,761&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities</TD>
     <TD ALIGN=RIGHT>58,696&nbsp;</TD>
     <TD ALIGN=RIGHT>59,639&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=RIGHT></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities</TD>
     <TD ALIGN=RIGHT>255,135&nbsp;</TD>
     <TD ALIGN=RIGHT>250,420&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=RIGHT></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;LONG-TERM DEBT</TD>
     <TD ALIGN=RIGHT>8,461&nbsp;</TD>
     <TD ALIGN=RIGHT>8,639&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;OTHER LIABILITIES</TD>
     <TD ALIGN=RIGHT>2,525&nbsp;</TD>
     <TD ALIGN=RIGHT>1,505&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>SHAREHOLDERS' EQUITY:</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;Preferred stock, par value $.01 per share, authorized 25 million shares,</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;issued none</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;Common stock, par value $.01 per share, authorized 150 million shares, issued</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;38,231,990 shares; outstanding 34,682,718 (2005) and 34,432,799 shares
(2004)</TD>
     <TD ALIGN=RIGHT>382&nbsp;</TD>
     <TD ALIGN=RIGHT>382&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;Additional paid-in capital</TD>
     <TD ALIGN=RIGHT>178,310&nbsp;</TD>
     <TD ALIGN=RIGHT>180,640&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income</TD>
     <TD ALIGN=RIGHT>3,243&nbsp;</TD>
     <TD ALIGN=RIGHT>3,920&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;Retained earnings</TD>
     <TD ALIGN=RIGHT>90,124&nbsp;</TD>
     <TD ALIGN=RIGHT>87,486&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;Common stock in treasury at cost - 3,549,272 (2005) and 3,799,191</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2004) shares</TD>
     <TD ALIGN=RIGHT>(41,694)</TD>
     <TD ALIGN=RIGHT>(44,630)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;Unearned restricted stock compensation</TD>
     <TD ALIGN=RIGHT>(4,592)</TD>
     <TD ALIGN=RIGHT>(5,166)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=RIGHT></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity</TD>
     <TD ALIGN=RIGHT>225,773&nbsp;</TD>
     <TD ALIGN=RIGHT>222,632&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=RIGHT></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY</TD>
     <TD ALIGN=RIGHT>$491,894&nbsp;</TD>
     <TD ALIGN=RIGHT>$483,196&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=RIGHT></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD></TR>
</TABLE>
<BR>


<P><FONT SIZE=3>See notes to condensed consolidated financial statements. </FONT></P>

<PAGE>

<P ALIGN=LEFT><FONT SIZE=3><B>Systemax Inc.</B><BR>
Condensed Consolidated Statements of Operations (Unaudited)<BR>
(In Thousands, except per share amounts)</FONT></P>
<HR SIZE=1 NOSHADE>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=80%>
<TR VALIGN=Bottom>
     <TH></TH>
     <TH COLSPAN=2 ALIGN=CENTER>Three Months Ended<BR>March 31,<HR ALIGN=RIGHT WIDTH=95% NOSHADE COLOR=#000000 SIZE=1></TH></TR>
<TR VALIGN=Bottom>
     <TH WIDTH=50% ALIGN=LEFT>&nbsp;</TH>
     <TH WIDTH=25% ALIGN=RIGHT>2005<HR WIDTH=90% NOSHADE COLOR=#000000 SIZE=1></TH>
     <TH WIDTH=25% ALIGN=RIGHT>2004<HR WIDTH=90% NOSHADE COLOR=#000000 SIZE=1></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><BR>Net sales</TD>
     <TD WIDTH=25% ALIGN=RIGHT>$537,908</TD>
     <TD WIDTH=25% ALIGN=RIGHT>$484,507</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Cost of sales</TD>
     <TD ALIGN=RIGHT>458,133</TD>
     <TD ALIGN=RIGHT>408,067</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Gross profit</TD>
     <TD ALIGN=RIGHT>79,775</TD>
     <TD ALIGN=RIGHT>76,440</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Selling, general and administrative expenses</TD>
     <TD ALIGN=RIGHT>72,643</TD>
     <TD ALIGN=RIGHT>65,575</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Restructuring and other charges</TD>
     <TD ALIGN=RIGHT>1,975</TD>
     <TD ALIGN=RIGHT>4,042</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Income from operations</TD>
     <TD ALIGN=RIGHT>5,157</TD>
     <TD ALIGN=RIGHT>6,823</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Interest and other expense, net</TD>
     <TD ALIGN=RIGHT>571</TD>
     <TD ALIGN=RIGHT>647</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Income before income taxes</TD>
     <TD ALIGN=RIGHT>4,586</TD>
     <TD ALIGN=RIGHT>6,176</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Provision for income taxes</TD>
     <TD ALIGN=RIGHT>1,948</TD>
     <TD ALIGN=RIGHT>2,486</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Net income</TD>
     <TD ALIGN=RIGHT>$2,638</TD>
     <TD ALIGN=RIGHT>$3,690</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Net income per common share:</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;Basic</TD>
     <TD ALIGN=RIGHT>$.08</TD>
     <TD ALIGN=RIGHT>$.11</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;Diluted</TD>
     <TD ALIGN=RIGHT>$.07</TD>
     <TD ALIGN=RIGHT>$.10</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Weighted average common and common equivalent shares:</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;Basic</TD>
     <TD ALIGN=RIGHT>34,472</TD>
     <TD ALIGN=RIGHT>34,305</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>&nbsp;&nbsp;&nbsp;&nbsp;Diluted</TD>
     <TD ALIGN=RIGHT>36,364</TD>
     <TD ALIGN=RIGHT>35,218</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=RIGHT><HR WIDTH=50% NOSHADE COLOR=#000000 SIZE=2></TD></TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>See notes to condensed consolidated financial statements. </FONT></P>

<PAGE>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><B>Systemax Inc.</B><BR>
Condensed Consolidated Statement of Shareholders'
Equity (Unaudited)<BR>
(In Thousands)</FONT></P>
<HR SIZE=1 NOSHADE>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT SIZE=2></FONT></TH>
     <TH COLSPAN=6><FONT SIZE=2>Common Stock</FONT><HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=2></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=2></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=2></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=2></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=2></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=2></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT SIZE=2></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=2>Number of<BR>
Shares<BR>
Outstanding</FONT><HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=2>Amount</FONT><HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=2>Additional<BR>
Paid-in<BR>
Capital</FONT><HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=2>Retained<BR>
Earnings</FONT><HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=2>Accumulated<BR>
Other<BR>
Comprehensive<BR>
Income (Loss),<BR>
Net of Tax</FONT><HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=2>Treasury<BR>
Stock,<BR>
At Cost</FONT><HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=2>Unearned<BR>
Restricted<BR>
Stock<BR>
Compensation</FONT><HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=2>Comprehensive<BR>
Income (Loss),<BR>
Net of Tax</FONT><HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=22% ALIGN=LEFT><FONT SIZE=2>Balances, January 1, 2005</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=2>34,433</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=2>      382</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=2>  180,640</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=2>   87,486</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=2>    3,920</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=2>  (44,630</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=2>   (5,166</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Exercise of stock options</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>250</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>(2,339</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>2,936</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Tax benefit of employee</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;stock plans</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>9</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Change in cumulative</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;translation adjustment,</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;net</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>(677</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>     (677</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Amortization of unearned</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;restricted stock</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;compensation</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>574</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Net income</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>2,638</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>2,638</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Total comprehensive income</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>    1,961</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=2>Balances, March 31, 2005</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>34,683</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>      382</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>  178,310</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>   90,124</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>    3,243</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>  (41,694</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=2>   (4,592</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=3></TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>See notes to condensed consolidated financial statements. </FONT></P>

<PAGE>

<P ALIGN=LEFT><FONT SIZE=3><B>Systemax Inc.</B><BR>
Condensed Consolidated Statements of Cash Flows (Unaudited)<BR>
(In Thousands)</FONT></P>
<HR SIZE=1 NOSHADE>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=4>Three Months Ended<BR>
<U>March 31,</U></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=60% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=10% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=10% ALIGN=RIGHT><U><B>2005</B></U></TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=10% ALIGN=RIGHT><U><B>2004</B></U></TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Net income</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$2,638</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$3,690</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by (used in)</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;operating activities:</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,617</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,995</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision (benefit) for deferred income taxes</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(792</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>2,871</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for returns and doubtful accounts</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,068</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>819</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation expense related to equity compensation plans</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>574</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>800</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on dispositions and abandonment</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>508</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax benefit of employee stock plans</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>79</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities:</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(6,755</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(10,270</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>11,065</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(21,058</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>911</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,746</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable, accrued expenses and other current liabilities</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>653</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>17,202</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>12,990</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>382</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Investments in property, plant and equipment</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(983</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(1,371</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Proceeds from disposals of property, plant and equipment</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>15</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>26</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(968</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(1,345</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Proceeds of borrowings from banks</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>7,474</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,984</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Repayments of long-term debt and capital lease obligations</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(174</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(442</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Issuance of common stock</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>597</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>154</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>7,897</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,696</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>EFFECTS OF EXCHANGE RATES ON CASH</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>174</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>199</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>NET INCREASE IN CASH AND CASH EQUIVALENTS</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>20,093</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>932</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>36,257</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>38,702</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>CASH AND CASH EQUIVALENTS - END OF PERIOD</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;56,350</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;39,634</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD></TR>
</TABLE>

<PAGE>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>See notes to condensed consolidated financial statements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><B>Systemax Inc.</B><BR>
Notes to Condensed Consolidated Financial Statements
(Unaudited) </FONT></P>
<HR SIZE=1 NOSHADE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><B>1.</B></TD>
<TD WIDTH=95%><B>Basis of Presentation</B>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT></TD>
<TD WIDTH=95%>The accompanying condensed consolidated financial statements of
the Company, its wholly-owned subsidiaries are unaudited and have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim financial information and the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America
are not required in these interim financial statements and have been condensed
or omitted. All significant intercompany accounts and transactions have been
eliminated in consolidation.<BR>
<BR>
In the opinion of management, the accompanying condensed consolidated financial
statements contain all normal and recurring adjustments necessary to present
fairly the financial position of the Company as of March 31, 2005 and the
results of operations for the three month periods ended March 31, 2005 and 2004,
cash flows for the three month periods ended March 31, 2005 and 2004 and changes
in shareholders' equity for the three month period ended March 31, 2005.
The December 31, 2004 Condensed Consolidated Balance Sheet has been derived from
the audited consolidated financial statements included in the Company's
amended Annual Report on Form 10-K/A for the year ended December 31, 2004.<BR>
<BR>
These condensed consolidated financial statements should be read in conjunction
with the Company's audited consolidated financial statements as of December 31,
2004 and for the year then ended included in the Company's amended Annual Report
on Form 10-K/A for the fiscal year ended December 31, 2004. The results for the
three months ended March 31, 2005 are not necessarily indicative of the results
for an entire year.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><B>2.</B></TD>
<TD WIDTH=95%><B>Stock-based Compensation</B></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT></TD>
<TD WIDTH=95%>The Company has three stock-based compensation plans, two of which
are for employees, consultants and advisors and the third of which is for
non-employee directors. The Company has elected to follow the accounting
provisions of Accounting Principles Board Opinion 25 for stock-based
compensation and to provide the pro forma disclosures required under Statement
of Financial Accounting Standards (SFAS) 148, "Accounting for Stock-Based
Compensation &#150; Transition and Disclosure." Accordingly, the Company
does not recognize compensation expense for stock option grants made at an
exercise price equal to or in excess of the market value of the underlying stock
on the date of grant. The following table illustrates the effect on net income
per share had compensation costs of the plans been determined under a fair value
alternative method as stated in SFAS 123, "Accounting for Stock-Based
Compensation" (in thousands, except per share data):
</TD>
</TR>
</TABLE>
<BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=70%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TH>
     <TH COLSPAN=4><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Three Months Ended<BR>
March 31,</FONT><HR WIDTH=40% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=3>2005</FONT><HR WIDTH=50% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=3>2004</FONT><HR WIDTH=50% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=66% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Net income - as reported</FONT></TD>
     <TD WIDTH=4% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>$2,638</FONT></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>$3,690</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Add: Stock-based compensation expense included in</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;&nbsp;&nbsp;reported net income, net of related tax effects</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>370</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>516</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Deduct: Stock-based employee compensation expense</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;&nbsp;&nbsp;determined under fair value based method, net of</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;&nbsp;&nbsp;related tax effects</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>485</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>522</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Pro forma net income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>$2,523</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>$3,684</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Net income per common share - basic:</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Net income  - as reported</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>$.08</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>$.11</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Net income  - pro forma</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>$.07</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>$.11</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Net income per common share - diluted:</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Net income - as reported</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>$.07</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>$.10</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Net income - pro forma</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>$.07</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>$.10</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3></FONT></TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>The fair value of options granted was estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions: </FONT></P>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=20%></TD>
<TD WIDTH=20% ALIGN=LEFT><BR>
Expected dividend yield<BR>
Risk-free interest rate<BR>
Expected volatility<BR>
Expected life in years</TD>
<TD WIDTH=10% ALIGN=RIGHT><U>2005</U><BR>
0%<BR>
5.5%<BR>
62.0%<BR>
2.41</TD>
<TD WIDTH=10% ALIGN=RIGHT><U>2004</U><BR>
0%<BR>
5.9%<BR>
58.0%<BR>
2.40</TD>
<TD WIDTH=40%></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><B>3.</B></TD>
<TD WIDTH=95%><B>Net Income per Common Share</B><BR>
<BR>
Net income per common share &#151; basic was calculated based upon the weighted
average number of common shares outstanding during the respective periods
presented. Net income per common share &#151; diluted was calculated based upon
the weighted average number of common shares outstanding and included the
equivalent shares for dilutive options outstanding during the respective
periods. The dilutive effect of outstanding options issued by the Company is
reflected in net income per share &#151; diluted using the treasury stock
method. Under the treasury stock method, options will only have a dilutive
effect when the average market price of common stock during the period exceeds
the exercise price of the options. The weighted average number of stock options
outstanding excluded from the computation of diluted earnings per share was
531,000 shares for the three months ended March 31, 2005 and 663,000 shares for
the three months ended March 31, 2004 due to their antidilutive effect.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><B>4.</B></TD>
<TD WIDTH=95%><B>Comprehensive Income</B><BR>
<BR>
Comprehensive income consists of net income and foreign currency translation
adjustments, net of tax, and is included in the Condensed Consolidated Statement
of Shareholders' Equity. For the three month periods ended March 31,
comprehensive income was $1,961,000 in 2005 and $3,433,000 in 2004.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><B>5.</B></TD>
<TD WIDTH=95%><B>Credit Facilities</B><BR>
<BR>
The Company maintained a $70 million secured revolving credit agreement with a
group of financial institutions which provides for borrowings in the United
States. The borrowings are secured by all of the domestic accounts receivable
and inventories of the Company, general intangibles and the Company's shares of
stock in its domestic subsidiaries. The revolving credit agreement contains
certain financial and other covenants, including restrictions on capital
expenditures and payments of dividends. The Company was in compliance with all
of the covenants as of March 31, 2005, except for the required timely submission
of financial statements, for which it has obtained a waiver. The credit facility
expires and outstanding borrowings thereunder were due on September 30, 2006. As
of March 31, 2005, availability under the agreement was $58.9 million. There
were outstanding letters of credit of $11.8 million and there were no
outstanding advances as of March 31, 2005. The agreement was amended in October
2005 to increase the amount available to $120 million, extend the maturity date
to October 2010 and provide for United States and United Kingdom borrowings.<BR>
<BR>
Under the Company's &pound;15 million ($28.3 million at the March 31, 2005
exchange rate) United Kingdom credit facility, which was available to its United
Kingdom subsidiaries, at March 31, 2005 there were &pound;9.0 million ($17.0
million) of borrowings outstanding with interest payable at a rate of 5.87%. The
facility did not have a termination date, but was cancelable by either party
with six months notice. Borrowings under the facility were secured by certain
assets of the Company's United Kingdom subsidiaries. The facility was terminated
in October 2005 and replaced by the expanded revolving credit agreement noted
above.<BR>
<BR>
Under the Company's &#128;5 million ($6.5 million at the March 31, 2005 exchange
rate) Netherlands credit facility, there were &#128;3.0 million ($3.9 million)
of borrowings outstanding at March 31, 2005, with interest payable at a rate of
5.0% per annum. Borrowings under the facility are secured by the subsidiary's
accounts receivable and are subject to a borrowing base limitation of 85% of the
eligible accounts. The facility expires in November 2006.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><B>6.</B></TD>
<TD WIDTH=95%><B>Accrued Restructuring Costs</B><BR>
<BR>
The Company periodically assesses its operations to ensure that they are
efficient, aligned with market conditions and responsive to customer needs.
During the quarterly period ended March 31, 2005 and the years ended December
31, 2004, 2003 and 2002 management approved and implemented restructuring
actions which included workforce reductions and facility consolidations. The
following table summarizes the amounts recognized by the Company as
restructuring and other charges for the periods presented (in thousands):</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10% ALIGN=LEFT></TD>
<TD WIDTH=30%>
<U>Three months ended March 31,</U><BR>
2004 United States streamlining plan<BR>
Other severance and exit costs<BR>
<BR>
Total restructuring and other charges</TD>
<TD WIDTH=10%>
&nbsp;&nbsp;&nbsp;<U>2005</U><BR>
&nbsp;&nbsp;&nbsp;$122<BR>
&nbsp;&nbsp;<U>1,853</U><BR>
<BR>
$1,975<BR>
=====</TD>
<TD WIDTH=10%>
&nbsp;&nbsp;&nbsp;<U>2004</U><BR>
$3,695<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>347</U><BR>
<BR>
$4,042<BR>
=====</TD>
<TD WIDTH=40%></TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><I><U>2004 United States Streamlining Plan</U></I><BR>
In the first quarter of 2004, the Company implemented a plan to streamline the
back office and warehousing operations in its United States computer businesses.
During the first quarter of 2005, the Company recorded $122,000 of additional
severance costs in connection with this plan. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U><I>Other Severance and Exit Costs</I></U><BR>
During the first quarter of 2005, the Company implemented plans to streamline
operations in its European businesses. The Company recorded $1.9 million of
costs related to these actions for severance and benefits for approximately 200
terminated employees during the first three months of 2005. During the first
quarter of 2004, the Company recorded $0.3 million of restructuring costs in
Europe in connection with workforce reductions, including a consolidation of
United Kingdom sales offices. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>The following table summarizes the components of the accrued
restructuring charges and the movements within these components during the
quarter ended March 31, 2005 (in thousands). </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH></TH>
     <TH>Severance and<BR>
<U>Personnel Costs</U></TH>
     <TH>Other<BR>
<U>Exit Costs</U></TH>
     <TH><U>Total</U></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=40% ALIGN=LEFT>Accrued at December 31, 2004</TD>
     <TD WIDTH=20% ALIGN=CENTER>&nbsp;$633</TD>
     <TD WIDTH=20% ALIGN=CENTER>$1,396</TD>
     <TD WIDTH=20% ALIGN=CENTER>$2,029&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Charged to expense in 2005</TD>
     <TD ALIGN=CENTER>1,975</TD>
     <TD ALIGN=CENTER>&nbsp;</TD>
     <TD ALIGN=CENTER>1,975</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Amounts utilized</TD>
     <TD ALIGN=CENTER>(1,380)</TD>
     <TD ALIGN=CENTER>&nbsp;&nbsp;&nbsp;&nbsp;(267)</TD>
     <TD ALIGN=CENTER>(1,647)</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=CENTER><HR WIDTH=30% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN=CENTER><HR WIDTH=30% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN=CENTER><HR WIDTH=30% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Accrued at March 31, 2005</TD>
     <TD ALIGN=CENTER>$1,228&nbsp;&nbsp;</TD>
     <TD ALIGN=CENTER>$1,129&nbsp;</TD>
     <TD ALIGN=CENTER>$2,357&nbsp;&nbsp;</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=CENTER><HR WIDTH=30% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=CENTER><HR WIDTH=30% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=CENTER><HR WIDTH=30% NOSHADE COLOR=#000000 SIZE=2></TD></TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><B>7.</B></TD>
<TD WIDTH=95%><B>Segment Information</B><BR>
<BR>
The Company operates in one primary business as a reseller of
business products to commercial and consumer users. The Company operates and is
internally managed in two operating segments, Computer Products and Industrial
Products. Computer Products sales include our Systemax PCs complemented by
offerings of other brand name PCs and notebook computers. This segment's sales
also include computer related products such as peripherals (hard disks, CD-ROM
and DVD drives, printers, scanners and monitors), memory upgrades, data
communication and networking equipment, packaged software, digital cameras,
plasma televisions and supplies, such as printer cartridges and media
(recordable disks, CD's and magnetic tape cartridges). Our Industrial Products
sales include storage equipment, such as metal shelving, bins and lockers, light
material handling equipment such as forklifts, hand carts and hand trucks,
furniture and consumable industrial products such as first aid items, safety
items, protective clothing and OSHA compliance items. The Company has also
separately disclosed its costs associated with the development of the Company's
web-hosted software application, which is being marketed to third parties and
for which no revenues have been recognized to date.<BR>
<BR>
The Company's chief operating decision-maker is the Company's Chief Executive
Officer. The Company evaluates segment performance based on income from
operations before net interest, foreign exchange gains and losses, restructuring
and other charges and income taxes. Corporate costs not identified with the
disclosed segments and restructuring and other charges are grouped as "Corporate
and other expenses." The chief operating decision-maker reviews assets and makes
capital expenditure decisions for the Company on a consolidated basis only. The
accounting policies of the segments are the same as those of the Company.<BR>
<BR>
Financial information relating to the Company's operations by reportable segment
was as follows (in thousands):</TD>
</TR>
</TABLE>
<BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=80%>
<TR VALIGN=Bottom>
     <TH></TH>
     <TH></TH>
     <TH>Three Months Ended<BR><U>March 31,</U></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=25% ALIGN=RIGHT><U><B>2005</B></U>&nbsp;</TD>
     <TD WIDTH=25% ALIGN=RIGHT><U><B>2004</B></U>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Net sales:</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Computer products</TD>
     <TD ALIGN=RIGHT>$497,306&nbsp;</TD>
     <TD ALIGN=RIGHT>$447,680&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Industrial products</TD>
     <TD ALIGN=RIGHT>40,602&nbsp;</TD>
     <TD ALIGN=RIGHT>36,827&nbsp;</TD></TR>
<TR>
<TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Consolidated</TD>
     <TD ALIGN=RIGHT>$537,908&nbsp;</TD>
     <TD ALIGN=RIGHT>$484,507&nbsp;</TD></TR>
<TR>
<TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Income (loss) from operations:</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Computer products</TD>
     <TD ALIGN=RIGHT>$8,973&nbsp;</TD>
     <TD ALIGN=RIGHT>$6,518&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Industrial products</TD>
     <TD ALIGN=RIGHT>1,510&nbsp;</TD>
     <TD ALIGN=RIGHT>2,595&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Software application</TD>
     <TD ALIGN=RIGHT>(1,752)</TD>
     <TD ALIGN=RIGHT>(1,047)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Corporate and other expenses</TD>
     <TD ALIGN=RIGHT>(3,574)</TD>
     <TD ALIGN=RIGHT>(1,243)</TD></TR>
<TR>
<TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Consolidated</TD>
     <TD ALIGN=RIGHT>$5,157&nbsp;</TD>
     <TD ALIGN=RIGHT>$6,823&nbsp;</TD></TR>
<TR>
<TD></TD>
     <TD ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=2></TD></TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>Financial information relating to the Company's operations by
geographic area was as follows (in thousands): </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=80%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3><CENTER>Three Months Ended<BR><U>March 31,</U></CENTER></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U><B>2005</B></U></TH>
     <TH COLSPAN=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U><B>2004</B></U></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=40% ALIGN=LEFT>Net sales:</TD>
     <TD WIDTH=10% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=20% ALIGN=RIGHT></TD>
        <TD WIDTH=10% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=18% ALIGN=RIGHT></TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>United States:</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Industrial products</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$40,602</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$36,827</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Computer products</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>288,553</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>244,099</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>United States total</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>329,155</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>280,926</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Other North America</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>24,089</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>14,367</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>North America total</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>353,244</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>295,293</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Europe</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>184,664</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>189,214</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Consolidated</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$537,908</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$484,507</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR WIDTH=35% NOSHADE COLOR=#000000 SIZE=2></TD></TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>Revenues are attributed to countries based on the location of selling
subsidiary. </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><B>8.</B></TD>
<TD WIDTH=95%><B>Recent Accounting Pronouncements</B><BR>
<BR>
In November 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4." SFAS 151 clarifies that abnormal inventory
costs such as costs of idle facilities, excess freight and handling costs, and
wasted materials (spoilage) are required to be recognized as current period
charges. SFAS 151 also requires that the allocation of fixed production
overheads to the costs of conversion be based on the normal capacity of the
production facility. The provisions of SFAS 151 will be effective for fiscal
years beginning after June 15, 2005 and is required to be adopted by the Company
in the first quarter of fiscal 2006. The Company does not expect that the
adoption will have a material impact on the Company's consolidated financial
position or results of operations.<BR>
<BR>
In December 2004, the FASB issued SFAS 123 (revised 2004) (SFAS 123R),
"Share-Based Payment." SFAS 123R replaced SFAS 123, "Accounting for Stock-Based
Compensation," and superseded Accounting Principles Board Opinion 25,
"Accounting for Stock Issued to Employees." SFAS 123R requires the recognition
of compensation cost relating to share-based payment transactions, including
employee stock options, in financial statements. That cost will be measured
based on the fair value of the equity or liability instruments issued. SFAS 123R
provides alternative methods of adoption which include prospective application
and a modified retroactive application. SFAS 123(R) also requires the benefits
of tax deductions in excess of recognized compensation expense to be reported as
a financing cash flow, rather than as an operating cash flow as prescribed under
current accounting rules. The Company is required to adopt the provisions of
SFAS 123R effective as of the beginning of its first quarter in 2006. The
Company is evaluating the available alternatives of adoption of SFAS 123R. The
Company currently accounts for share-based payments using APB Opinion 25&#145;s
intrinsic value method and recognizes no compensation expense for employee stock
options as permitted under SFAS 123. See "Stock-based Compensation" above for
the effect on reported net income if we had accounted for our stock-based
compensation plans using the fair value recognition provisions of SFAS 123. The
actual effects of adopting SFAS 123R will depend on numerous factors, including
the amounts of share-based payments granted in the future, the valuation model
we use and estimated forfeiture rates. The Company has not made any
modifications to its stock-based compensation plans as a result of the issuance
of SFAS 123R. The Company believes the adoption of SFAS 123R will not have a
material effect on its consolidated financial statements.<BR>
<BR>
In March 2005, the Securities and Exchange Commission released SEC Staff
Accounting Bulletin ("SAB") 107, "Share-Based Payment." SAB 107 provides the SEC
staff's position regarding the application of SFAS No.&nbsp;123R and certain SEC
rules and regulations, and also provides the staff's views regarding the
valuation of share-based payments for public companies. The Company will adopt
SAB 107 in connection with its adoption of SFAS 123R. The Company is currently
reviewing the effects, if any, that the application of SAB 107 will have on the
Company's consolidated financial position and results of operations.<BR>
<BR>
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections" ("SFAS 154"), which replaces Accounting Principles Board Opinion
No. 20, "Accounting Changes," and SFAS No. 3, "Reporting Accounting Changes in
Interim Financial Statements-An Amendment of APB Opinion No. 28." SFAS 154
changes the requirements for the accounting for and reporting of a change in
accounting principle. Previously, most voluntary changes in accounting
principles required recognition of a cumulative effect adjustment within net
income of the period of the change. SFAS 154 requires retrospective application
to prior periods' financial statements, unless it is impracticable to determine
either the period-specific effects or the cumulative effect of the change. SFAS
154 also applies to changes required by an accounting pronouncement in the rare
case that the pronouncement does not contain specific transition provisions.
This statement also carries forward the guidance from APB No.&nbsp;20 regarding
the correction of an error and changes in accounting estimates. SFAS 154 is
effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005. The Company does not believe the adoption of
SFAS 154 will have a material effect on its consolidated financial position,
results of operations or cash flows.<BR>
<BR>
In June 2005, the FASB issued FSP FAS 143-1, "Accounting for Electronic
Equipment Waste Obligations" ("FSP FAS 143-1"), to address the accounting for
obligations associated with a European Union's Directive on Waste Electrical and
Electronic Equipment (the "Directive"). The Directive, enacted in 2003, requires
EU-member countries to adopt legislation to regulate the collection, treatment,
recovery and environmentally sound disposal of electrical and electronic waste
equipment. The Directive distinguishes between products put on the market after
August 13, 2005 ("new waste") and products put on the market on or before that
date ("historical waste"). FSP FAS 143-1 addresses the accounting for historical
waste only and will be applied the later of the first reporting period ending
after June 8, 2005 or the date of the adoption of the law by the applicable
EU-member country. The adoption of FSP FAS 143-1 did not have a material impact
on the Company's consolidated financial position or results of operations for
the EU-member countries which have adopted the law.<BR>
<BR>
In October 2005, the FASB issued FSP FAS 13-1, "Accounting for
Rental Costs Incurred During a Construction Period" ("FSP FAS 13-1"), which
requires the expensing of rental costs associated with ground or building
operating leases that are incurred during the construction period. FSP FAS 13-1
is effective in the first reporting period beginning after December 15, 2005.
The Company does not expect that this pronouncement will have a material effect
on its consolidated financial position or results of operations.
</TD>
</TR>
</TABLE>
<BR>


<P><FONT SIZE=3><B>Item 2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Management's
Discussion and Analysis of Financial Condition and Results of
Operations</U>.</B></FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Forward Looking Statements</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>This report contains forward looking statements within the
meaning of that term in the Private Securities Litigation Reform Act of 1995
(Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934). Additional written or oral forward looking statements may
be made by the Company from time to time, in filings with the Securities and
Exchange Commission or otherwise. Statements contained in this report that are
not historical facts are forward looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward looking statements may include, but are not limited to, projections of
revenue, income or loss and capital expenditures, statements regarding future
operations, financing needs, compliance with financial covenants in loan
agreements, plans for acquisition or sale of assets or businesses and
consolidation of operations of newly acquired businesses, and plans relating to
products or services of the Company, assessments of materiality, predictions of
future events and the effects of pending and possible litigation, as well as
assumptions relating to the foregoing. In addition, when used in this
discussion, the words "anticipates", "believes", "estimates", "expects",
"intends", "plans" and variations thereof and similar expressions are intended
to identify forward looking statements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>Forward-looking statements in this report are based on the
Company's beliefs and expectations as of the date of this report and are subject
to risks and uncertainties which may have a significant impact on the Company's
business, operating results or financial condition. Investors are cautioned that
these forward-looking statements are inherently uncertain. Should one or more of
the risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results or outcomes may vary materially from those described
herein. Statements in this report, particularly in "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Notes to Condensed Consolidated Financial Statements, describe certain
factors, among others, that could contribute to or cause such differences.
</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>Readers are cautioned not to place undue reliance on any forward
looking statements contained in this report, which speak only as of the date of
this report. We undertake no obligation to publicly release the result of any
revisions to these forward looking statements that may be made to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unexpected events. </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><B>Overview</B> </FONT></P>

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<P><FONT SIZE=3>We are a direct marketer of brand name and private label
products. Our operations are organized in two primary reportable segments &#150;
Computer Products and Industrial Products. Our Computer Products segment markets
personal desktop computers, notebook computers and computer related products in
North America and Europe. We assemble our own PCs and sell them under our own
trademarks, which we believe gives us a competitive advantage. We also sell
personal computers manufactured by other leading companies, such as Hewlett
Packard, E-Machines and Sony. Our Industrial Products segment markets material
handling equipment, storage equipment and consumable industrial items in North
America. We offer more than 100,000 products and continuously update our product
offerings to address the needs of our customers, which include large, mid-sized
and small businesses, educational and government entities as well as individual
consumers. We reach customers by multiple channels, utilizing relationship
marketers, e-commerce web sites, mailed catalogues and retail outlet stores. We
also participate in the emerging market for on-demand, web-based software
applications through the marketing of our PCS Profitability Suite&#153; of
hosted software, which we began during 2004, and in which we have not yet
recognized any revenues and have incurred considerable losses to date. Computers
and computer related products account for 92% of our net sales, and, as a
result, we are dependent on the general demand for information technology
products. </FONT></P>

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<P><FONT SIZE=3>The market for computer products is subject to intense price
competition and is characterized by narrow gross profit margins. The North
American industrial products market is highly fragmented and we compete against
multiple distribution channels. Distribution of information technology and our
industrial products is working capital intensive, requiring us to incur
significant costs associated with the warehousing of many products, including
the costs of leasing warehouse space, maintaining inventory and inventory
management systems, and employing personnel to perform the associated tasks. We
supplement our on-hand product availability by maintaining relationships with
major distributors and manufacturers, utilizing a combination of stocking and
drop-shipment fulfillment. </FONT></P>

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<P><FONT SIZE=3>The primary component of our operating expenses historically has
been employee related costs, which includes items such as wages, commissions,
bonuses, and employee benefits. We have made substantial reductions in our
workforce and closed or consolidated several facilities over the past several
years. In response to poor economic conditions in the United States, we
implemented a plan in the first quarter of 2004 to streamline our United States
computer business. This plan consolidated duplicative back office and warehouse
operations, which resulted in annual savings of approximately $8 million
excluding severance and other restructuring costs of approximately $3 million,
which were recognized in fiscal 2004. With evidence of a prolonged economic
downturn in Europe, we took measures to align our cost structure with expected
potentially lower revenues and decreasing gross margins, initiating several cost
reduction plans there during 2004 and 2005. Actions taken in 2005 to increase
efficiency and profitability in our European operations resulted in the
elimination of approximately 240 positions, and are expected to result in
approximately $6.0 million in future annual savings excluding the severance and
restructuring costs to be recognized in fiscal 2005. We will continue to monitor
our costs and evaluate the need for additional actions. </FONT></P>

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<P><FONT SIZE=3>The discussion of our results of operations and financial
condition that follows will provide information that will assist in
understanding our financial statements, the factors that we believe may affect
our future results and financial condition as well as information about how
certain accounting principles and estimates affect the consolidated financial
statements. This discussion should be read in conjunction with the condensed
consolidated financial statements included herein. </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><B>Results of Operations</B> </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><B>Three Months Ended March 31, 2005 Compared to Three
Months Ended March 31, 2004</B></FONT></P>

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<P><FONT SIZE=3>Net sales for the three months ended March 31, 2005 increased
11.0% to $537.9 million compared to $484.5 million in the year-ago quarter. Net
sales in the first quarter of 2005 included approximately $151.1 million of
internet-related sales, a 25.3% increase from $120.6 million of internet-related
sales in the prior year's first quarter. North American sales were $353.2
million, an increase of 19.6% from $295.3 million in the prior year. European
sales decreased 2.4%, to $184.7 million (representing 34.3% of worldwide sales)
compared to $189.2 million (39.1% of worldwide sales) in the year-ago quarter.
Movements in foreign exchange rates positively impacted the European sales
comparison by approximately $11.7 million in 2005. Excluding the movements in
foreign exchange rates, European sales would have decreased 9.0% from the prior
year. Sales as measured in local currencies in each of the European markets we
serve decreased in 2005 as a result of continuing weakness in demand for
information technology products from business customers. The increase in our
North American sales resulted from sales growth in both our computer and
industrial products groups. Sales of computer products were $312.6 million, a
21.0% increase from $257.3 million of sales in the prior year; and this increase
was primarily a result of our continuing internet initiatives. Sales of
industrial products increased 10.3% to $40.6 million from $36.8 million in the
prior year, continuing the trend in sales growth which began with the improved
economic conditions in the United States last year. </FONT></P>

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<P><FONT SIZE=3>Gross profit, which consists of net sales less product cost,
shipping, assembly and certain distribution center costs, was $79.8 million
compared to $76.4 million in the year-ago quarter, an increase of $3.3 million.
The gross profit margin was 14.8% in the current period, compared to 15.8% in
the year-ago period. The decline in the gross profit margin was due to pricing
pressures in the computer products business and increased warehouse costs for
staff and supplies related to increased activity levels from a year ago.
</FONT></P>

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<P><FONT SIZE=3>Selling, general and administrative expenses for the quarter
increased $7.1 million, or 10.8%, to $72.6 million compared to $65.6 million in
the first quarter of 2004. This increase resulted primarily from more than $1.8
million of increased costs in Europe due to the effects of changes in foreign
exchange rates and $1.2 million of higher credit card processing fees related to
the higher sales volume in 2005. We also had increased bad debt expense in the
first quarter of 2005 and increased accounting and consulting fees related to
the restatement of our 2003 financial statements. Selling, general and
administrative expenses as a percentage of net sales remained constant at 13.5%
compared to the year-ago quarter. </FONT></P>

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<P><FONT SIZE=3>During the first quarter of 2005 we implemented plans to
streamline and restructure the activities of our European computer businesses,
resulting in the elimination of approximately 200 positions. We incurred $2.0
million of restructuring costs associated with these plans for staff severance
and benefits for terminated employees. In the first quarter of 2004, we
implemented a plan to streamline the activities of our United States' computer
businesses' back office and warehouse operations and also consolidated our
United Kingdom sales offices. We incurred approximately $4.0 million of
restructuring costs associated with these actions. </FONT></P>

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<P><FONT SIZE=3>We had income from operations for the current quarter of $5.2
million compared to $6.8 million in the year-ago quarter. We had income from
operations of $10.9 million in our North American operations in the current
quarter compared to income from operations of $4.3 million last year. We had a
loss from operations in Europe of $5.7 million in the first quarter of 2005,
compared to income from operations of $2.5 million in the year-ago quarter.
</FONT></P>

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<P><FONT SIZE=3>Interest and other expense &#151; net consists principally of
interest expense. Interest expense was $712,000 in the first quarter of 2005 and
$641,000 in 2004 as a result of increased European short-term borrowings.
Interest income earned on invested funds increased slightly in 2005 as a result
of higher interest rates on the funds available for investment. </FONT></P>

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<P><FONT SIZE=3>Income tax expense was $1.9 million in the first quarter of 2005
and $2.5 million in the year-ago quarter. The effective income tax rate for the
first quarter of 2005 was 42.5%, compared to 40.3% in the year ago period. The
effective income tax rate was lower in 2004 as a result of the utilization of a
foreign net operating loss for which a full valuation allowance had previously
been recorded. Changes in the mix of U.S. and non-U.S. earnings over the balance
of the year and changes in the valuation of deferred tax assets could have a
significant impact on the effective tax rate for the year. </FONT></P>

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<P><FONT SIZE=3>As a result of the above, net income for the first quarter was
$2.6 million, or $.08 per basic share and $.07 per diluted share, compared to
$3.7 million, or $.11 per basic and $.10 per diluted share, in the first quarter
of 2004. </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><B>Liquidity and Capital Resources</B> </FONT></P>

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<P><FONT SIZE=3>Our primary liquidity needs are to support working capital
requirements in our business and to fund capital expenditures. We rely
principally upon operating cash flow and borrowings under our credit facilities
to meet these needs. We believe that cash flow available from these sources will
be sufficient to meet our working capital requirements, projected capital
expenditures and interest and debt repayments in the foreseeable future.
</FONT></P>

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<P><FONT SIZE=3>Our working capital was $152.0 million at March 31, 2005, an
increase of $4.0 million from $148.0 million at the end of 2004. This was due
principally to a $20.1 million increase in cash, a $2.4 million increase in
accounts receivable and a $2.3 million decrease in accounts payable and other
accrued expenses, offset by an $11.8 million decrease in inventories, a $2.0
million decrease in prepaid expense and other current assets and a $7.0 million
increase in short-term borrowings. We decreased our inventory levels in line
with our historical sales pattern, maintaining our inventory turnover at 10
times. The increase in our accounts receivable occurred in North America, with
the days sales outstanding remaining level at 13 from the end of 2004. Accounts
receivable in Europe was substantially unchanged. Future accounts receivable and
inventory balances will continue to fluctuate with changes in sales volume and
the mix of our net sales between consumer and business customers. </FONT></P>

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<P><FONT SIZE=3>Our cash balance increased to $56.4 million during the three
months ended March 31, 2005 from $36.3 million at the end of 2004. Net cash
provided by operating activities was $13.0 million for the first three months of
2005, compared to $0.4 million in the same period of 2004. The increase in cash
provided by operations in 2005 resulted from changes in our working capital
accounts, which provided $5.9 million in cash compared to using $11.4 million of
cash in 2004. The improvement resulted primarily from a $11.0 million decrease
in inventories in the first three months of 2005 compared to a $21.1 million
increase for the same period of the prior year and a $0.7 million decrease in
accounts payable, accrued expenses and other current liabilities in the first
three months of 2005, compared to a $17.2 million decrease for the same period
of the prior year. Cash generated from net income adjusted by other non-cash
items provided $7.1 million in 2005, compared to $11.8 million provided by these
items in 2004. </FONT></P>

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<P><FONT SIZE=3>We maintain our cash and cash equivalents primarily in money
market funds or their equivalent. As of March 31, 2005, all of our investments
mature in less than three months. Accordingly, we do not believe that our
investments have significant exposure to interest rate risk. </FONT></P>

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<P><FONT SIZE=3>We used $1.0 million of cash in 2005 and $1.3 million in 2004 in
investing activities, principally for the purchase of property, plant and
equipment. Capital expenditures in both periods consisted primarily of upgrades
and enhancements to our information and communications systems hardware and
facilities costs for the opening of new retail outlet stores. </FONT></P>

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<P><FONT SIZE=3>Net cash of $7.9 million was provided by financing activities in
2005. Cash of $7.5 million was provided by short-term borrowings under our
European credit facilities. We used cash of $0.2 million for payments under
long-term borrowing and capital lease agreements. Exercises of stock options
provided $0.6 million of cash in 2005. Cash of $1.7 million was provided by
financing activities in 2004, including $2.0 million provided from borrowings
under our European lines of credit and $0.2 million from the exercise of stock
options. This was offset by $0.4 million used to repay long-term obligations.
</FONT></P>

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<P><FONT SIZE=3>Under our United States secured revolving credit agreement,
which then was $70 million and expired on September 30, 2006, availability as of
March 31, 2005 was $58.9 million. There were outstanding letters of credit of
$11.8 million and there were no outstanding advances as of March 31, 2005. The
agreement was amended in October 2005 to increase the amount available to $120
million, extend the maturity date to October 2010 and provide for United States
and United Kingdom borrowings. Under our &pound;15 million ($28.3 million at the
March 31, 2005 exchange rate) multi-currency United Kingdom credit facility,
which was available to our United Kingdom subsidiaries, at March 31, 2005 there
were &pound;9.0 million ($17.0 million) of borrowings outstanding with interest
payable at a rate of 5.87%. The facility did not have a termination date, but
was cancelable by either party on six months notice. Borrowings under the
facility were secured by certain assets of our United Kingdom subsidiaries. The
United Kingdom facility was terminated in October 2005 and replaced by expanding
the United States credit facility to $120 million. </FONT></P>

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<P><FONT SIZE=3>Under our Netherlands &#128;5 million ($6.5 million at the March
31, 2005 exchange rate) credit facility, at March 31, 2005 there were &#128;3.0
million ($3.9 million) of borrowings outstanding under this line with interest
payable at a rate of 5.0% per annum. This facility expires in November 2006.
</FONT></P>

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<P><FONT SIZE=3>We also have certain obligations with various parties that
include commitments to make future payments. Our principal commitments at March
31, 2005 consisted of repayments of borrowings under our credit agreements and
long-term borrowings, payments under operating leases for certain of our real
property and equipment and payments under employment and other service
agreements. </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><B>Off-balance Sheet Arrangements</B> </FONT></P>

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<P><FONT SIZE=3>The Company has not created, and is not party to, any
special-purpose or off-balance sheet entities for the purpose of raising
capital, incurring debt or operating the Company's business. The Company does
not have any arrangements or relationships with entities that are not
consolidated into the financial statements that are reasonably likely to
materially affect the Company's liquidity or the availability of capital
resources. </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><B>Critical Accounting Policies and Estimates</B>
</FONT></P>

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<P><FONT SIZE=3>The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements, and
revenues and expenses during the period. Significant accounting policies
employed by the Company, including the use of estimates, were presented in the
Notes to Consolidated Financial Statements of the Company's amended 2004 Annual
Report on Form 10-K/A. </FONT></P>

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<P><FONT SIZE=3>Critical accounting policies are those that are most important
to the presentation of our financial condition and results of operations,
require management's most difficult, subjective and complex judgments, and
involve uncertainties. The accounting policies that have been identified as
critical to our business operations and understanding the results of operations
pertain to revenue recognition, net accounts receivable, inventories, long-lived
assets, income taxes and restructuring charges and accruals. The application of
each of these critical accounting policies and estimates was discussed in the
Company's amended Annual Report on Form 10-K/A for the year ended December 31,
2004. There have been no significant changes in the application of critical
accounting policies or estimates during 2005. Management believes that full
consideration has been given to all relevant circumstances that we may be
subject to, and the condensed consolidated financial statements of the Company
accurately reflect management's best estimate of the consolidated results of
operations, financial position and cash flows of the Company for the periods
presented. Because of the uncertainty in these estimates, actual results could
differ from estimates used in applying the critical accounting policies. We are
not aware of any reasonably likely events or circumstances which would result in
different amounts being reported that would materially affect its financial
condition or results of operations. </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><B>Recent Accounting Developments</B> </FONT></P>

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<P><FONT SIZE=3>In November 2004, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards ("SFAS") 151,
"Inventory Costs, an amendment of ARB No. 43, Chapter 4." SFAS 151 clarifies
that abnormal inventory costs such as costs of idle facilities, excess freight
and handling costs, and wasted materials (spoilage) are required to be
recognized as current period charges. SFAS 151 also requires that the allocation
of fixed production overheads to the costs of conversion be based on the normal
capacity of the production facility. The provisions of SFAS 151 will be
effective for fiscal years beginning after June 15, 2005 and is required to be
adopted by the Company in the first quarter of fiscal 2006. The Company does not
expect that the adoption will have a material impact on the Company's
consolidated financial position or results of operations. </FONT></P>

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<P><FONT SIZE=3>In December 2004, the FASB issued SFAS 123 (revised 2004) (SFAS
123R), "Share-Based Payment." SFAS 123R replaced SFAS 123, Accounting for
Stock-Based Compensation, and superseded Accounting Principles Board Opinion 25,
Accounting for Stock Issued to Employees. SFAS 123R requires the recognition of
compensation cost relating to share-based payment transactions, including
employee stock options, in financial statements. That cost will be measured
based on the fair value of the equity or liability instruments issued. SFAS 123R
provides alternative methods of adoption which include prospective application
and a modified retroactive application. SFAS 123(R) also requires the benefits
of tax deductions in excess of recognized compensation expense to be reported as
a financing cash flow, rather than as an operating cash flow as prescribed under
current accounting rules. The Company is required to adopt the provisions of
SFAS 123R effective as of the beginning of its first quarter in 2006. The
Company is evaluating the available alternatives of adoption of SFAS 123R. The
Company currently accounts for share-based payments using APB Opinion 25&#145;s
intrinsic value method and recognizes no compensation expense for employee stock
options as permitted under SFAS 123. See "Stock-based Compensation" above for
the effect on reported net income if we had accounted for our stock-based
compensation plans using the fair value recognition provisions of SFAS 123. The
actual effects of adopting SFAS 123R will depend on numerous factors, including
the amounts of share-based payments granted in the future, the valuation model
we use and estimated forfeiture rates. The Company has not made any
modifications to its stock-based compensation plans as a result of the issuance
of SFAS 123R. The Company believes the adoption of SFAS 123R will not have a
material effect on its consolidated financial statements. </FONT></P>

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<P><FONT SIZE=3>In March 2005, the Securities and Exchange Commission ("SEC")
released SEC Staff Accounting Bulletin ("SAB") 107, "Share-Based Payment." SAB
107 provides the SEC staff's position regarding the application of SFAS
No.&nbsp;123R and certain SEC rules and regulations, and also provides the
staff's views regarding the valuation of share-based payments for public
companies. The Company will adopt SAB 107 in connection with its adoption of
SFAS 123R. The Company is currently reviewing the effects, if any, that the
application of SAB 107 will have on the Company's consolidated financial
position and results of operations. </FONT></P>

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<P><FONT SIZE=3>In May 2005, the FASB issued SFAS No. 154, "Accounting Changes
and Error Corrections" ("SFAS 154"), which replaces Accounting Principles Board
Opinion No. 20, "Accounting Changes," and SFAS No. 3, "Reporting Accounting
Changes in Interim Financial Statements-An Amendment of APB Opinion No. 28."
SFAS 154 changes the requirements for the accounting for and reporting of a
change in accounting principle. Previously, most voluntary changes in accounting
principles required recognition of a cumulative effect adjustment within net
income of the period of the change. SFAS 154 requires retrospective application
to prior periods' financial statements, unless it is impracticable to determine
either the period-specific effects or the cumulative effect of the change. SFAS
154 also applies to changes required by an accounting pronouncement in the rare
case that the pronouncement does not contain specific transition provisions.
This statement also carries forward the guidance from APB No.&nbsp;20 regarding
the correction of an error and changes in accounting estimates. SFAS 154 is
effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005. The Company does not believe the adoption of
SFAS 154 will have a material effect on its consolidated financial position,
results of operations or cash flows. </FONT></P>

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<P><FONT SIZE=3>In June 2005, the FASB issued FSP FAS 143-1, "Accounting for
Electronic Equipment Waste Obligations" ("FSP FAS 143-1"), to address the
accounting for obligations associated with a European Union's Directive on Waste
Electrical and Electronic Equipment (the "Directive"). The Directive, enacted in
2003, requires EU-member countries to adopt legislation to regulate the
collection, treatment, recovery and environmentally sound disposal of electrical
and electronic waste equipment. The Directive distinguishes between products put
on the market after August 13, 2005 ("new waste") and products put on the market
on or before that date ("historical waste"). FSP FAS 143-1 addresses the
accounting for historical waste only and will be applied the later of the first
reporting period ending after June 8, 2005 or the date of the adoption of the
law by the applicable EU-member country. The adoption of FSP FAS 143-1 did not
have a material impact on the Company's consolidated financial position or
results of operations for the EU-member countries which have adopted the law.
</FONT></P>

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<P><FONT SIZE=3>In October 2005, the FASB issued FSP FAS 13-1, "Accounting for
Rental Costs Incurred During a Construction Period" ("FSP FAS 13-1"), which
requires the expensing of rental costs associated with ground or building
operating leases that are incurred during the construction period. FSP FAS 13-1
is effective in the first reporting period beginning after December 15, 2005.
The Company does not expect that this pronouncement will have a material effect
on its financial position or results of operations. </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><B>Item 3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Quantitative
and Qualitative Disclosure About Market Risk</U>.</B> </FONT></P>

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<P><FONT SIZE=3>We are exposed to market risks, which include changes in U.S.
and international interest rates as well as changes in currency exchange rates
(principally Pounds Sterling, Euros and Canadian dollars) as measured against
the U.S. dollar and each other. </FONT></P>

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<P><FONT SIZE=3>The translation of the financial statements of our operations
outside of the United States is impacted by movements in foreign currency
exchange rates. Changes in currency exchange rates as measured against the U.S.
dollar may positively or negatively affect sales, gross margins, operating
expenses and retained earnings as expressed in U.S. dollars. We have limited
involvement with derivative financial instruments and do not use them for
trading purposes. We may enter into foreign currency options or forward exchange
contracts aimed at limiting in part the impact of certain currency fluctuations,
but as of March 31, 2005 we had no outstanding forward exchange contracts.
</FONT></P>

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<P><FONT SIZE=3>Our exposure to market risk for changes in interest rates
relates primarily to our variable rate debt. Our variable rate debt includes
short-term borrowings under our European credit facilities and our United
Kingdom term loan. As of March 31, 2005, the balance outstanding on our variable
rate debt was approximately $31.5 million. In connection with our United Kingdom
term loan agreement, effective April 30, 2002 we entered into an interest rate
collar agreement to reduce our exposure to market rate fluctuations. At March
31, 2005 the notional amount of the interest rate collar was &pound;5.0 million
($9.3 million at the March 31, 2005 exchange rate) with an interest rate cap of
6.0% and a floor of 4.5%. The fair value of the interest rate collar was zero as
of March 31, 2005. The interest rate collar expires on April 30, 2005. Based on
our market sensitive instruments as of March 31, 2005, a hypothetical change in
average interest rates of one percentage point is not expected to have a
material effect on our financial position, results of operations or cash flows
for the fiscal year. </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><B>Item 4.
<U>Controls and Procedures</U></B> </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><B>Disclosure Controls and Procedures</B> </FONT></P>

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<P><FONT SIZE=3>The Company establishes and maintains disclosure controls and
procedures that are designed to provide reasonable assurance that information
required to be disclosed by the Company in the reports it files under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms. Disclosure
controls are also designed to provide reasonable assurance that such information
is accumulated and reported to management, including the Chief Executive Officer
and the Chief Financial Officer, to allow timely decisions regarding required
disclosure. </FONT></P>

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<P><FONT SIZE=3>Our management, including our CEO and CFO, does not expect that
our disclosure controls and procedures will prevent all errors and all fraud. A
control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in control systems,
misstatements due to error or fraud may occur and not be detected. These
limitations include the circumstances that breakdowns can occur as a result of
error or mistake, the exercise of judgment by individuals or that controls can
be circumvented by acts of misconduct. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. </FONT></P>

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<P><FONT SIZE=3>As of the end of the period covered by this report, we carried
out an evaluation, under the supervision and with the participation of our
management, including the Chief Executive Officer and the Chief Financial
Officer, of the effectiveness of the design and the operation of our disclosure
controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15 of the
Securities Exchange Act of 1934. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>Based on their evaluation, as of March 31, 2005, the Chief
Executive Officer and the Chief Financial Officer have concluded that our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended) were not effective to
ensure that the information required to be disclosed by us in this quarterly
report on Form 10-Q was recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms. This conclusion is based on
our identification of three material weaknesses in our internal controls over
financial reporting as of March 31, 2005. The material weaknesses are:
</FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
We do not maintain sufficiently and adequately trained personnel resources at
certain locations outside of the Company's corporate headquarters with the
requisite knowledge and financial reporting expertise to execute a timely
financial closing process, address non-routine accounting issues that arise in
the normal course of the Company's operations and ensure the timely and accurate
preparation of interim and annual financial statements.
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
We have insufficient processes to effectively prepare timely account
reconciliations and analyses with thorough documentation and substantiation of
certain general ledger accounts resulting in a number of audit adjustments
required to be recorded after being identified by our independent registered
public accountants.
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
We have insufficient processes to effectively estimate certain liability
accounts related to vendor purchases at our Tiger Direct subsidiary.  The
deficiencies include the lack of sufficient internal control to accurately
reconcile and review the estimation processes for these accounts.
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>As a result of this determination and as part of the work undertaken in
connection with this report, we have applied compensating procedures and processes as
necessary to ensure the reliability of our financial reporting. Accordingly, management
believes, based on its knowledge, that (i) this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which they were made, not misleading
with respect to the period covered by this report and (ii) the financial statements, and
other financial information included in this report, fairly reflect the form and substance
of transactions and fairly present in all material respects our financial condition,
results of operations and cash flows as at, and for, the periods presented in this report. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><B>Material Weaknesses Reported for the Years Ended
December 31, 2004 and December 31, 2003</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>As reported in our amended Annual Reports on Form 10-K/A for the years ended
December 31, 2004 and December 31, 2003, management was unable to conclude that the
Company's internal controls over financial reporting were then effective, as a result
of material weaknesses resulting from the ineffectiveness of internal controls over
inventory in our United Kingdom and Tiger Direct subsidiaries. We are continuing to
evaluate and test the steps taken to improve the effectiveness of our internal controls
over financial reporting and we implemented the following changes to further address our
material weaknesses: </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>During 2005, beginning in the first quarter, we implemented a number of
remediation measures to address the material weakness related to inventory at our United
Kingdom subsidiary. These measures included: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
Modification of our internal procedures to more accurately identify the types of
inventory transactions processed
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
Implementation of additional system reporting to provide more details to enhance
the inventory reconciliation process
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
Addition of management-level reviews to support the reconciliation process
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
Implementation of additional review procedures to test cut-off accuracy.
</TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>During 2005, beginning in the third quarter, we also implemented
remediation measures to address the material weakness related to inventory at
our Tiger Direct subsidiary. These measures included: </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
Modification of our internal information technology control procedures to help
ensure the accurate compilation of inventory at the end of each financial period
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
Conducting of more frequent physical inventory counts (at least once per
quarter) during the last three quarters of fiscal 2005
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
Preparation and analysis of detailed monthly inventory reconciliations, which is
supported by additional management review
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
Implementation of additional review procedures to test cut-off accuracy
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
Hiring of a new person to fill a senior managerial position overseeing the
subsidiary's accounting staff and also increasing the subsidiary's accounting
staff.
</TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>While progress is being made to remediate the material
weaknesses identified, we are continuing to monitor these processes to further
improve our procedures as may be necessary. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>Deloitte &amp; Touche LLP, our former independent registered
public accounting firm, issued a material weakness letter to the Company which
addressed both the weaknesses at the Company's United Kingdom subsidiary and
inadequate oversight and control activities on the part of senior management of
the Company over its remote subsidiaries. These matters were discussed in detail
among management, the audit committee and Deloitte &amp; Touche. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><B>Section 404 of the Sarbanes-Oxley Act</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>We are not yet subject to the internal controls certification
and attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002
because we are not an accelerated filer. Based on SEC implementing regulations
in effect as of June 30, 2006, at the end of fiscal year 2007 Section 404 of the
Sarbanes-Oxley Act of 2002 will require that management provide an assessment of
the effectiveness of the Company's internal control over financial reporting and
that the Company's independent registered public accounting firm will be
required to audit that assessment. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>We are continuing to work to achieve compliance with the
requirements of Section 404. We have dedicated substantial time and resources to
documentation and review of our procedures, including the hiring of additional
internal audit staff in both the United States and in Europe. We will also
evaluate the need to engage outside consultants to assist us. We have not
completed this process or its assessment, due to the complexities of our
decentralized structure and the number of accounting systems in use. We have not
completed our assessment of our internal control over financial reporting. In
addition to the two material weaknesses as of March 31, 2005 discussed under the
caption "Disclosure Controls and Procedures," we have identified a number of
internal control significant deficiencies, including controls in the information
technology area, that may affect the timeliness and accuracy of recording
transactions and which, individually or in the aggregate, could become material
weaknesses in future periods if not remediated. While the Company does not
believe that the following are currently material weaknesses, they are
designated as significant deficiencies as of March 31, 2005: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
The disparate operating and financial information systems used at certain of our
locations have inherent limitations resulting in a control environment heavily
reliant upon manual review procedures and adjustments. These deficiencies
include inadequate or lack of systems interfaces and the preparation of numerous
manual journal entries.
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
Internal control deficiencies in the information technology area include lack of
adequate general controls. We lack program change and project management
controls, have inadequate segregation of duties between information technology
department development and production functions, need formal information
technology strategic planning, need formal documentation of information security
procedures, need security around user rights to certain application systems and
need to implement formal help desk procedures.
</TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>We have a significant amount of work to do to remediate the
items we have identified. In the course of completing our evaluation and testing
we may identify further deficiencies and weaknesses that will need to be
addressed and will require remediation. We may not be able to correct all such
internal control deficiencies in a timely manner and may find that a material
weakness or weaknesses continues to exist. As a result, management may not be
able to issue an unqualified opinion on the effectiveness of the Company's
internal control over financial reporting as of December 31, 2007, if required.
</FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><B>Changes in Internal Controls Over Financial
Reporting</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>Our management is not aware of any changes in internal control
over financial reporting other than those described above that occurred during
the quarter ended March 31, 2005 that materially affected, or were reasonably
likely to materially affect, our internal control over financial reporting.
</FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<P ALIGN=LEFT><FONT SIZE=3><B>PART II &#151; OTHER
INFORMATION</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3>Item 1. <U>Legal Proceedings</U> </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
Beginning on May 24, 2005, three shareholder derivative lawsuits were filed, one
in the United States District Court for the Eastern District of New York and two
in the Supreme Court of New York, County of Nassau, against various officers and
directors of the Company and naming the Company as a nominal defendant in
connection with the Company&#146;s restatements of its fiscal year 2003 and 2004
financial statements. The defendants and the Company denied all of the
allegations of wrongdoing contained in the complaints. On May 16, 2006, the
parties entered into a stipulation of settlement of this case. By order dated
July 6, 2006 the United States District Court for the Eastern District of New
York approved the settlement and dismissed the federal complaint with prejudice.
Pursuant to the settlement the defendants are released from liability and the
Company will adopt certain corporate governance principles including the
appointment of a lead independent director to, among other things, assist the
Board of Directors in assuring compliance with and implementation of the
Company's corporate governance jpolicies and pay $300,000 of the legal fees of
the plaintiffs. The plaintiffs were directed by the U.S. District Court to move
to dismiss the state court actions.
</TD>
</TR>
</TABLE>
<BR>




<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<P ALIGN=LEFT><FONT SIZE=3>Item 6. <U>Exhibits</U> </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>31</TD>
<TD WIDTH=90%>
Certifications of the Chief Executive Officer and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>32</TD>
<TD WIDTH=90%>
Certifications of the Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3><B><U>SIGNATURES</U></B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized. </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>
<BR>
<BR>
<BR>
Date:  August 29, 2006
</TD>
<TD WIDTH=50%>
SYSTEMAX INC.<BR>
<BR>
<BR>
By: <U>/s/ RICHARD LEEDS</U><BR>
Richard Leeds<BR>
Chairman and Chief Executive Officer<BR>
<BR>
<BR>
By: <U>/s/ STEVEN GOLDSCHEIN</U><BR>
Steven Goldschein<BR>
Senior Vice President and Chief Financial Officer
</TD>
</TR>
</TABLE>
<BR>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>systemax-ex311_070606.htm
<DESCRIPTION>EXHIBIT 31
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 31</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Head Right" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 31 </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3><B>CERTIFICATION UNDER SECTION 302 OF THE<BR>
SARBANES-OXLEY ACT OF 2002</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><B>CERTIFICATION OF CHIEF EXECUTIVE OFFICER</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>I, Richard Leeds, Chief Executive Officer of Systemax Inc.,
certify that: </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>1. I have reviewed this quarterly report on Form 10-Q of
Systemax Inc. (the "registrant");</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report;</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and (except as
disclosed in Item 4 of this quarterly report on Form 10-Q) we have:</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision, to
reasonably ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within
these entities, particularly during the period in which this quarterly report is
being prepared;</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting.</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
function):</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting known to me
which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls over financial reporting.</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3>Dated: August 29, 2006</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>/s/ RICHARD LEEDS</U><BR>
Richard Leeds, Chief Executive Officer</FONT></P>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>3
<FILENAME>systemax-ex312_070606.htm
<DESCRIPTION>EXHIBIT 31
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 31</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Head Right" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 31 </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3><B>CERTIFICATION UNDER SECTION 302 OF THE<BR>
SARBANES-OXLEY ACT OF 2002</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><B>CERTIFICATION OF CHIEF FINANCIAL OFFICER</B>
</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>I, Steven M. Goldschein, Chief Financial Officer of Systemax
Inc., certify that: </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>1. I have reviewed this quarterly report on Form 10-Q of
Systemax Inc. (the "registrant");</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report;</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and (except as
disclosed in Item 4 of this quarterly report on Form 10-Q) we have:</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision, to
reasonably ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within
these entities, particularly during the period in which this quarterly report is
being prepared;</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting.</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
function):</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting known to me
which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3>b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls over financial reporting.</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3>Dated: August 29, 2006</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>/s/ STEVEN M. GOLDSCHEIN</U><BR>
Steven M. Goldschein, Chief Financial Officer</FONT></P>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>4
<FILENAME>systemax-ex321_070606.htm
<DESCRIPTION>EXHIBIT 32
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 32</TITLE>
</HEAD>
<BODY>


<!-- MARKER FORMAT-SHEET="Head Right" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 32 </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3><B>CERTIFICATION PURSUANT TO SECTION 906 OF THE<BR>
SARBANES-OXLEY ACT OF 2002</B> </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><B><U>CERTIFICATION OF CHIEF EXECUTIVE OFFICER</U></B>
</FONT></P>

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<P><FONT SIZE=3>The undersigned, the Chief Executive Officer of Systemax Inc.,
hereby certifies that to the best of his knowledge Systemax Inc.&#145;s Form
10-Q for the period ended March 31, 2005 fully complies with the requirements of
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78m or 78 (o)(d) and that the information contained in such Form 10-Q fairly
presents, in all material respects, the financial condition and results of
operations of Systemax Inc. </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3>Dated: August 29, 2006</FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><U>/s/ RICHARD LEEDS</U><BR>
Richard Leeds, Chief Executive Officer</FONT></P>

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<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>5
<FILENAME>systemax-ex322_070606.htm
<DESCRIPTION>EXHIBIT 32
<TEXT>
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<TITLE>Exhibit 32</TITLE>
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<P ALIGN=RIGHT><FONT SIZE=3>Exhibit 32</FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><B><U>CERTIFICATION OF CHIEF FINANCIAL
OFFICER</U></B> </FONT></P>

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<P><FONT SIZE=3>The undersigned, the Chief Financial Officer of Systemax Inc.,
hereby certifies that to the best of his knowledge Systemax Inc.&#145;s Form
10-Q for the period ended March 31, 2005 fully complies with the requirements of
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78m or 78 (o)(d) and that the information contained in such Form 10-Q fairly
presents, in all material respects, the financial condition and results of
operations of Systemax Inc. </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3>Dated: August 29, 2006</FONT></P>

<P><FONT SIZE=3><U>/s/ STEVEN M. GOLDSCHEIN</U><BR>
Steven M. Goldschein, Chief Financial Officer</FONT></P>

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