FORM 10-K

SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

(Mark One)

FOR ANNUAL AND
TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year
ended December 31, 2001



> [X] ANNUAL
> REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
> OR
>         [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
> THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 0-25790

PC MALL, INC.(Exact name of registrant as specified in its charter)

|                                                                    |  |                                          
|------------------------------------------------------------------- |  | -----------------------------------------
|Delaware                                                            |  | 95-4518700                               
|(State or other jurisdiction
      ofincorporation or organization) |  | (I.R.S. Employer Identification
  Number)

2555 West 190th StreetTorrance, CA 90504(address of
principal executive offices)(310) 354-5600(Registrant's telephone
number, including area code)

Securities registered pursuant to Section 12(b) of the
Act:

None


Securities registered pursuant to Section 12(g) of the
Act:

Common Stock, Par Value $0.001 Per Share




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.  YesTNo

Indicate by check mark if
disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of the Registrant's knowledge in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K.

As of March 28, 2002 the aggregate market value of the Common Stock held by
non-affiliates of the Registrant was approximately $30,993,692.  The number
of shares outstanding of the Registrant's Common Stock as of March 28, 2002 was
10,443,616.

Documents incorporated by reference into Part III: 
Portions of the Proxy Statement for the Registrant's 2002 Annual Meeting of
Stockholders are incorporated by reference into Part III hereof.



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PC MALL, INC.

TABLE OF CONTENTS

> PART IITEM 1 -
>       BusinessITEM
>       2 - PropertiesITEM
>       3 -
>       Legal ProceedingsITEM
>       4 -
>       Submission of Matters to a Vote of Security HoldersPART IIITEM
>       5 - Market for Registrant's Common Stock and Related Stockholder MattersITEM
>       6 - Selected Financial DataITEM
>       7 - Management's Discussion and Analysis of Financial Condition and
>       Results of OperationsITEM
>       7A - Quantitative and Qualitative Disclosures about Market RiskITEM
>       8 - Financial Statements and Supplementary DataITEM
>       9 - Changes in and Disagreements with Accountants on Accounting and
>       Financial DisclosurePART IIIITEM
>       10 - Directors and Executive Officers of the RegistrantITEM
>       11 - Executive CompensationITEM
>       12 - Security Ownership of Certain Beneficial Owners and ManagementITEM
>       13 - Certain Relationships and Related TransactionsPART IVITEM
>       14 - Exhibits, Financial Statement Schedules and Reports on Form 8-KSIGNATURES



---

PART I

ITEM 1.
BUSINESS

General

PC
Mall, Inc. (the "Company"), formerly IdeaMall, Inc. and Creative Computers,
Inc., founded
in 1987, is a rapid response supplier of computer hardware, software,
peripheral and electronics products. The Company offers products to business,
government and educational institutions as well as individual consumers through
relationship-based direct marketing techniques, direct response catalogs, dedicated
inbound telemarketing sales executives, the Internet, a direct sales force, and
a retail showroom.  The Company
offers a broad selection of products through its distinctive full-color catalogs
under the PC Mall, MacMall, and eCOST.com brands, its five worldwide
web sites on the Internet: pcmall.com, macmall.com, ccit-inc.com, ecost.com, and
elinux.com, and other promotional materials. The Company's staff of
knowledgeable sales executives, customer service and technical
support personnel work together to serve customers by assisting in product
selection and offering technical assistance.  The Company believes that its high level of customer service results in
customer loyalty and repeat customer orders.

In
September 1997, the Company formed a wholly-owned subsidiary, uBid, Inc.
("uBid"),
to sell computer-related products and consumer electronics through an auction
format on the Internet. On December 9, 1998, uBid completed an initial public
offering of 1,817,000 shares of its Common Stock.  Upon completion of this offering, the Company owned 80.1% of
the outstanding Common Stock of uBid.  On June 7, 1999, the Company divested its ownership in
uBid
by means of a tax-free distribution of all of its remaining 7.3 million shares
of uBid Common Stock to the
Company's stockholders of record as of May 24, 1999.  In April 2000, uBid was acquired by CMGI.

In
February 1999, the Company formed eCOST.com as a wholly-owned subsidiary.  eCOST.com is a multi-category Internet retailer of computer products and
electronics, and offers a broad selection of name-brand products, most of which
are sold at competitive prices plus itemized fees for processing and shipping
the order.  In December 1999, the
Company formed eLinux as a wholly-owned subsidiary to focus on products and
services directed to the Linux community.

During
2000, the Company shifted its strategy to focus primarily on its outbound direct
marketing operations.  Accordingly, the Company changed its operating
strategy for its start-up businesses, eCOST.com and eLinux, emphasizing
profitability over growth.

The Company
currently operates in three reportable business segments: 1) a rapid
response supplier of computers, hardware, software, peripheral and electronics
products under the PCMall, MacMall, and CCIT brands, collectively
referred to as the "Core Business"; 2) a multi-category Internet
retailer of computer and consumer electronics products under the eCOST.com brand, and 3) a rapid response supplier of Linux-based products and
services provided under the eLinux brand.  For
segment information relating to net sales, gross profit and operating income,
see Note 9 to the Company's financial statements included herein.

Strategy

The Company's
strategy is to be a leading rapid response direct marketer and supplier of a broad range of computers, software and related
technology products and solutions to businesses, governmental and educational
institutions, and individual customers.  Specific elements of the Company's
operating strategy include:

Continued
Development of Outbound Direct Marketing.  During 2001, the Company continued to intensify its outbound
direct marketing efforts to focus on the under-served small and medium business
(SMB) market as well as large businesses (enterprise),
government and education markets.  The Company
believes that its inherent cost efficiencies and its purchasing power with key
vendors provides it with competitive advantages and growth opportunities to
acquire market-share from small Value-Added Resellers ("VARS") that
traditionally serve the SMB market.   Outbound business sales can also be more profitable than
inbound sales due to reduced advertising expense and lower transaction cost from
higher average order size.  The Company's strategy is to expand its outbound sales executive
workforce and use its expertise in database marketing to mine its customer database and purchased name lists for
prospects.  During 2001, the Company
continued to hire experienced outbound direct marketing executives to manage this
initiative and expand the
outbound sales executive workforce.  In September 2001, the Company opened
a new outbound call center located in Orange County, California.  The
Company also focused on the development of its direct marketing executives
through its
comprehensive training program.  The
Company expects to continue to invest in new tools and training to develop its
outbound direct marketing sales operation.

Focus
on the Windows/Intel (PC platform) Market. The
Company launched its first PC catalog, PC Mall, primarily for PC platform customers,
in May 1995.  The Company published seven editions of PC Mall with a total
circulation of 11.1 million copies in 1995.  During 2001, there were 13 editions of the PC Mall catalog distributed, with
total
circulation of 13.7 million.  Total PC platform revenues were $437.8 million,
a  decrease of $60.6 million, or 12.2%
over 2000 PC platform revenue of $498.4 million.

The
Company is authorized or otherwise has the ability to sell IBM, Compaq,
Hewlett-Packard, Sony, Toshiba and other name brand computers.  The Company
has become one of the leading catalog resellers of PC platform products since the start
of its PC platform initiative in 1995.

Continued
Macintosh Marketshare Expansion.  Throughout 2001, the Company continued to be a leading
rapid response supplier of
Macintosh products, offering the full line of Apple and related products.  The Company's sales of Mac-related products in
2001 was $280.4 million, a decrease of $39.8 million, or 12.4% compared to $320.2 million in 2000.  During 2001, the Company published
14 editions of its MacMall catalog
with a circulation of 29.7 million copies, a 1% increase from the prior year's
29.5 million circulation and a 6% decrease from the 31.5 million copies
circulated in 1999.

Penetration
of the Linux Market.  In February 2000, the Company launched its newest venture, eLinux,
focusing on providing technology solutions to Linux users.  Linux is an open source operating software gaining rapid acceptance
within the IT community and is used extensively to run network servers.  eLinux 
offers
complete multi-vendor Linux solutions, including Linux compatible products,
consulting and support services, and community.  The Company's eLinux
subsidiary serves the rapidly growing Linux community by providing
multi-vendor Linux solutions and custom configurations of Linux-based systems
and compatible products through its secure web site and its outbound sales
executive work force.

Marketing
Database Growth.  The Company
has compiled a proprietary mailing list of approximately 7.7 million names of previous
and potential customers.  The
database is continually analyzed to target customer types and increase response
and purchase rates.  The Company's
response rate (calculated by dividing the number of orders generated by the
number of catalogs distributed) for its proprietary mailing list during 2001 was
higher than its response rate for prospects from purchased name lists.

Increased
Relationship-Based Selling.  The
Company's sales executives are highly trained in relationship building with
their customers and are continuously coached to offer higher levels of service. 
The Company is committed to relationship-based selling.  Each sales executive is trained and empowered to handle all customer
needs, including ongoing customer service and returns-related issues.  Additionally, sales executives bring other expertise to bear as needed
from within the Company, including Novell-trained Certified Network Engineers (CNE),
Microsoft Windows NT specialists (MCSE) and Apple and Cisco-certified technicians.

Leverage
of Internet Leadership Position.  The
Company considers itself a leader in Internet e-commerce innovation and intends
to continue enhancing its leadership position on the Internet. The Company was
among the first to enter the Internet auction space with its ubid.com web site. 
uBid completed a successful
initial public offering ("IPO") in December 1998, and the Company
subsequently distributed to its stockholders all of its remaining shares of uBid
in June 1999.

In
March 1999, the Company launched the eCOST.com web site, which offers a broad
selection of name-brand products, most of which are sold at discount prices.
Customers are provided an itemized description of the fees associated with
processing their orders, including a handling fee to cover warehousing, order
processing, systems and overhead costs, and a shipping fee. With the
introduction of eCOST.com, the Company believes that it was among the first
full-spectrum Internet resellers in the personal computing marketplace, offering
customers many different ways to purchase computer hardware, software,
peripherals and consumer electronics.

Marketing and
Sales

The
Company designs its various marketing programs to attract new customers and to
stimulate additional purchases by previous customers.  The Company continuously attracts new customers by producing leads from
existing and purchased databases, employing outbound direct marketing sales
techniques to establish relationships with businesses, selectively mailing
catalogs to prospective customers and through advertising on the Internet and in
major computer user magazines, such as Computer Shopper, MacWorld, Mac Home, Mac
Today, Mac Addict and others.  In addition,
the Company obtains the names of prospective customers through selected mailing
lists acquired from various sources, including manufacturers, suppliers and
computer magazine publishers.   The
Company sells its products to businesses, government and educational institutions,
as well as individual consumers.

During
2001, the Company acquired a software package designed to manage
marketing campaigns using different media channels and to optimize campaigns
through advanced data mining
techniques.  The software combines these optimization techniques with
multiple predictive statistical models to more effectively match offers to
individuals and businesses to provide the most profitable results.  The
Company expects to begin using the software in 2002.

Outbound
Direct Marketing and Inbound Telemarketing. The Company believes that much of its success has come from the quality
and training of its sales executives.  Sales executives are
responsible for assisting customers in purchasing decisions, answering product
pricing and availability questions and processing product orders.  Sales executives
also have the authority to vary prices within
specified parameters in order to meet prices of competitors.  In addition,
sales executives undergo an initial three-month training program focusing on use of the
Company's systems, product offerings and networking solutions, sales techniques, phone etiquette and customer
service.  Sales
executives also attend frequent training sessions to stay up-to-date on new products. 
Sales executives staff the Company's toll-free order lines 24 hours a
day, seven days a week.  Customer
service and technical support personnel assist inbound and outbound sales executives.

The
Company's phone and computer systems are used for order entry, customer
tracking and inventory management.  The
computer system maintains a database listing previous customer purchases, which
allows sales executives to make product suggestions that fit each
customer's specific buying preferences and to offer the latest upgrades for
products previously purchased from the Company.  During 2001, the Company shipped approximately
640,000 inbound and outbound orders with an average order size of $739.

Catalogs.
The Company published 13 editions of its PC Mall catalog during 2001 and distributed approximately
13.7 million catalogs.  PC Mall customers receive a catalog several times a year depending
on purchasing history.  In addition, the Company includes a catalog with
most orders
shipped, as well as special promotional flyers and manufacturers' product
brochures.

The
Company published 14 editions of its MacMall catalog in 2001 and distributed approximately
29.7 million catalogs.  Active
MacMall customers receive a catalog several times a year depending upon
purchasing history, and the Company includes a catalog with most orders shipped,
as well as special promotional flyers and manufacturers' product brochures.

The
Company creates all of its catalogs in-house with its own design team and
production artists using a computer-based desktop publishing system.  The in-house preparation of the catalogs streamlines the production
process, provides greater flexibility and creativity in catalog production, and
results in significant cost savings over outside production.

The Internet. 
The Company operates five
worldwide web sites on the Internet, including pcmall.com, macmall.com,
ccit-inc.com, ecost.com and elinux.com.  The Company offers many
advanced Internet features such as on-line ordering, access to inventory
availability and a large product selection with detailed product information. 
The Company also maintains and operates an extranet for its Corporate customers,
called "Corporate Access Pages" or CAP sites.  The CAP sites provide custom
catalogs and online purchasing channels for corporate customers and their
employees.  Sales generated through the Internet have grown rapidly for the Company
as it offers its customers a convenient means of shopping and ordering its
products.  In addition, the
Company's web sites also serve as another source of new customers.  In
2001, the Company shipped approximately 355,000 Internet orders, with
an average order size of $608.

Vendor Supported Marketing.
The
Company currently has a marketing team that sells advertising space in the
Company's catalogs, advertising on the Company's Internet sites and vendor
supported outbound marketing campaigns.  These
advertising sales generate revenues that offset a substantial portion of the
expense of publishing and distributing the catalogs.  The same marketing team
also develops marketing campaigns to
maximize product sales.

National Off-Page Advertising. 
The
Company continuously attracts new catalog customers and generates orders through
large multi-page color advertisements in major publications such as  Computer Shopper,
MacWorld, Mac Home, Mac Today, and Mac Addict.  During 2001, the Company
purchased 184 pages of magazine advertising.

Corporate Sales.
The specific needs of
corporate buyers are fulfilled through a combination of inbound and outbound
full-time sales personnel as well as a direct sales force through its CCIT
subsidiary.  The Company's sales
staff builds long-term relationships with corporate customers through regular
phone contact and personalized service.  Corporate
customers may choose from several purchase or lease options for financing
product purchases, and the Company extends credit terms to certain corporate
customers.

Customer Return Policy.
The
Company offers a 30-day return policy on a number of its products, subject to
vendor terms and conditions.  Returns
are monitored to identify trends in product acceptance and defects, to enhance
customer satisfaction and to reduce overall returns.

Products
and Merchandising

The
Company offers hardware, software, peripherals, components and accessories for
users of computer products, as well as electronics equipment.  The Company screens new products and selects products for inclusion in
its catalogs and web sites based on features, quality, sales trends, price,
margins, cooperative/market development funds and warranties.  The Company offers its customers other value-added services, such as the
ability to purchase systems that have been specifically configured to meet the
customer's requirements.  Through
frequent mailings of its catalogs and e-mails to its customers, the Company is
able to quickly introduce new products and replace slower selling products with
new products.

The
following table sets forth the Company's net sales by major product category
as a percentage of total net sales for the periods presented.

|                                               | Year
      Ended December 31,
|---------------------------------------------- | -----------------------------
|                                               | 2001                         
|Computer
      systems                         | 39.0%                        
|Peripherals,
      components  and accessories | 45.5                         
|Software                                       | 10.4                         
|Other
      (1)                                | 5.1                          
|Total                                          | 100.0%                       

(1)   
Other consists primarily of other electronic products, income from labor
charges and sales of extended warranties.

Computer
Systems.  The Company offers a large selection of desktop, laptop, and server systems from
leading manufacturers including Apple, IBM, Compaq,
Hewlett-Packard, Sony, Toshiba and others.

Peripherals, Components and Accessories.The Company offers a large selection of peripheral and
component products from manufacturers such as Apple, Hewlett-Packard, Sony,
Epson, 3Com, US Robotics, IBM, Iomega and Compaq.  Peripherals and components include printers, modems, monitors, data
storage devices, add-on circuit boards, connectivity products and communications
products.  The accessories offered
by the Company include a broad range of computer-related items and supplies such
as diskettes, cables and connectors.

Software.
  The Company sells a
wide variety of software packages in the business and personal productivity,
utility, language, educational and entertainment categories, including word
processing, spreadsheet and database software.  The Company offers a large number of software programs and licenses from
established vendors, such as Microsoft, Corel, Adobe, Symantec, Quark, Lotus,
Macromedia and Intuit, as well as numerous specialty products from new and
emerging vendors.  The Company also
markets upgrades from certain vendors, such as Symantec, Corel, Lotus and
Microsoft, which the Company believes offer incremental revenue opportunities.

Purchasing
and Inventory

The
Company believes that effective purchasing is a key element of its business
strategy to provide name brand computer products and related software and
peripherals at competitive prices.  The
Company believes that its high volume of sales results in increased purchasing
power with its primary suppliers, resulting in volume discounts, favorable
product return policies and vendor promotional allowances.  During 2001, the Company purchased products from over
548 vendors. 
During 2001, 2000 and 1999, products manufactured by Apple represented
approximately 27.0%, 24.9% and 25.4% of net sales, respectively.  The Company is also linked electronically with
twelve distributors, which
allows account executives to view distributor product availability on line and
drop-ship product directly to their customers.  The benefits of this program, known as virtual warehouse, include reduced
inventory carrying costs and improved inventory turns.

Most
key vendors have agreements to provide market development funds to the Company,
whereby such vendors fund portions of the cost of catalog publication and
distribution based upon the amount of coverage given in the catalogs for their
products.  Termination or
interruption of the Company's relationships with its vendors, or modification
of the terms of or discontinuance of the Company's agreements with its
vendors, could adversely affect the Company's operating results.  The Company's
success is dependent in part upon the ability of its
vendors to develop and market products that meet the changing requirements of
the marketplace.  As is customary in
the industry, the Company has no long-term supply contracts with any of its
vendors.  Substantially all of the
Company's contracts with its vendors are terminable upon 30 days' notice or
less.

The
Company attempts to manage its inventory position to generate the highest levels
of customer satisfaction possible while limiting inventory risk.  The Company believes that it has increased its ability to
provide constrained products, which it believes is an important competitive
advantage; and the Company invested in this strategy heavily during 2001.  The Company's average annual inventory turns were
15.7 times in 2001, 18.5 times in 2000, and 15.1 times in 1999.  Inventory levels may vary from period to period, due in part to increases
or decreases in sales levels, the Company's practice of making large-volume
purchases when it deems the terms of such purchases to be attractive and the
addition of new manufacturers and products.  The Company has negotiated agreements with many of its vendors that
contain price protection provisions intended to reduce the Company's risk of
loss due to manufacturer price reductions.  The Company currently has such rights with respect to products
that it
purchases from Apple, IBM, Compaq, Hewlett-Packard and certain other vendors;
however, such rights vary by product line, have other conditions and limitations
and can be terminated or changed at any time.

The
market for computers, computer products, peripherals, software and electronics
is characterized by rapid technological change and a growing diversity of
products.  The Company believes that its success
depends in large part on its ability to identify and obtain the right to market
products that will meet the changing requirements of the marketplace and to
obtain sufficient quantities of product to meet changing demands.  There can be no assurance that the Company will be able to identify and
offer products necessary to remain competitive or avoid losses related to excess
or obsolete inventory.

Distribution

The
Company operates a full-service 325,000 square foot distribution center in
Memphis, Tennessee.  The centralized
distribution operations, strategically located near the Federal Express hub in
Memphis, allow most orders of in-stock products accepted by 10:00 p.m.
Eastern Standard Time to be shipped for delivery by 10:30 a.m. the
following day via Federal Express.  Upon
request, orders may also be shipped at a lower cost by United Parcel Ground
Service.  The Company subleases 105,600 square feet of the Company's 325,000 square foot
facility to uBid, and the sublease is coterminus with the building lease.

When
an order is entered into the system, an automated credit check or credit card
verification is performed and, if approved, the order is electronically
transmitted to the warehouse, where a packing slip is printed for order
fulfillment.  Orders fulfilled by
certain distributors linked electronically with the Company are transmitted
directly to their warehouses via electronic data interchange (EDI).  All
inventory items are bar coded and located in computer-designated areas which are
easily identified on the packing slip.  All
orders are checked with bar code scanners prior to final packing to ensure that
each order is packed correctly.

The
Company believes that its existing distribution facilities are currently
adequate for its needs.

Management Information Systems

The
Company has committed significant resources to the development of a
sophisticated computer system that is used to manage all aspects of its
business.  The Company's computer system supports telemarketing,
marketing, purchasing, accounting, customer service, warehousing and
distribution, and facilitates the preparation of daily operating control reports
which provide concise and timely information regarding key aspects of its
business.  The system allows the
Company to, among other things, monitor sales trends, make informed purchasing
decisions and provide product availability and order status information.  In addition to the main computer system, the Company has a system of
networked personal computers, which facilitates data sharing.  The Company also applies its management information systems to the task
of managing its inventory.  The
Company currently operates its management information system using a Hewlett
Packard HP3000 Enterprise System and has a back-up system available in the event
of a system failure.  The Company
believes that in order to remain competitive it will be necessary to upgrade its
management information systems on a continuing basis.

The
Company's success is in part dependent on the accuracy and proper utilization
of its management information systems and its telephone system.  In addition to the costs associated with system upgrades, the transition
to and implementation of new or upgraded hardware or software systems can result
in system delays or failures.  Any
interruption, corruption, degradation or failure of the Company's management
information systems or telephone system could impact its ability to receive and
process customer orders on a timely basis.

Retail Computer Showroom

The Company currently operates one retail computer showroom, located in
Santa Monica, California that is targeted at high-end consumers and small
businesses located in the Southern California area.

Competition

The
retail business for personal computers and related products is highly
competitive.  The Company competes
with other direct marketers, including CDW, Insight Enterprises, PC Connection and
Zones.  In addition, the Company competes with computer retail stores and
resellers, including superstores such as CompUSA and Best Buy, certain hardware and software
vendors such as Gateway and Dell Computer that sell directly to end users, and
other direct marketers of hardware, software and computer-related products. 
Barriers to entry are relatively low in the direct marketing industry and
the risk of new competitors entering the market is high.  The market in which the Company's retail showroom operates is also
highly competitive.

The
manner in which personal computers, software and related products are
distributed and sold is changing, and new methods of sales and distribution have
emerged.  Technology
now allows software vendors the ability to sell and download programs directly
to consumers, if so desired.  In
addition, in recent years the industry has generated a number of new,
cost-effective channels of distribution such as computer superstores, consumer
electronic and office supply superstores, national direct marketers and mass
merchants.  Computer resellers are
consolidating operations and acquiring or merging with other resellers to
achieve economies of scale and increased efficiency.  In addition, traditional retailers have entered and may increase their
penetration into the direct mail channel.  The
current industry reconfiguration and the trend toward consolidation could cause
the industry to become even more competitive, further increase pricing pressures
and make it more difficult for the Company to maintain its operating margins or
to increase or maintain the same level of net sales or gross profit.

Although
many of the Company's competitors have greater financial resources than the
Company, the Company believes that its ability to offer the consumer a wide
selection of products, at competitive prices, with prompt delivery and a high
level of customer service, and its good relationships with its vendors and
suppliers, allow it to compete effectively.  There can be no assurance that the Company can continue to compete
effectively against existing or new competitors that may enter the market. 
The Company believes that competition may increase in the future, which
could require the Company to reduce prices, increase advertising expenditures or
take other actions that may have an adverse effect on the Company's operating
results.

Employees

As
of December 31, 2001, the Company had 907 full-time employees, including
100 people at the Company's distribution center.  The Company emphasizes the recruiting and training of high-quality
personnel and, to the extent practical, promotes people to positions of
increased responsibility from within the Company.  Each employee initially receives training appropriate for his or her
position, followed by varying levels of training in computer technology,
communication and leadership.  New
account executives participate in an intensive three-month training program, during
which time they are introduced to the Company's philosophy, available
resources, products and services, as well as basic and advanced sales skills. 
Training for specific product lines and continuing education programs for
all employees are conducted on an ongoing basis, supplemented by
vendor-sponsored training programs for all sales executives and technical
support personnel.

The
Company's employees are generally compensated on a basis that rewards
performance and the achievement of identified goals.  For example, sales executives receive compensation pursuant to a
commission schedule that is based primarily upon aggregate sales, gross profit
dollars and gross profit percentage generated from their sales efforts.  The Company believes that these incentives positively impact its
performance and operating results.

The
Company considers its employee relations to be good.  None of the Company's employees is represented by a labor union, and
the Company has experienced no work stoppages.

Since
its formation, the Company has experienced rapid growth.  As a result of this growth, the Company has added a significant number of
employees and has been required to expend considerable effort in training these
new employees.

Properties



The
Company's facilities at December 31, 2001 were as follows:

Description
    Sq. Ft.
    LocationPC
      Mall, Inc. Corporate Headquarters

    143,532
    Torrance,
      CADistribution
      Center
    325,000
    Memphis,
      TNWisconsin
      Sales Office
    35,503
    Milwaukee,
      WIKansas
      Property
    32,800
    Lenexa,
      KSCCIT
      Corporate Headquarters
    25,840
    Elk
      Grove Village, ILRetail
      Showroom
    9,750
    Santa
      Monica, CAOrange
      County Sales Office
    8,821
    Irvine,
      CACCIT
      Colorado Corporate Sales
    2,315
    Englewood,
      CO


The
Company leases all of its facilities, except for the Santa Monica
retail showroom and the Lenexa property, both of which are owned by the Company.  The Company's distribution center serves the Company's
Core Business, eCOST.com and eLinux operations, and includes shipping, receiving, warehousing and administrative space.  The Company subleases
105,600 square feet of its distribution center to uBid, and is coterminus with
the original building lease.  The PC Mall Corporate Headquarters and
Wisconsin Sales Office have leases remaining greater than two years.  All
of the other leases have remaining terms less than two years.  The Company
intends to sell its Lenexa, Kansas building.  The
Distribution Center lease expires April 30, 2002, and the Company is negotiating
a three-year extension covering 155,000 square feet.

Regulatory
and Legal Matters

The
direct response business as conducted by the Company is subject to the
Merchandise Mail Order Rule and related regulations promulgated by the Federal
Trade Commission and laws or regulations directly applicable to access to or
commerce on the Internet.  While the
Company believes it is currently in compliance with such laws and regulations
and has implemented programs and systems to address its on-going compliance with
such regulations, no assurances can be given that new laws or regulations will
not be enacted or adopted which might adversely affect the Company's
operations.  Due to the increasing
popularity and use of the Internet, it is possible that a number of laws and
regulations may be adopted with respect to the Internet.  The growth and development of the market for Internet commerce may prompt
calls for more stringent consumer protection laws that may impose additional
burdens on those companies conducting business over the Internet.  The adoption of any additional laws or regulations may decrease the
growth of the Internet, which, in turn, could decrease the demand for and growth
of the Company's Internet-based sales.

Based
upon current law, the Company, or various subsidiaries, currently collects and
remits sales tax only on sales of its products to residents of the states in
which the Company or its respective subsidiaries has a physical presence.  Various state taxing authorities have sought to impose on direct
marketers with no physical presence in the taxing state the burden of collecting
state sales and use taxes on the sale of products shipped to those states'
residents, and it is possible that such a requirement could be imposed in the
future.  In addition, a number of
bills are pending before federal and state legislatures that would potentially
expand the tax collection responsibility of Internet-related companies.  Until these legislative efforts have run their course and the courts have
considered and resolved some cases involving these tax collection issues, there
can be no assurance that future laws imposing taxes or other regulations on
commerce over the Internet would not substantially impair the growth of
e-commerce and as a result have a material adverse effect on the Company's
business, results of operations and financial condition.

Executive Officers

The executive officers of the Company as of
March 29, 2002 and their respective ages and positions are as follows:

Name
    Age

    PositionFrank Khulusi
    35
    Chairman of the Board, President and Chief
      Executive OfficerTheodore R. Sanders
    47
    Chief Financial OfficerDaniel J. DeVries
    40
    Executive Vice President - MarketingKristin M. Rogers
    43
    Executive Vice President -
      Enterprise Sales


The following is a biographical summary of the
experience of the executive officers:

Frank
F. Khulusi is a co-founder of the Company and has served as Chairman of the
Board and Chief Executive Officer of the Company since the Company's inception
in 1987, served as President until July 1999, and resumed the office of
President in March 2001.  Mr.
Khulusi attended the University of Southern California.

Theodore
R. Sanders has served as Chief Financial Officer since September 1998 and was
Vice President - Controller of the Company from May 1997 to September 1998. 
Prior to joining the Company, Mr. Sanders spent ten years with the
Pittston Company in various senior finance roles including Controller of its
Burlington Air Express Global division and Director of Internal Audit.  Mr. Sanders started his career with Deloitte & Touche and rose to the
position of Manager.  Mr. Sanders is
a C.P.A. and received a B.S.B.A. degree from Nichols College.

Daniel
J. DeVries has served as Executive Vice President - Marketing since February 1996 and was
Senior Vice President from October 1994 to that time.  Mr. DeVries is responsible for all marketing,
consumer sales, purchasing and the
retail showroom.  Mr. DeVries'
marketing responsibilities include vendor co-op marketing, merchandising,
database marketing and Internet marketing.  From April 1993 to October 1994, he held various sales and marketing
positions with the Company.  From
July 1988 to April 1993, Mr. DeVries was a Regional Manager for Sun
Computers, a computer retailer.

Kristin
M. Rogers joined the Company in February 2000 and was
appointed asExecutive Vice President  - Enterprise Sales in June
2001.  Ms. Rogers is responsible for all enterprise
sales, which includes all sales divisions selling to businesses, as well as the
sales support functions including training, sales operations and
recruiting.  Prior to joining PC Mall, Ms. Rogers held a variety of positions with
Merisel, a computer wholesale distributor from 1980 through 1999, the most recent position being Senior Vice President and General Manager of
the US region.  In addition, Ms. Rogers spent one year (1997) as Executive Vice President and
General Manager of the US region for Micro Warehouse, a direct marketer based in
Norwalk, Connecticut.  Ms. Rogers received
a B.A. degree in Political Science at Bates College (Lewiston, Maine).

#### CERTAIN
FACTORS AFFECTING FUTURE RESULTS

This
Annual Report on Form 10-K, including the sections entitled
"Business," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and other sections of this Report,
contain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. 
Words such as "expect," "anticipate,"
"intend," "plan," "believe," "estimate,"
"may," "will," "should," "seeks" and
variations of such words and similar expressions are intended to identify such
forward-looking statements.  The
Company intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and the Company is including this statement for
purposes of complying with these safe harbor provisions.  The Company has based these forward-looking statements on its current
expectations and projections about future events.  These forward-looking statements are not guarantees of future performance
and are subject to risks, uncertainties and assumptions, and actual results
could differ materially as a result of several factors, including those set
forth under this section entitled "Certain Factors Affecting Future
Results" and elsewhere herein.  The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

|(1)  | The loss of a key vendor or decline in demand for products of a key
vendor, such as Apple, may reduce sales and adversely affect operating results.                                                                           
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)  | Intense competition may lead to reduced prices and lower gross margins.                                                                                                                                                       
|(3)  | The Company's narrow margins magnify the impact on operating results of
variations in operating performance.  A
number of factors may reduce the Company's margins even further.                                              
|(4)  | Seasonal variations in the demand for products and services, as well
as the introduction of new products, may cause variations in the Company's
quarterly results.                                                            
|(5)  | The availability (or lack thereof) of capital on acceptable terms may
hamper the Company in its efforts to fund its increasing working capital needs.                                                                         
|(6)  | The failure of the Company to adequately manage its growth, including the
integration of acquired companies, may adversely impact the Company's results
of operations.                                                        
|(7)  | A failure of the Company's information systems may adversely impact the
Company's results of operations.                                                                                                                      
|(8)  | The loss of a key executive officer or other key employee may adversely
impact the Company's operations.                                                                                                                      
|(9)  | The inability of the Company to obtain products on favorable terms may
adversely impact the Company's results of operations.                                                                                                  
|(10) | The
Company's operations may be adversely impacted by an acquisition that is
either (i) not suited for the Company or (ii) improperly executed.                                                                               
|(11) | The
Company's financial condition may be adversely impacted by a decline in value
of a portion of the Company's inventory.                                                                                                    
|(12) | The
failure of certain shipping companies to deliver product to the Company, or from
the Company to its customers, may adversely impact the Company's results of
      operations.                                            
|(13) | The
failure of the Company to respond adequately to changes in consumer and business
      preferences,
such as the use of the Internet for purchasing, may adversely affect the
Company's business and results of operations.
|(14) | Rapid
technological change may alter the market for the Company's products and
services, requiring the Company to anticipate such technological changes, to the
extent possible.                                              
|(15) | The
failure of the Company to attract and retain skilled personnel may adversely
affect the Company's business and results of operations.                                                                                     

It is not reasonably
possible to itemize all of the many factors and specific events that could
affect the Company and/or the computer products and electronics industry as a
whole.  However, the discussion
below discusses in more detail some of the foregoing factors, as well as
additional factors which may affect the Company's actual results and cause
such results to differ materially from those projected, forecasted, estimated,
budgeted or otherwise expressed in any "forward-looking statements."

The addition of a new business focus could subject the
Company to risks commonly associated with a new company.

The Company has historically operated as a direct marketer
of computer products, and has only subsequently expanded its business model to
include a focus on the business-to-business and Internet markets by developing
its portfolio of web site properties.  The
Company has only been active in this new line of business since 1995 when the
pcmall.com web site was launched.  The
Company established uBid.com, an on-line auction web site in 1997, the ecost.com
web site in March 1999 and the eLinux.com web site in February 2000, and plans
to continue its focus on the business-to-business and Internet market in the
future.   The Company does not
have a significant operating history to evaluate the new business focus, and
past performance should be not relied upon to predict future performance.  In adding a new business focus, the Company expects that it will have to
make changes to its business operations, sales and implementation practices,
customer service and support operations and management focus.  The Company also faces new risks and challenges, including a lack of
meaningful historical financial data upon which to plan future budgets, reliance
on the growth and use of the Internet to generate commercial opportunities,
competition from a wider range of sources, the need to develop strategic
relationships and other risks.  The
Company cannot guarantee that it will be able to successfully transition to this
new business focus.

Dependence
on Apple

The
Company is dependent on sales of Apple computers and software and peripheral
products used with Apple computers.  Products
manufactured by Apple represented 27.0%, 24.9% and 25.4% of the Company's net
sales in 2001, 2000 and 1999, respectively.  A decline in sales of Apple computers or a decrease in supply of or
demand for software and peripheral products for such computers could have a
material adverse impact on the Company's business.  During parts of 2001,
2000 and 1999, certain Apple computers were in short
supply.  A continuation of such
shortages or future shortages could adversely affect the Company's operating
results.  The Company is an
authorized dealer for the full retail line of Apple products; however, the
Company's dealer agreement with Apple is terminable upon 30 days' notice. 
The Company's business would be adversely affected if all or a portion of
the line of Apple products was no longer available to the Company.  The Company's success is, in part, dependent upon the ability of Apple to
develop and market products that meet the changing requirements of the
marketplace.  To the extent that
these products are not available to the Company, the Company could encounter
increased price and other competition, which would adversely affect the
Company's business, financial condition and results of operations.

Rapid
Growth

Since
its formation, the Company has experienced rapid growth.  Net sales have grown from $8.7 million in 1990 to
$718.1 million in 2001. 
The Company's direct marketing sales grew from $117.9 million in 1994 to $472.9
million in 2001.  Internet sales on
its pcmall.com, macmall.com, ccit-inc.com, ecost.com and elinux.com web
sites grew from $15.6 million in 1997 to $215.8 million in 2001.  As a result of the Company's shift from the retail showroom
to the Internet sales and catalog distribution channels, retail showroom sales
have decreased from 28.0% of net sales in 1994 to 4.1% in 2001.  In response to the growth in catalog
and business-to-business sales, the Company has added a significant number of employees and has been required to expend
considerable efforts in training these new employees.  This growth has placed strains on the Company's management,
resources and facilities.  As part
of its growth strategy, the Company may in the future acquire companies in the same or complementary
lines of business.  These
acquisitions and any such acquisition and the ensuing integration of the
operations of the acquired company with those of the Company place additional
demands on the Company's management, operating and financial resources.  The Company's success will, in part, be dependent upon the ability of the
Company to manage growth effectively.  In
addition, the Company's business and growth could be affected by the spending
patterns of existing or prospective customers, the cyclical nature of capital
expenditures of businesses, continued competition and pricing pressures, changes
in the rate of development of new technologies and new products by
manufacturers, acceptance by end users and other trends in the general economy. 
There can be no assurance that the Company's historical growth will
continue in the future.

Competition

The
retail business for personal computers, electronics and related products is
highly competitive, based primarily on price, product availability, speed and
accuracy of delivery, effectiveness of sales and marketing programs, credit
availability, ability to tailor specific solutions to customer needs, quality
and breadth of product lines and services, and availability of technical or
product information.  The Company
competes with other direct marketers,
including CDW,
Insight Enterprises, PC Connection and Zones.  In addition, the Company competes with computer retail stores and
resellers including superstores such as CompUSA and Best Buy, certain hardware and software
vendors such as Gateway and Dell Computer that sell directly to end users, and
other direct marketers of hardware, software and computer-related products.  In the direct marketing and Internet retail industries, barriers to entry
are relatively low and the risk of new competitors entering the market is high. 
Certain existing competitors of the Company have substantially greater
financial resources than the Company.  There
can be no assurance that the Company can continue to compete effectively against
existing competitors, consolidations of competitors or new competitors that may
enter the market.  In addition,
price is an important competitive factor in the personal computer hardware,
software and peripherals market and the market for electronics products, and
there can be no assurance that the Company will not be subject to increased
price competition, which may have an adverse effect on the Company's business,
financial condition and results of operations.  There can be no assurance that the Company will not lose market share or
that it will not be forced in the future to reduce its prices in response to the
actions of its competitors and thereby experience a further reduction in its
gross margins.

Narrow Gross
Operating Margins

As a
result of intense price competition in the computer products and electronics
industry, the Company's margins have historically been narrow and are expected
to continue to be narrow.  These
narrow gross margins magnify the impact on operating results of variations in
operating costs and of adverse or unforeseen events.

Potential Quarterly Fluctuations

The
Company experiences variability in its net sales and net income on a quarterly
basis as a result of many factors.  These
factors include the frequency of catalog mailings, introduction or
discontinuation of new catalogs, the introduction of new products or services by
the Company and its competitors, changes in prices from suppliers, the loss or
consolidation of a significant supplier or customer, general competitive
conditions including pricing, the Company's ability to control costs, the timing
of capital expenditures, the condition of the personal computer industry and
electronics in general, seasonal shifts in demand for computer and electronics
products, industry announcements and market acceptance of new products or
upgrades, deferral of customer orders in anticipation of new product
applications, product enhancements or operating systems, the relative mix of
products sold during the period, inability of the Company to obtain adequate
quantities of products carried in its catalogs, delays in the release by
suppliers of new products and inventory adjustments and expenditures by the
Company on new business ventures.  The
Company's planned operating expenditures each quarter are based on sales
forecasts for the quarter. If sales
do not meet expectations in any given quarter, operating results for the quarter
may be materially adversely affected. The Company's narrow margins may magnify the impact of these factors on the
Company's operating results. The Company believes that period-to-period comparisons of its operating results
should not be relied upon as an indication of future performance. In addition, the results of any quarterly period are not necessarily
indicative of results to be expected for a full fiscal year.  In certain future quarters, the Company's operating results may be
below the expectations of public market analysts or investors.  In such event, the market price of the Company's Common Stock could be
materially adversely affected.

Dependence on
Vendors

The
Company purchases all of its products from vendors.  Certain key vendors, including IBM, Hewlett-Packard, Compaq and Apple,
provide the Company with trade credit as well as substantial incentives in the
form of discounts, credits and cooperative advertising.  Most key vendors have agreements to provide, or otherwise have
consistently provided, market development funds to the Company, whereby such
vendors finance portions of the cost of catalog publication and distribution
based upon the amount of coverage given in the catalogs to their respective
products.  Termination or
interruption of the Company's relationships with one or more of these vendors,
including Apple, or modification of the terms or discontinuance of the
agreements and market-development fund programs with these vendors, could adversely affect the Company's operating
income and cash flow.  The Company's
success is dependent in part upon the ability of its vendors to develop and
market products that meet the changing requirements of the marketplace.  Substantially all of the Company's contracts with its vendors are
terminable upon 30 days' notice or less.  In
most cases, the Company has no guaranteed price or delivery arrangements with
its suppliers.  As a result, the Company has experienced and may in the
future experience short-term inventory shortages on certain products.  In addition, manufacturers who currently sell their products through the
Company may decide to sell their products directly or through resellers or
channels other than the Company.  Further,
the personal computer industry experiences significant product supply shortages
and customer order backlogs from time to time due to the inability of certain
manufacturers to supply certain products as needed.  There can be no assurance that suppliers will be able to maintain an
adequate supply of products to fulfill the Company's customers' orders on a
timely basis or that the Company will be able to obtain particular products or
that a product line currently offered by suppliers will continue to be
available.  Similarly, there can be
no assurance that the Company will be able to obtain authorizations from new
vendors which may introduce new products that create market demand.

Business
Interruption; Facilities

The
Company believes that its success to date has been, and future results of
operations will be, dependent in large part upon its ability to provide prompt
and efficient service to its customers.  The
Company has taken several precautionary steps to help minimize the impact of
disasters that might cause business interruptions.  There can be no assurance that a disruption will not occur; however, any
disruption of the Company's day-to-day operations including those caused by
natural disasters, acts or threats of war, terrorism or other conflict could have a material adverse effect upon the Company, and any
interruption, corruption, degradation or failure of the Company's management
information systems, distribution center, web site or telephone system could
impair its ability to receive and process customer orders and ship products on a
timely basis.  The Company does not
have a redundant telephone system and does not have a backup or redundant call
center.

Changing
Methods of Distribution

The
manner in which computer and electronics products are distributed and sold is
changing, and new methods of sale and distribution, such as the Internet, have
emerged.  Computer hardware and
software vendors have sold, and may intensify their efforts to sell, their
products directly to end users.  From
time to time, certain vendors have instituted programs for the direct sale of
large quantities of hardware and software to certain major corporate accounts.  
These types of programs may continue to be developed and used by various
vendors.  Vendors also may attempt
to increase the volume of software products distributed electronically to end
users' personal computers.  Any of
these competitive programs, if successful, could have a material adverse effect
on the Company's business, financial condition and results of operations.

Dependence
on Independent Shipping Companies

The
Company relies almost entirely on arrangements with independent shipping
companies, especially Federal Express and UPS, for the delivery of its products. 
The disruption or termination of the Company's arrangements with
Federal Express, UPS or other shipping companies, or the failure or inability of
one or more shipping companies to deliver products from the Company to its
customers, or from suppliers to the Company, could have a material adverse
effect on the Company's business, financial condition and results of
operations.

Postage, Shipping and Paper Costs

Postage
and shipping are significant expenses in the operation of the Company's
business.  The Company ships its
products to customers by overnight delivery and ground delivery services and
generally mails its catalogs through the U.S. Postal Service.  Any increases in postal or shipping rates in the future could have a
material adverse effect on the business, financial condition and results of
operations.  The cost of paper is
also a significant expense of the Company in printing its catalogs.  The cost of paper has fluctuated significantly over the last several
years.  While the Company believes
that it may be able to recoup a portion of any increased postage and paper costs
through increases in vendor advertising rates, no assurance can be given that
such advertising rate increases can be sustained or that they will offset all of
the increased costs.

Risk
of Technological Changes and Inventory Obsolescence

The
market for personal computers, peripherals, software and electronics products is
characterized by rapid technological change and a growing diversity of products. 
The Company's success depends in large part on its ability to identify
and obtain the right to market products that will meet the changing requirements
of the marketplace.  There can be no assurance that the Company will be able to
identify and offer products necessary to remain competitive or avoid losses
related to excess and obsolete inventory.  The
Company currently has limited return rights with respect to products which it
purchases from Apple, IBM, Compaq, Hewlett-Packard and certain other vendors;
however, such rights vary by product line, have other conditions and limitations
and can be terminated or changed at any time.

State
Sales Tax Collection

Based
upon current law, the Company, or various subsidiaries, currently collects and
remits sales tax only on sales of its products to residents of the states in
which the Company or its respective subsidiaries has a physical presence.  The U.S. Supreme Court has ruled that the various states, absent
Congressional legislation, may not impose tax collection obligations on an
out-of-state mail order company whose only contacts with the taxing state are
distribution of catalogs and other advertisement materials through the mail, and
whose subsequent delivery of purchased goods is by mail or interstate common
carriers.   Certain court cases
have upheld tax collection obligations on  companies, including mail order companies, whose contacts
with  the taxing state was quite
limited (e.g., visiting the state
several times a year to aid customers or  to
inspect showrooms stocking their goods).  The
Company believes its operations are different from the operations of the
companies in  these cases and thus
do not give rise to tax collection obligations.

However,
the Company cannot predict the level of contact with any state which would give
rise to future or past tax collection obligations.   The tax treatment of the Internet and e-commerce is currently 
in a state of flux.   Various
state taxing authorities have sought to impose on direct marketers with no
physical presence in the taxing state the burden of collecting state sales and
use taxes on the sale of products shipped to those states' residents, and it
is possible that such a requirement could be imposed in the future.  In addition, a number of bills are pending before federal and state
legislatures that would potentially expand the tax collection responsibility of
Internet-related companies.  It is
possible that federal legislation could be enacted that would permit states to
impose sales tax collection obligations on out-of-state mail order companies and
if enacted, the imposition of a tax collection obligation on the Company may
result in additional administrative expenses to the Company and price increases
to its customers that could adversely affect the Company's business, financial
condition and results of operations.  States
also potentially may expand tax collection responsibilities of out-of-state
companies through legislation.  Until
these legislative efforts have run their course and the courts have considered
and resolved some cases involving tax  collection issues, there can be no assurance that future laws
imposing taxes or other regulations on commerce over the Internet would not
substantially impair the growth of e-commerce and as a result have a material
adverse effect on the Company's business, results of operations and financial
condition.

Industry
Evolution and Price Reductions

The
personal computer industry is undergoing significant change.  In addition, in recent years a number of new, cost-effective channels of
distribution have developed in the industry, such as the Internet, computer
superstores, consumer electronic and office supply superstores, national direct
marketers and mass merchants.  Computer
resellers are consolidating operations and acquiring or merging with other
resellers and/or direct marketers to achieve economies of scale and increased
efficiency.  The current industry
reconfiguration and the trend towards consolidation could cause the industry to
become even more competitive, further increase pricing pressures and make it
more difficult for the Company to maintain its operating margins or to increase
or maintain the same level of net sales or gross profit.  Declining prices, resulting in part from technological changes, may
require the Company to sell a greater number of products to achieve the same
level of net sales and gross profit.  Such
a trend could make it more difficult for the Company to continue to increase its
net sales and earnings growth.  In
addition, the personal computer market has experienced rapid growth.  If the growth rate of the personal computer market were to decrease, the
Company's business, financial condition and operating results could be adversely
affected.

Management
Information Systems

The
Company's success is in part dependent on the accuracy and proper utilization of
its management information systems, including its telephone system.  The Company's ability to analyze data derived from its
management information systems to increase product promotions, manage inventory
and accounts receivable collections, to purchase, sell and ship products
efficiently and on a timely basis and to maintain cost-efficient operations, are
each dependent upon the quality and utilization of the information generated by
its management information systems.  During 1995, the Company significantly upgraded its
management information system hardware and software.  The Company believes that to remain competitive it will be necessary to
upgrade its management information systems on a continuing basis.  In addition to the costs associated with such upgrades, the transition to
and implementation of new or upgraded hardware or software systems can result in
system delays or failures which could impair the Company's ability to receive
and process orders and ship products in a timely manner.  The Company does not currently have a redundant or back-up telephone
system, and any interruption in telephone service including those caused by
natural disasters could have a material adverse effect on the Company's
business, financial condition and results of operations.

Dependence
on Senior Management

The
Company's future performance will depend to a significant extent upon the
efforts and abilities of certain key management personnel, including Frank
Khulusi, Chairman of the Board, President and Chief Executive Officer.  The Company has a $3 million key man life insurance policy on Mr.
Khulusi.  The loss of service of one
or more of the Company's key management personnel could have an adverse effect
on the Company's business.  The
Company's success and plans for future growth will also depend in part on
management's continuing ability to hire, train and retain skilled personnel in
all areas of its business.

Management
of Growth

The
rapid growth of the Company's business has required the Company to make
significant additions in personnel and has significantly increased the
Company's working capital requirements.  Although
the Company has experienced significant sales growth, such
growth should not be considered indicative of future sales growth.  Such growth has resulted in new and increased responsibilities for
management personnel and has placed and continues to place significant strain
upon the Company's management, operating and financial systems, and other
resources.  There can be no
assurance that this strain will not have a material adverse effect on the
Company's business, financial condition, and results of operations, nor can
there be any assurance that the Company will be able to attract or retain
sufficient personnel to continue the expansion of its operations.  Also crucial to the Company's success in managing its growth will be
its ability to achieve additional economies of scale.  There can be no assurance that the Company will be able to achieve such
economies of scale, and the failure to do so could have a material adverse
effect upon the Company's business, financial condition and results of
operations.

Acquisitions

As
part of its growth strategy, the Company acquired two marketers of computers and
computer-related products in 1997 and may continue to pursue acquisitions of
companies that would either complement or expand its existing business.  No assurance can be given that the benefits expected from the integration
of acquired companies will be realized.  In
addition, acquisitions involve a number of risks and difficulties, including
expansion into new geographic markets and business areas, the diversion of
management's attention to the assimilation of the operations and personnel of
the acquired company, the integration of the acquired Company's management
information systems with those of the Company, potential short-term adverse
effects on the Company's operating results and the amortization of acquired
intangible assets.  Any delays or
unexpected costs incurred in connection with the integration of acquired
operations could have a material adverse effect on the Company's business,
financial condition and results of operations.  There can be no assurance that the Company will be able to implement or
sustain its acquisition strategy or that its strategy will ultimately prove
profitable for the Company.

Possible
Volatility of Stock Price

The
Company believes certain factors, such as sales of the Company's Common Stock into the market
by existing stockholders, fluctuations in quarterly operating results and market
conditions generally, including market conditions affecting stocks of computer
hardware and software manufacturers and resellers and companies in the Internet
and electronic commerce industries in particular, and other technology or
related stocks, could cause the market price of the Company's Common Stock to fluctuate
substantially.  The stock market in
general, and the stocks of computer and software resellers, and companies in the
Internet and electronic commerce industries in particular, and other technology
or related stocks, have in the past experienced extreme price and volume
fluctuations which have been unrelated to corporate operating performance. 
Such market volatility may adversely affect the market price of the Company's Common Stock.

The Company's Common Stock is presently authorized for quotation on the
Nasdaq National Market. Accordingly, the Company is subject to all requirements
of its listing agreement with Nasdaq.  Among
the events that could cause the Company's Common Stock to have its status as a
National Market security terminated include the failure to maintain a minimum
closing bid price for the Common Stock of $1.00 per share, failure to timely
hold annual meetings of stockholders and failure to comply with other corporate
governance requirements.  Any delisting of the Company's Common Stock from
the Nasdaq National Market could have a material adverse effect on the liquidity
and market price of the Company's Common Stock.

Privacy
Concerns

The Company mails catalogs and sends electronic messages to names in its
proprietary customer database and to potential customers whose names the Company
obtains from rented or exchanged mailing lists.  Worldwide public concern regarding personal privacy has subjected the
rental and use of customer mailing lists and other customer information to
increased scrutiny.  Any domestic or
foreign legislation enacted limiting or prohibiting these practices could
negatively affect the Company's business, financial condition and results of
operations.

Dependence
on Continued Use of Internet

The Company's level of sales generated from its worldwide web sites has
increased in part because of the growing use and acceptance of the Internet by
end-users.  The growth in Internet
usage is a relatively recent development, and no assurance can be made that the
Internet will continue to develop or that a sufficiently broad base of consumers
will adopt and continue to use the Internet and other online services as a
medium of commerce.  Sales of
computer products over the Internet have increased as a percentage of the
Company's net sales in recent years.  Continued
growth of the Company's Internet sales is dependent on potential customers using
the Internet in addition to traditional
means of commerce to purchase products.  The
Company cannot accurately predict the rate at which they will do so.  If the use by consumers of the Internet to purchase products does not
continue, the Company's business, financial condition and results of
operations could be adversely affected.

The Company's success in maintaining and growing its Internet business
will depend in large part upon the development of an infrastructure for
providing Internet access and services.  If
the number of Internet users or their use of Internet resources continues to
grow rapidly, such growth may overwhelm the existing Internet infrastructure. 
The Company's ability to increase the speed with which it
provides services to customers and to increase the scope of such services
ultimately is limited by and reliant upon the speed and reliability of the
networks operated by third parties.  The
Company cannot assure that networks and infrastructure providing sufficient
capacity and reliability will continue to be developed.

ITEM 2. 
PROPERTIES

See "Properties" in Item 1 above.

ITEM 3. LEGAL PROCEEDINGS

The
Company is subject to various legal proceedings or claims which arise in the
ordinary course of business.  In the
opinion of management, the amount of ultimate liability with respect to those
actions will not materially affect the Company's business, financial condition
or results of operations.

ITEM 4. 
SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security
holders during the fourth quarter of 2001.

PART
I

ITEM 5. 
MARKET FOR
REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The
Common Stock of the Company has been traded on the Nasdaq National Market since
the Company's initial public offering on April 4, 1995 (the "IPO"). 
Prior to the IPO, there was no public market for the Company's Common
Stock.  The following table sets
forth the range of high and low closing sales prices for the Company's Common Stock for
the periods indicated, as reported by the Nasdaq National Market.

> Price Range of Common
>         StockHigh
>       LowYear Ended December 31, 1999First Quarter
>       $43.25
>       $25.13Second Quarter
>       39.13
>       6.06Third Quarter
>       7.88
>       5.25Fourth Quarter
>       11.00
>       5.75Year Ended December 31, 2000First Quarter
>       14.06
>       7.13Second Quarter
>       10.06
>       3.66Third Quarter
>       4.56
>       2.59Fourth Quarter
>       3.13
>       0.53Year Ended December 31, 2001First Quarter
>       2.50
>       0.81Second Quarter
>       2.01
>       1.00Third Quarter
>       3.50
>       1.43Fourth Quarter
>       4.06
>       1.73

On
March 28, 2002, the closing price of the Company's Common Stock as
reported on the Nasdaq National Market was $4.40 per share.  As of March 28,
2002, there were approximately 52 holders of record
of the Common Stock.

On
June 7, 1999, the Company distributed to its stockholders all of the 7.3 million
shares of common stock of uBid, Inc.
owned by the Company, representing approximately 80.1% of the outstanding stock
of uBid.  Each of the holders of the Company's Common Stock entitled to the
distribution received approximately .70488 shares of uBid common stock for each share of the Company's
Common Stock
held by such stockholders on May 24, 1999.  On June 8, 1999, the Company's Common Stock traded ex-dividend to
reflect the spin-off of uBid, and its
closing price on the Nasdaq National Market on that date was $8.6875.

The
Company has never paid and has no present plans to pay any cash dividends on its
capital stock.  The Company intends
to retain its earnings to finance the growth and development of its business.

ITEM 6.  SELECTED FINANCIAL DATA

The
following selected consolidated financial data are qualified by reference to,
and should be read in conjunction with, the Company's Consolidated Financial
Statements and the notes thereto, and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" contained elsewhere
herein.  The selected income statement data for the years ended December 31, 1999,
2000 and 2001 and the selected balance sheet data as of December 31, 2000 and
2001 are derived from the Company's audited consolidated financial
statements, which are included elsewhere herein.  The selected income statement data for the years ended December 31,
1997 and 1998 along with the balance sheet data as of December 31, 1997,
1998 and 1999 are derived from the audited consolidated financial statements of
the Company which are not included herein.  The selected operating data are derived from the operating records of the
Company and have not been audited.

|                                                                                                                                                                                                    |                                                           |                                   |                       | Year Ended December 31,                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | --------------------------------- | --------------------- | -----------------------------------------------
|                                                                                                                                                                                                    |                                                           |                                   |                       | (in thousands, except per share data)          
|                                                                                                                                                                                                    |                                                           |                                   |                       |                                                
|Net sales                                                                                                                                                                                           | $                                                         | 718,083                           | $                     | 818,627                                        
|Cost of goods sold                                                                                                                                                                                  |                                                           | 639,111                           |                       | 730,794                                        
|Retail store closure inventory
      reserve                                                                                                                                                        |                                                           | -                                 |                       | -                                              
|Gross profit                                                                                                                                                                                        |                                                           | 78,972                            |                       | 87,833                                         
|Selling, general, and
      administrative expenses                                                                                                                                                 |                                                           | 73,775                            |                       | 95,536                                         
|Expenses related to retail store
      closure                                                                                                                                                      |                                                           | -                                 |                       | -                                              
|Income (loss) from operations                                                                                                                                                                       |                                                           | 5,197                             |                       | (7,703)                                        
|Interest income (expense)                                                                                                                                                                           |                                                           | (709)                             |                       | (917)                                          
|Income (loss) before income taxes                                                                                                                                                                   |                                                           | 4,488                             |                       | (8,620)                                        
|Income tax provision (benefit)                                                                                                                                                                      |                                                           | -                                 |                       | -                                              
|Income (loss) from continuing
      operations                                                                                                                                                      |                                                           | 4,448                             |                       | (8,620)                                        
|Discontinued operations                                                                                                                                                                             |                                                           | -                                 |                       | -                                              
|Cumulative effect of change in
      accounting principle                                                                                                                                           |                                                           | -                                 |                       | (536)                                          
|Net income (loss)                                                                                                                                                                                   | $                                                         | 4,488                             | $                     | (9,156)                                        
|                                                                                                                                                                                                    |                                                           |                                   |                       |                                                
|Basic earnings per
      share (1)                                                                                                                                                                  |                                                           |                                   |                       |                                                
|                                                                                                                                                                                                    | Continuing operations                                     | $                                 | 0.43                  | $                                              
|                                                                                                                                                                                                    | Discontinued operations                                   |                                   | -                     |                                                
|                                                                                                                                                                                                    | Cumulative effect of change in
      accounting principle |                                   | -                     |                                                
|                                                                                                                                                                                                    |                                                           |                                   |                       | $                                              
|Diluted earnings (loss) per share
      (1)                                                                                                                                                         |                                                           |                                   |                       |                                                
|                                                                                                                                                                                                    | Continuing operations                                     | $                                 | 0.43                  | $                                              
|                                                                                                                                                                                                    | Discontinued operations                                   |                                   | -                     |                                                
|                                                                                                                                                                                                    | Cumulative effect of change in
      accounting principle |                                   | -                     |                                                
|                                                                                                                                                                                                    |                                                           |                                   |                       | $                                              
|Pro Forma amounts assuming the
      accounting change required by SAB 101 is applied retroactively (See Note 1
      of Notes to Consolidated Financial Statements)                                |                                                           |                                   |                       |                                                
|                                                                                                                                                                                                    | Income (loss) from continuing
      operations            | $                                 | 4,488                 | $                                              
|                                                                                                                                                                                                    | Net income (loss)                                         | $                                 | 4,488                 | $                                              
|                                                                                                                                                                                                    |                                                           | Basic earnings (loss) per share   |                       |                                                
|                                                                                                                                                                                                    |                                                           |                                   | Continuing operations | $                                              
|                                                                                                                                                                                                    |                                                           |                                   | Net income (loss)     | $                                              
|                                                                                                                                                                                                    |                                                           |                                   |                       |                                                
|                                                                                                                                                                                                    |                                                           | Diluted earnings (loss) per share |                       |                                                
|                                                                                                                                                                                                    |                                                           |                                   | Continuing operations | $                                              
|                                                                                                                                                                                                    |                                                           |                                   | Net income (loss)     | $                                              
|                                                                                                                                                                                                    |                                                           |                                   |                       |                                                
|Basic weighted average number of
      shares outstanding                                                                                                                                           |                                                           | 10,436                            |                       | 10,419                                         
|Diluted weighted average number of
      shares outstanding                                                                                                                                         |                                                           | 10,551                            |                       | 10,419                                         
|                                                                                                                                                                                                    |                                                           |                                   |                       |                                                
|                                                                                                                                                                                                   
|(1) Earnings (loss) per share and
      weighted average shares outstanding have been restated for all periods
      prior to 1998 to reflect the adoption of SFAS 128, "Earnings per
      Share".
|                                                                                                                                                                                                    |                                                           |                                   |                       |                                                
|(2) Operating results in 2000
      reflect the implementation of SAB 101.  See Note 1 of Notes to
      Consolidated Financial Statements.                                                        
|                                                                                                                                                                                                    |                                                           |                                   |                       |                                                
|                                                                                                                                                                                                    |                                                           |                                   |                       |                                                
|                                                                                                                                                                                                    |                                                           |                                   |                       | Year Ended December 31,                        
|                                                                                                                                                                                                    |                                                           |                                   |                       | (in thousands, except average order
      size)
|Selected Operating
      Data                                                                                                                                                                       |                                                           | 2001                              |                       | 2000                                           
|                                                                                                                                                                                                    | Direct marketing net sales                                | $                                 | 472,927               | $                                              
|                                                                                                                                                                                                    | Internet sales                                            | $                                 | 215,760               | $                                              
|                                                                                                                                                                                                    | Retail net sales                                          | $                                 | 29,396                | $                                              
|                                                                                                                                                                                                    | Number of catalogs
      distributed                      |                                   | 43,367                |                                                
|                                                                                                                                                                                                    | Orders filled (Direct
      marketing)                    |                                   | 640                   |                                                
|                                                                                                                                                                                                    | Orders filled
      (Internet)                            |                                   | 355                   |                                                
|                                                                                                                                                                                                    | Average order size
      (Direct marketing)               | $                                 | 739                   | $                                              
|                                                                                                                                                                                                    | Average order size
      (Internet)                       | $                                 | 608                   | $                                              
|                                                                                                                                                                                                    | Mailing list size                                         |                                   | 7,685                 |                                                
|                                                                                                                                                                                                    |                                                           |                                   |                       |                                                
|                                                                                                                                                                                                    |                                                           |                                   |                       | December 31                                    
|                                                                                                                                                                                                    |                                                           |                                   |                       | (in thousands)                                 
|Balance Sheet Data                                                                                                                                                                                  |                                                           | 2001                              |                       | 2000                                           
|                                                                                                                                                                                                    | Working capital                                           | $                                 | 17,270                | $                                              
|                                                                                                                                                                                                    | Total assets                                              | $                                 | 125,805               | $                                              
|                                                                                                                                                                                                    | Short-term debt                                           | $                                 | 1,437                 | $                                              
|                                                                                                                                                                                                    | Line
      of credit                                      | $                                 | 1,561                 | $                                              
|                                                                                                                                                                                                    | Long-term debt,
      excluding current portion           | $                                 | 375                   | $                                              
|                                                                                                                                                                                                    | Stockholders' equity                                      | $                                 | 44,011                | $                                              

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the Company's
consolidated financial statements and notes thereto included elsewhere herein.

Overview

The Company began operations in May 1987 as a
mail order company and opened
its first retail computer showroom in August 1987.  After opening its first
retail showroom, the Company conducted mail order operations from one of its
retail showroom locations.  The Company became an authorized Apple dealer in
1991. During 1997, the Company operated four retail showrooms in Southern
California under the name Creative Computers and three retail showrooms in
Illinois and one retail showroom in Indiana under the name of Elek-Tek.  During
the first quarter of 1998, the Company closed all but one of its retail
showrooms.

In 1993, the Company shifted its principal distribution and marketing focus
from retail showrooms to direct mail marketing distribution and relocated its
mail order/catalog operations to a central location.  In 1994, the Company
received authorization from Apple to offer the full retail line of Apple
products via direct mail and the Company distributed the first edition of its
MacMall catalog in April 1994.

In 1998, the Company modified its strategic focus to acquiring
small-to-medium size business customers and established an outbound
relationship-based direct marketing model.  The outbound direct marketing model
involves hiring and training technical sales executives, developing qualified
business leads and establishing business relationships with IT professionals.

During 1999, the Company successfully completed a spin-off of its former
subsidiary, uBid, Inc., to the Company's stockholders.  Consistent with its
strategic focus on the business-to-business and Internet markets, the Company
formed a new subsidiary, eCOST.com, a multi-category Internet retail web site,
in February 1999.  In December 1999, the Company formed its eLinux subsidiary to
provide products, news, discussion groups, services and support to the Linux
community.

During
2000, the Company shifted its strategy to focus primarily on its outbound direct
marketing operations.  Accordingly, the Company changed its operating
strategy for its start-up businesses, eCOST.com and eLinux, emphasizing
profitability over growth.

Net sales from
direct marketing operations, as a percentage of net
sales, were  65.9%, 70.2% and 76.2% in 2001, 2000 and 1999 respectively, with
an average order size of $739, $837, and $637 for those respective years.  Net sales
from the Internet, as a percentage of net sales, were 30.0%, 25.4% and 
19.0% in 2001, 2000 and 1999 respectively, with an average order size of $608, 
$533 and $414 for those respective years.

Net sales of the Company are derived primarily from the sale of computer
hardware, software, peripherals, and electronic products to businesses, government
and educational institutions as well as individual consumers through
relationship-based direct marketing techniques, direct response catalogs, dedicated
inbound telemarketing sales executives, the Internet, a direct sales force, and
a retail showroom. Gross profit consists of net sales less product and shipping
costs. The Company receives marketing development funds ("MDF") from
manufacturers of products included in the Company's catalogs and web sites, as
well as co-operative advertising funds ("Co-Op") on products purchased
from manufacturers and vendors.

A substantial portion of the Company's business is dependent on sales of
Apple computers and software and peripheral products used with Apple computers.
Products manufactured by Apple represented approximately 27.0%, 24.9% and 
25.4% of the Company's net sales in 2001, 2000 and 1999, respectively.

Results of Operations

The following table sets forth for the years indicated information derived
from the Company's consolidated statement of operations expressed as a
percentage of net sales.  Results for the year ended December 31, 1999 have been
restated to reflect the results of uBid as discontinued operations. There can be
no assurance that trends in sales gross profit or operating results will continue in
the future.

Percentage of Net SalesYear Ended
      December 31,2001
    
    2000
    
    1999Net sales
    100.0
    %
    100.0
    %
    100.0
    %Cost of goods sold
    89.0
    
    89.3
    
    89.1Gross profit
    11.0
    
    10.7
    
    10.9Selling, general, and administrative expenses
    10.3
    
    11.7
    
    11.5Income (loss) from operations
    0.7
    
    (1.0)
    
    (0.6)Interest expense, net
    0.1
    
    -
    
    0.1Income (loss) before income taxes
    0.6
    
    (1.0)
    
    (0.5)Income tax provision
    -
    
    -
    
    0.1Income (loss) from continuing operations
    0.6
    
    (1.0)
    
    (0.6)Loss from discontinued operations
    -
    
    -
    
    (0.9)Cumulative effect of change in accounting
      principle
    -
    
    (0.1)
    
    -Net income (loss)
    0.6
    %
    (1.1)
    %
    (1.5)
    %


Year Ended December 31, 2001 Compared to the Year Ended December 31, 2000

Net sales
in  2001 were $718.1 million, a decrease of $100.5 million or 12.3% from net sales
of $818.6 million in 2000.  The Company's Core Business net sales declined
11.0% to $625.0 million in 2001.  The Core Business sales decline in 2001
resulted from reduced demand and lower selling prices of technology products due to the economic
recession and the effect of the September 11th attacks.  Further, net
catalog circulation in 2001 decreased 12.0%, or 5.9 million catalogs to 43.4
million,  comprised of 29.7 million and 13.7 million MacMall and PC Mall catalogs,
respectively.  Retail net sales included in the Core Business declined $6.5
million or 18.0% in 2001 to $29.4 million.  The decline was partially offset by an
increase in Core Business Internet sales of $33.7 million, a 35.0% increase over
2000.  Net sales for the Company's eCOST.com segment in 2001 declined $25.3
million or 23.0% over 2000  because of a significant reduction of advertising expenditures
and increases in product margins to sustainable levels.  The Company's eLinux
segment reported net sales growth in 2001 of 34.5% to $8.4 million from $6.2
million in 2000.  Total PC platform revenues were
$437.7 million,
a  decrease of $60.7 million, or 12.2%
over 2000 PC platform revenue of $498.4 million.    Total sales
of  Mac platform products in
2001 was $280.4 million, a decrease of $39.8 million, or 12.4% compared to $320.2 million in 2000.

Gross profit
increased as a percentage of net sales to 11.0% in 2001, versus 10.7% in
2000.  The gross profit percentage in
2001 was positively affected by eCOST.com, which nearly doubled its margin
percentage from 2000,  partially offset by a decline in the Core Business margin to 11.3% from 11.7% of sales in
2000, due to market conditions.  eCOST.com
gross profit increased 49.5% to $7.7 million in 2001, from $5.2 million in 2000
as a result of its focus on profitability.  Core Business gross profit
declined 14.1% to $70.5 million in 2001 primarily as a result of decreased net
sales.  eLinux gross profit increased in 2001 by $0.1 million or 21.0% over
2000.  Gross profit margin may vary depending on
various factors, including outbound sales initiatives, fluctuations in key
vendor support programs and price protections, product mix, market conditions
and other factors.

Selling, general and administrative expenses
(SG&A) declined $21.8 million in 2001, or 22.8% from 2000 due to companywide
cost containment efforts, combined with increased productivity in net
advertising expense.  The decline in SG&A expenditures resulted in a
decrease in SG&A as a
percentage of net sales, decreasing to 10.3% in 2001 from 11.7% in 2000. 
Core Business SG&A declined $12.3 million in 2001, or 15.9% primarily due to
cost containment efforts and optimization of advertising expenditures. 
Core Business SG&A as a percentage of net sales declined to 10.4% from 11.0%
in 2000.  eCOST.com SG&A decreased 50.1% in 2001, to $7.3 million, from
$14.6 million in 2000, resulting primarily from reduced adverting
expenditures.  eCOST.com SG&A as a percentage of net sales declined to
8.6% in 2001, versus 13.3% in 2000.  SG&A expenses for eLinux were
$1.3 million in 2001, a decrease of $2.1 million, or 61.6% from $3.5 million in the
prior year due primarily to reduced advertising expenditures.  As a
percentage of net sales, eLinux SG&A declined to 15.9% in 2001, versus 55.6%
in 2000.

Net interest expense was
$0.7 million for the year ended December 31, 2001
compared to $0.9 million net interest expense for the year ended December 31,
2000.  The decrease was due to reduced borrowings and outstanding debt
throughout the year of 2001 versus 2000, as well as reduced borrowing rates.

No income tax provision was recorded for the year ended December 31,
2001 or for the year ended December 31, 2000;  as
such, the effective tax rate was 0% for both years.

Year Ended December 31, 2000 Compared to the Year Ended December 31, 1999

Net sales for the year ended December 31, 2000 were $818.6 million, an
increase of $88.4 million or 12.1% over net sales for the year ended December
31, 1999 of $730.2 million. Telemarketing/catalog sales for 2000 were $575.0
million, an increase of $18.5 million or 3.3% compared to 1999
telemarketing/catalog sales of $556.5 million. The increase in
telemarketing/catalog sales is primarily due to higher revenue per book and
average order value. Net catalog circulation in 2000 decreased 16.4%, or 9.7
million catalogs to 49.3 million, of which MacMall comprised 29.5 million, PC
Mall 18.0 million and ComputAbility 1.8 million. The ComputAbility catalog was
merged with PC Mall during 2000. Internet sales in 2000 were $207.8 million, an
increase of 49.5%, or $68.8 million over 1999. Retail net sales in 2000 were
$35.8 million, an increase of 3.2%, or $1.1 million from 1999. PC platform net sales
increased 21.5% to $498.4 million in 2000, versus $410.2 million in 1999. Sales
for eCOST.com were $110.0 million, an increase of $73.2 million, or 199% over
1999 sales of $36.8 million. Sales for eLinux were $6.2 million in its first
year of operations.

Gross profit for the year ended December 31, 2000 was $87.8 million, an
increase of $8.3 million or 10.4% from gross profit of $79.6 million for the
year ended December 31, 1999. The increase in gross profit was primarily due to
the sales increase in 2000 over 1999, partially offset by a slight decrease in
overall margin as a percentage of sales. Gross profit as a percentage of sales
was 10.7% in 2000, versus 10.9% in 1999. The gross profit percentage was
negatively affected by lower margins experienced by eCOST.com, primarily in the
first half of the year, and other factors, including outbound sales initiatives
and fluctuations in key vendor support programs, offset by an improvement in the
core business margin to 11.6% from 11.4% of sales in 1999. Completing its second
year of operations, gross profit for eCOST.com was $5.2 million for the year
ended December 31, 2000, an increase of 1,877% or $4.9 million over 1999 gross
profit of $0.3 million. Gross profit for eLinux was $0.7 million for the year
ended December 31, 2000, its first year of operations.

Selling, general and administrative expenses (SG&A) were $95.5 million
for the year ended December 31, 2000, an increase of $11.8 million or 14.2% over
SG&A expenses of $83.7 million for the year ended December 31, 1999. As a
percentage of net sales, SG&A expenses were 11.7% in 2000, versus 11.5% in
1999, the increase due to higher advertising expenditures in the first half of
the year. For its second year of operations, SG&A expenses for eCOST.com
were $14.6 million for the year ended December 31, 2000, versus $6.4 million in
the prior year, primarily due to advertising increases. For its first year of
operations SG&A expenses for eLinux were $3.5 million for the year ended
December 31, 2000.

Net interest expense was $0.9 million for the year ended December 31, 2000
compared to $0.2 million net interest income for the year ended December 31,
1999. The increase was due to increased debt outstanding in 2000 versus 1999.

No income tax provision was recorded for the year ended December 31, 2000
versus a provision of $0.8 million for the year ended December 31, 1999. As
such, the effective tax rate for 2000 was 0%, compared with 20.8% in 1999. The
change in effective tax rate is primarily due to the provision of valuation
allowance against deferred tax assets.

Liquidity and Capital Resources

The Company's primary capital need has been funding the working capital
requirements created by its growth in sales.  Historically, the Company's
primary sources of financing have come from cash flow from operations, public offerings and borrowings from
its stockholders, private investors and financial institutions. In April and
August 1995, the Company completed an initial public offering and a follow on
offering of its Common Stock which resulted in aggregate net proceeds to the
Company of approximately $46.6 million. Cash flows from operations were $14.9
million, $(28.0) million, and $21.5 million for 2001, 2000 and 1999,
respectively.

Inventory
increased $10.2 million in 2001 and inventory turns declined to 15.7  from
18.5 in 2000.  Inventory increased at the end of 2001
versus 2000 as a result of strategic purchases made at the end of 2001. 
Accounts receivable decreased $16.3
million to $38.7 million during 2001, primarily due to strong cash collections
and improved days sales outstanding.

For
the year ended December 31, 2001, the Company's capital expenditures
were $1.3 million compared to $4.4 million in 2000 and $4.2 million in 1999.
The Company's primary capital needs will continue to fund its working
capital requirements for anticipated sales growth, possible acquisitions and new
business ventures.

In March 2001, the Company replaced its existing $40 million credit facility
with a new $75 million, three-year asset-based revolving credit facility from a
lending unit of a large commercial bank (the "New Line of Credit"). 
The New Line of Credit functions as a working capital line of credit with a
borrowing base of inventory and accounts receivable, and bears interest at prime
with a LIBOR option.  At December 31, 2001, the Prime Rate was 4.75%. 
The New Line of Credit is secured by substantially all of
the Company's assets.  The New Line of Credit has as its single financial
covenant a minimum tangible net worth requirement and also includes a commitment
fee of 0.25% annually on the unused portion of the line up to $60 million. 
In
addition, in March 2001, the Company entered into a new $40 million flooring
credit facility, which functions in lieu of a vendor trade payable for inventory
purchases and does not bear interest if paid within terms specific to each
vendor (the "New Flooring Facility").  The New Flooring Facility is
secured by substantially all of the Company's assets and is also supported by a
letter of credit issued under the New Line of Credit in the amount outstanding
under the New Flooring Facility from time to time.  The amount of the Letter of
Credit is applied against the credit limit under the New Line of Credit.  The Company had
$4.6 million of borrowings under the credit facility included in accounts
payable and $1.6 million of net working capital advances outstanding at
December 31, 2001.

At December 31,
2001 and 2000, the Company had cash and short-term
investments of $10.0 million and $12.2 million, respectively, and working
capital of $17.3 million and $10.2 million, respectively.  The Company has
historically funded its operations through a combination of operating cash flow,
current working capital and available lines of credit.  The Company believes
that current working capital, together with cash flows from operations and
available lines of credit, will be adequate to support the Company's current
operating plans through 2002.  However, if the Company needs extra funds, such as
for acquisitions or expansion or to fund a significant downturn in sales that
causes losses, there are no assurances that adequate financing will be available
at acceptable terms, if at all.

In July 1996, the Company announced its plan to repurchase up to 1,000,000
shares of its Common Stock. The shares will be repurchased from time to time at
prevailing market prices, through open market or negotiated transactions,
depending upon market conditions. No limit was placed on the duration of the
repurchase program. There is no guarantee as to the exact number of shares that
the Company will repurchase. Subject to applicable securities laws, repurchases
may be made at such times and in such amounts as the Company's management deems
appropriate. The program can also be discontinued at any time management feels
additional purchases are not warranted. As of December 31, 2001, the Company has
repurchased 15,000 shares.

As part of its growth strategy, the Company may, in the future, acquire other
companies in the same or complementary lines of business, and pursue other
business ventures. Any launch of a new business venture or any acquisition and
the ensuing integration of the operations of the acquired company with those of
the Company would place additional demands on the Company's management,
operating and financial resources.

Inflation

Inflation has not had a material impact upon operating results, and the
Company does not expect it to have such an impact in the near future. There can
be no assurances, however, that the Company's business will not be so affected
by inflation.

Impact of Recently Issued Accounting Standards

In July 2001, the FASB issued SFAS No. 142, "Goodwill and
Other Intangible Assets."  SFAS 142, which changes the accounting for
goodwill and indefinite-lived intangible assets from an amortization method to
an impairment-only approach, will be effective for fiscal years beginning after
December 15, 2001.  The Company has not determined the full impact that adoption
of this Standard will have on its consolidated financial statements.
 However, the Company does anticipate that selling, general and
administrative expenses will be reduced by approximately $0.5 million per year
due to the discontinuance of goodwill amortization as required by the Standard.

In August 2001, the FASB issued SFAS No. 144,
"Accounting for the Impairment of Long-Lived Assets."  SFAS
No.144 supercedes FAS No. 121," Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed Of" and APB Opinion No. 30, "Reporting
Extraordinary, Unusual and Infrequently Occurring Events and Transactions"
and amends APB No. 51, "Consolidated Financial Statements."  This
Statement was issued to address the accounting for a segment of a business
accounted for as a discontinued operation under APB No. 30 and to establish a
single accounting model based on the framework established in FAS No. 121, for
long-lived assets to be disposed of by sale.  The Statement is effective
for financial statements issued for fiscal years beginning after December 15,
2001.  The adoption of this statement
will not have a material impact on the Company's consolidated financial
statements.

Critical
Accounting Policies

The
Company has identified the following as its critical accounting policies:

Revenue
Recognition.Net sales include product sales, net
of returns and allowances, and gross outbound shipping and handling
charges.  The Company recognizes revenue from product sales, net of
discounts, coupon redemption and estimated sales returns, when title to products
sold has transferred to the customer, generally upon the receipt of products by
the customer.  The Company offers a 30-day return policy on selected items
based on manufacturer return policies, and provides an allowance for sales
returns based on historical experience.  For all product sales shipped
directly from suppliers to customers, the Company takes title to the products
sold upon shipment, bears credit risk, and bears inventory risk for returned
products that are not successfully returned to suppliers; therefore, these
revenues are recognized at gross sales amounts.

Allowance
for Doubtful Accounts Receivable.The Company
maintains an allowance for doubtful accounts receivable based upon estimates of
future collection.  The Company extends credit to its customers based upon
an evaluation of each customer's financial condition and credit history, and
generally does not require collateral.  The Company continually evaluates
its customers' financial condition and credit history in determining the
adequacy of  its allowance for doubtful accounts.  The Company also
maintains an allowance for uncollectible vendor receivables which arise from
vendor rebate programs, price protections and other promotions.  The
Company determines the sufficiency of the vendor receivable allowance based
various factors, including payment history.  Amounts received from vendors
may vary from amounts recorded because of potential non-compliance with certain
elements of vendor programs.

Reserve
for Inventory Obsolescence.  The
Company maintains allowances for the valuation of its inventory by estimating
the obsolete or unmarketable inventory based on the difference between inventory
cost and market value determined by general market conditions,  nature, age
and type
of of each product.  The Company continually evaluates the adequacy of its
inventory reserve.

Deferred
Advertising Revenue and Costs.  The
Company produces and circulates catalogs at various dates throughout the year
and  receives market development funds and cooperative (co-op)
advertising funds from vendors included in each catalog.  These funds are recognized based on sales generated over the life of the
catalog, approximately eight weeks.  The
costs of developing, producing and circulating each catalog are deferred and charged to
advertising expense at the same rate as the co-op revenue based on the life of the catalog.  Deferred
advertising revenue is included in accrued expenses and other current
liabilities, offset by deferred advertising costs, which are included in prepaid
expenses and other current assets.

Contractual Obligations

The following tables
set forth the Company's
future contractual obligations and other commercial commitments as of December 31,
2001 (in thousands):

> Contractual
>         obligations
>       Total
>       Less
>         than 1 year
>       1-3
>         years
>       4-5
>         years
>       After
>         5 yearsLong-term
>         debt
>       $    
>         1,250
>       $    
>         1,000
>       $      
>         250
>       $        
>         -
>       $        
>         -Operating
>         leases
>       10,548
>       2,450
>       4,111
>       2,941
>       1,046Capital
>         lease obligations
>       655
>       507
>       148
>       -
>       -Total
>         contractual cash obligations
>       $  
>         12,453
>       $    
>         3,957
>       $   
>         4,509
>       $ 
>         2,941
>       $ 
>         1,046



> Other
>       commercial commitments
>     Total
>     Less
>       than 1 year
>     1-3
>       years
>     4-5
>       years
>     After
>       5 yearsLines of
>       credit
>     $   6,161
>     $    
>       6,161
>     -
>     -
>     -



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's financial instruments include cash and long-term debt. At March
29, 2002, the carrying values of the Company's financial instruments
approximated their fair values based on current market prices and rates.

It is the Company's policy not to enter into derivative financial
instruments. The Company does not have any significant foreign currency exposure
since it does not transact business in foreign currencies. Therefore, the
Company does not have significant overall currency exposure at March 29, 2002.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is contained in the financial
statements listed in Item 14(a) under the caption "Consolidated Financial
Statements" and commencing on page F-1 of this Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding directors of the Company is set forth under the
caption "Election of Directors," in the Company's definitive Proxy
Statement to be filed in connection with its 2002 Annual Meeting of Stockholders
and such information is incorporated herein by reference. A list of executive
officers of the Company is included in Part I of this report.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is set forth under the caption
"Executive Compensation and Other Information" and "Election of
Directors - Compensation of Directors" in the Company's definitive Proxy
Statement to be filed in connection with its 2002 Annual Meeting of Stockholders
and such information is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is set forth under the caption
"Security Ownership of Certain Beneficial Owners and Management" in
the Company's definitive Proxy Statement to be filed in connection with its 2002
Annual Meeting of Stockholders and such information is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is set forth under the captions
"Certain Relationships and Related Transactions" and
"Compensation Committee Interlocks and Insider Participation" in the
Company's definitive Proxy Statement to be filed in connection with its 2002 Annual Meeting of Stockholders and such information is incorporated herein by
reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K

The following consolidated financial statements of the
Company are filed as part of this report:

> (a) (1) Consolidated Financial Statements.  See Consolidated Financial
>   Statements beginning on page F-2.
>   (2) Financial Statement
>   Schedules.  See Schedule II, Valuation and Qualifying Accounts in the Consolidated Financial Statements.
>   (3) Exhibits.
>   The following exhibits are
>   filed or incorporated by reference as part of this report:
>   Exhibit
>           Number
>         Description3.1
>         Certificate of Incorporation
>           of the Company (1)3.1(A)
>         Certificate of Amendment of
>           Certificate of Incorporation, dated June 1, 2000 (13)3.1(B)
>         Certificate of Amendment of
>           Certificate of Incorporation, dated June 19, 2001 (14)3.2
>         Amended and Restated Bylaws
>           of the Company (13)10.1*
>         Amended and Restated 1994
>           Stock Incentive Plan (10)10.2*
>         Employment Agreement dated
>           January 1, 1995, between Creative Computers, Inc. and Frank F. Khulusi
>           (1)10.4*
>         Employment Agreement dated
>           January 1, 1994, between Creative Computers, Inc. and Dan DeVries (1)10.18*
>         Directors' Non-Qualified
>           Stock Option Plan, amended and restated as of May 18, 1999 (7)10.25
>         Industrial Lease Agreement
>           between Corporate Estates, Inc. and Creative Computers, Inc. dated
>           September 15, 1995 for the premises located at 4515 E. Shelby Drive,
>           Memphis, Tennessee, filed in connection with the Company's 10-Q for
>           the quarter ended September 30, 1995 (4)10.28
>         Authorized Apple Dealer U.S.
>           Sales Agreement dated August 29, 1996; Authorized Apple Catalog
>           Reseller Sales Agreement dated August 29, 1996; Dealer Apple
>           Authorized Service Provider Agreement dated August 29, 1996; Apple
>           Corporate Alliance Program Addendum to the Authorized Apple Dealer
>           Sales Agreement dated August 29, 1996 (4)10.35
>         Separation and Distribution
>           Agreement by and between Creative Computers, Inc. and uBid, Inc.,
>           dated as of December 7, 1998, as amended (7)10.37(A)
>         Tax Indemnification and
>           Allocation Agreement by and between Creative Computers, Inc. and uBid,
>           Inc., dated as of December 7, 1998, as amended (8)10.37(B)
>         Amendment No. 1 to the Tax
>           Indemnification and Allocation Agreement by and among uBid, Creative
>           Computers and CMGI, Inc., dated as of February 9, 2000 (9)10.38
>         Sublease Agreement between
>           Creative Computers, Inc. and uBid, Inc., dated as of July 1, 1998 (6)10.41(A)
>         Sublease Agreement between
>           Creative Computers, Inc. and uBid, Inc., dated as of December 1, 1999 
>           (12)10.41(B)
>         Amendment No. 1
>           to the Sublease Agreement between the Company and uBid, Inc., dated as of
>           February 1, 200110.43
>         Loan and Security Agreement,
>           dated March 7, 2001, between Congress Financial Corporation and
>           IdeaMall, Inc. and Subsidiaries (13)10.44
>         Agreement for Wholesale
>           Financing dated March 15, 2001, between Deutsche Financial Services
>           and IdeaMall, Inc. and Subsidiaries (13)10.45*
>         Employment
>           Agreement dated January 20, 2000 between the Company and Kristin M.
>           Rogers.21.1
>         Subsidiaries23.1
>         Consent of
>           PricewaterhouseCoopers LLP(1)
>         Incorporated by
>           reference to the Company's Registration Statement on Form S-1
>           (33-89572) declared effective on April 4, 1995.(2)
>         Incorporated by reference to
>           the Company's Registration Statement on Form S-1 (33-95416) declared
>           effective on August 23, 1995.(3)
>         Intentionally
>           omitted.(4)
>         Incorporated by reference to
>           the Company's 1996 Form 10-K, filed with the Commission on March 31,
>           1997.(5)
>         Intentionally omitted.(6)
>         Incorporated by reference to
>           the Registration Statement on Form S-1 of uBid,
>           Inc. (File No. 333-58477), on file with the Commission.(7)
>         Incorporated by reference to
>           the Company's Report on Form 10-Q for the quarter ended June 30,
>           1999, filed with the Commission on August 16, 1999.(8)
>         Incorporated by reference to
>           the Company's Report on Form 10-Q for the quarter ended March 31,
>           1999, filed with the Commission on May 17, 1999.(9)
>         Incorporated by reference to
>           the Annual Report on 10-K of uBid, Inc. (Commission File No.
>           000-25119) for the year ended December 31, 1999.(10)
>         Incorporated by reference to
>           Annex A of the registrant's Definitive Proxy Statement filed with
>           the Commission on April 24, 2000.(11)
>         Intentionally
>           omitted.(12)
>         Incorporated by reference to
>           the Company's Annual Report of Form 10-K, File Number 0-25790, for
>           the year ended December 31, 1999, filed with the Commission on March
>           30, 2000.(13)
>         Incorporated by reference to
>           the Company's Annual Report of Form 10-K, File Number 0-25790, for
>           the year ended December 31, 2000, filed with the Commission on March
>           30, 2001.(14)
>         Incorporated by reference to
>           the Company's Annual Report of Form 10-Q for
>           the quarter ended June 30, 2001, filed with the Commission on August
>           14, 2001.

*
The referenced exhibit is a compensatory contract, plan or arrangement.

(b)   
Reports on Form 8-K:

> 1. 
>     A Current Report on Form 8-K was filed on October 25, 2001 regarding a press
>     release issued to announce unaudited consolidated financial results for the
>     third quarter of 2001.



PC
MALL, INC.

INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS



Financial Statements and Supplementary
      DataReport of Independent Accountants
    F-2Consolidated Balance Sheet at December 31,
      2001 and 2000
    F-3Consolidated Statement of Operations for the
      Years Ended December 31, 2001, 2000 and 1999
    F-4Consolidated Statement of Stockholders'
      Equity for the Years Ended December 31, 2001, 2000, and 1999
    F-5Consolidated Statement of Cash Flows for the
      Years Ended December 31, 2001, 2000 and 1999
    F-6Notes to Consolidated Financial Statements
    F-7Quarterly Financial Information (unaudited)
    F-8Financial Statement ScheduleSchedule II - Valuation and Qualifying Accounts
    F-9All other schedules are
      omitted since the required information is not present or is not present in
      amounts sufficient to require submission of the schedule, or because the
      information required is included in the consolidated financial statements
      and notes thereto.


F-1

---



REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of PC Mall, Inc.

In our opinion, the consolidated financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of PC Mall,
Inc. and its subsidiaries at December 31, 2001 and 2000, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America.  In addition, in our opinion, the
financial statement schedule listed in the accompanying index presents fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. 
We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our
opinion.

As discussed in Note 1 to the consolidated
financial statements, the Company changed its method of revenue recognition in
2000.

/s/ PRICEWATERHOUSECOOPERS
LLP

Los Angeles,
California

January 18, 2002

F-2

---

PC MALL, INC.  CONSOLIDATED BALANCE SHEET(in
thousands, except share data)

December
      31,
    
    December 31,2001
    
    2000AssetsCurrent
      assets:Cash and cash
      equivalents
    $
    9,972
    
    $
    12,195Accounts
      receivable, net of allowance for doubtful accounts of $2,340 and $1,162,
      respectively
    
    38,707
    
    
    54,970Inventories
    
    46,074
    
    
    35,838Prepaid
      expenses and other current assets
    
    2,096
    
    
    2,489Deferred
      income taxes

    1,840
    
    2,047Total current
    assets
    
    98,689
    
    
    107,539Property and equipment,
      net
    
    11,304
    
    
    14,928Goodwill, net
    
    10,796
    
    
    11,316Deferred income
      taxes
    
    4,062
    
    
    3,738Other assets
    954
    
    45$

    125,805
    

    $

    137,566Liabilities and
      Stockholders' EquityCurrent
    liabilities:Accounts payable
    $
    59,151
    
    $
    59,294Accrued expenses and other
      current liabilities
    
    10,526
    
    
    12,963Deferred revenue
    
    8,744
    
    
    7,204Line of credit
    
    1,561
    
    
    17,315Capital leases - current
      portion
    
    437
    
    
    573Notes payable - current
      portion
    1,000
    
    
    6Total current
      liabilities
    
    81,419
    
    
    97,355Capital leases
    
    125
    
    
    562Notes payable
    250
    
    141Total liabilities
    81,794
    
    98,058Commitments
      and contingencies (See Note 5)Stockholders'
    equity:Preferred stock, $.001 par value; 5,000,000 shares authorized; none
      issued and outstanding
    
    -
    
    
    -Common
      stock, $.001 par value; 15,000,000 shares authorized; 10,443,616 and 10,433,866 shares
      issued and outstanding
    
    11
    
    
    11Additional paid-in
      capital
    
    74,418
    
    
    74,403Treasury stock at cost:
      15,000 shares
    
    (91)
    
    
    (91)Retained earnings
      (accumulated deficit)
    (30,327)
    
    (34,815)Total stockholders'
      equity
    44,011
    
    39,508$
    125,805
    
    $
    137,566


See notes to consolidated financial statements.

F-3

---

##### 

PC MALL, INC.  CONSOLIDATED STATEMENT OF
OPERATIONS(in thousands, except per share data)

Year
      Ended December 31,2001
    
    
    2000
    
    
    1999Net sales
    $
    718,083
    
    $
    818,627
    
    $
    730,181Cost of goods sold
    
    639,111
    
    
    730,794
    
    
    650,630Gross profit
    
    78,972
    
    
    87,833
    
    
    79,551Selling,
      general and administrative expenses
    
    73,775
    
    
    95,536
    
    
    83,687Income (loss) from operations
    
    5,197
    
    
    (7,703)
    
    
    (4,136)Interest income (expense), net
    
    (709)
    
    
    (917)
    
    
    245Income (loss) before income taxes
    
    4,488
    
    
    (8,620)
    
    
    (3,891)Income tax provision
    
    -
    
    
    -
    
    
    812Income (loss)
      from continuing operations
    
    4,488
    
    
    (8,620)
    
    
    (4,703)Loss from
      discontinued operations, net of minority interest of $1,500 in 1999
    
    -
    
    
    -
    
    
    (6,240)Income
      (loss) before cumulative effect of change in accounting principle
    
    4,488
    
    
    (8,620)
    
    
    (10,943)Cumulative
      effect of change in accounting principle for revenue recognition
    
    -
    
    
    (536)
    
    
    -Net income (loss)
    $
    4,488
    
    $
    (9,156)
    
    $
    (10,943)Earnings (loss) per share:Continuing
      operations
    $
    0.43
    
    $
    (0.83)
    
    $
    (0.45)Discontinued
      operations
    
    
    
    
    -
    
    
    (0.60)Cumulative
      effect of change in accounting principle
    
    -
    
    
    (0.05)
    
    
    -$
    0.43
    
    $
    (0.88)
    
    $
    (1.05)Diluted earnings (loss) per share:Continuing
      operations
    $
    0.43
    
    $
    (0.83)
    
    $
    (0.45)Discontinued
      operations
    
    
    
    
    -
    
    
    (0.60)Cumulative
      effect of change in accounting principle
    
    -
    
    
    (0.05)
    
    
    -$
    0.43
    
    $
    (0.88)
    
    $
    (1.05)Pro Forma
      amounts assuming the accounting change is applied retroactively (See note
      1)Income (loss)
      from continuing operations
    
    
    
    
    
    
    $
    (4,842)Net income (loss)
    
    
    
    
    
    
    $
    (11,082)Basic earnings (loss) per share:Continuing
      operations
    
    
    
    
    
    
    $
    (0.45)Discontinued
      operations
    
    
    
    
    
    
    
    (0.60)Cumulative
      effect of change in accounting principle
    
    
    
    
    
    
    
    -$
    (1.05)Diluted earnings (loss) per share:Continuing
      operations
    
    
    
    
    
    
    $
    (0.45)Discontinued
      operations
    
    
    
    
    
    
    
    (0.60)Cumulative
      effect of change in accounting principle
    
    
    
    
    
    
    
    -$
    (1.05)Basic
      weighted average number of shares outstanding
    
    10,436
    
    
    10,419
    
    
    10,383Diluted
      weighted average number of shares outstanding
    
    10,551
    
    
    10,419
    
    
    10,383


See notes to consolidated financial statements.

F-4

---

PC MALL, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS'
EQUITY(in thousands)



Common
      Stock
    Additional paid-in capital
    Retained
      Earnings (Deficit)
    Treasury Stock
    TotalShares
    AmountBalance at December 31, 1998
    10,265
    $
    10
    $
    82,361
    $
    (14,716)
    $
    (91)
    $
    67,564Spin-off of uBid
      subsidiary
    -
    
    -
    
    (8,877)
    
    -
    
    -
    
    (8,877)Stock option exercises
    139
    
    1
    
    853
    
    -
    
    -
    
    854Net Loss
    -
    
    -
    
    -
    
    (10,943)
    
    -
    
    (10,943)Balance at December 31, 1999
    10,404
    
    11
    
    74,337
    
    (25,659)
    
    (91)
    
    48,598Stock option exercises
    30
    
    -
    
    66
    
    -
    
    -
    
    66Net Loss
    -
    
    -
    
    -
    
    (9,156)
    
    -
    
    (9,156)Balance at December 31, 2000
    10,434
    
    11
    
    74,403
    
    (34,815)
    
    (91)
    
    39,508Stock option exercises
    10
    
    -
    
    15
    
    -
    
    -
    
    15Net Income
    -
    
    -
    
    -
    
    4,488
    
    -
    
    4,488Balance at December 31, 2001
    10,444
    
    11
    
    74,418
    
    (30,327)
    
    (91)
    
    44,011


See notes to consolidated financial statements.

F-5

---

PC MALL, INC.  CONSOLIDATED STATEMENT OF CASH
FLOWS(in thousands)

|                                                           |                                                                                                                |                                                      |          | For the twelve months endedDecember 31,
|---------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | -------- | ---------------------------------------
|                                                           |                                                                                                                |                                                      |          | 2001                                   
|Cash flows from operating
      activities:               
|                                                           | Net income (loss)                                                                                              | $                                                    | 4,488    |                                        
|                                                           | Adjustments to
      reconcile net income (loss) to net cash provided by/(used in) operating
      activities: |                                                      |          |                                        
|                                                           | Depreciation and
      amortization                                                                            |                                                      | 5,607    |                                        
|                                                           | (Benefit)/provision for deferred income
      taxes                                                            |                                                      | (117)    |                                        
|                                                           | Loss on disposal of fixed
      assets                                                                         |                                                      | 41       |                                        
|                                                           | Loss from discontinued
      operations                                                                        |                                                      | -        |                                        
|                                                           | Changes in assets and liabilities, net of spin-off                                                             |                                                      |          |                                        
|                                                           |                                                                                                                | Accounts
    receivable                              |          | 16,263                                 
|                                                           |                                                                                                                | Inventories                                          |          | (10,236)                               
|                                                           |                                                                                                                | Prepaid expenses and other
      current assets      |          | 329                                    
|                                                           |                                                                                                                | Other assets                                         |          | (388)                                  
|                                                           |                                                                                                                | Accounts payable                                     |          | (143)                                  
|                                                           |                                                                                                                | Accrued expenses and other
      current liabilities |          | (2,437)                                
|                                                           |                                                                                                                | Deferred revenue                                     |          | 1,540                                  
|                                                           | Total adjustments                                                                                              |                                                      | 10,459   |                                        
|                                                           |                                                                                                                |                                                      |          |                                        
|Net cash provided by/(used
      in) operating activities  |                                                                                                                | 14,947                                               |          |                                        
|                                                           |                                                                                                                |                                                      |          |                                        
|Cash flows from investing
      activities:                |                                                                                                                |                                                      |          |                                        
|                                                           | Collection of notes
      receivable                                                                           |                                                      | -        |                                        
|                                                           | Purchases of property and
      equipment                                                                      |                                                      | (1,345)  |                                        
|                                                           | Proceeds from
      sale of property and equipment                                                             |                                                      | 81       |                                        
|                                                           |                                                                                                                |                                                      |          |                                        
|Net cash used in investing activities                      |                                                                                                                | (1,264)                                              |          |                                        
|                                                           |                                                                                                                |                                                      |          |                                        
|Cash flows from financing
      activities:                |                                                                                                                |                                                      |          |                                        
|                                                           | Payments for deferred
      financing costs                                                                    |                                                      | (697)    |                                        
|                                                           | Borrowings under notes
      payable                                                                           |                                                      | 2,000    |                                        
|                                                           | Payments under notes
      payable                                                                             |                                                      | (897)    |                                        
|                                                           | Net (payments)/borrowings
      under line of credit                                                           |                                                      | (15,754) |                                        
|                                                           | Principal payments of
      obligations under capital leases                                                   |                                                      | (573)    |                                        
|                                                           | Proceeds from stock issued
      under stock option plans                                                      |                                                      | 15       |                                        
|                                                           |                                                                                                                |                                                      |          |                                        
|Net cash (used in)/provided
      by financing activities  |                                                                                                                | (15,906)                                             |          |                                        
|                                                           |                                                                                                                |                                                      |          |                                        
|Net (decrease)/increase in cash and
      cash equivalents |                                                                                                                | (2,223)                                              |          |                                        
|Cash and cash
      equivalents:                           |                                                                                                                |                                                      |          |                                        
|                                                           | Beginning of year                                                                                              |                                                      | 12,195   |                                        
|                                                           | End of year                                                                                                    | $                                                    | 9,972    |                                        



See notes to consolidated financial statements.

F-6

---

##### 

PC MALL, INC. NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(in thousands, except share and per share data)

1.           
Summary
of Significant Accounting Policies

Description
of Company

PC
Mall, Inc., formerly IdeaMall, Inc. and Creative Computers, Inc. (the "Company"), founded in 1987,
is a rapid response supplier of personal computer hardware, software and peripheral
products, as well as consumer electronics.  The Company offers products to
individual consumers, home offices, small businesses and large corporations
through direct response catalogs, dedicated inbound and outbound sales executives, a direct sales force, a retail showroom and multiple Internet
web sites.  The Company offers a broad selection of products through its
distinctive, full-color catalogs, MacMall, PC Mall Business Solutions, MacMall Software Buyers
Guide and eCOST.com, the Company's worldwide web sites on the Internet, and
other promotional materials.

In
September 1997, the Company formed a wholly owned subsidiary, uBid,
Inc. ("uBid") to sell
computer-related products and consumer electronics through an auction format on
the Internet.  In December 1998, uBid
completed an initial public offering of 1,817,000 shares of its common stock. 
On June 7, 1999, the Company divested its ownership in uBid
by means of a tax-free distribution of all of its remaining 7.3 million shares
of uBid common stock to the
Company's shareholders of record as of May 24, 1999.  In accordance with
Accounting Principles Board Opinion No. 30, "Reporting the Results of
Operations," uBid's revenues
and expenses have been excluded from the Company's consolidated revenues and
expenses from continuing operations.  The Company's share of uBid's
operating results, net of taxes, in 1999 is reported as
a separate line item on the Company's consolidated statement of operations
under the caption "Loss from discontinued operations."   uBid's revenues were $64,784 for the period ended June 7, 1999.

Use of Estimates in the
Preparation of Financial Statement

The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the respective reporting
periods.  Actual results could differ from those estimates.

Principles
of Consolidation

The consolidated financial statements
include the accounts of the Company and its subsidiaries.  All significant intercompany accounts and transactions have been
eliminated.

Revenue Recognition

Net
sales include product sales, net of returns and allowances, and gross outbound
shipping and handling charges. The Company recognizes revenue from product
sales, net of discounts, coupon redemption and estimated sales returns, when
title to products sold has transferred to the customer.  The Company considers this to occur upon receipt of products by the
customer.  The Company provides an
allowance for sales returns, which is based on historical experience.  For all product sales shipped directly from suppliers to customers, the
Company takes title to the products sold upon shipment, bears credit risk, and
bears inventory risk for returned products that are not successfully returned to
suppliers, although some of these risks are mitigated through arrangements with
the Company's shippers and suppliers.

In the
fourth quarter of 2000, the Company adopted Securities and Exchange Commission
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in
Financial Statements."  SAB 101
requires the Company to defer, in certain situations, sales revenue until goods
have been received by the customer and risk of loss has been passed.  The adjustment resulted from the change in timing of revenue recognition
from the point of shipment to the point of delivery of product to the customer. 
The adoption of SAB 101 resulted in a cumulative effect of a change in
accounting principle of $536, retroactively applied to January 1, 2000.  The financial effect of adoption on revenue for the
year ended December
31, 2000 is immaterial.  The pro forma amounts shown in the consolidated statement of
operations present the effect of retroactive application of SAB 101.

Outbound
Shipping Costs

Outbound shipping
costs incurred to deliver products to customers are included in cost of goods
sold.

Cash
Equivalents

All
highly liquid investments with initial maturities of three months or less are
considered cash equivalents.

Concentration
of Credit Risk

Accounts
receivable potentially subject the Company to credit risk.  The Company extends credit to its customers based upon an evaluation of
each customer's financial condition and credit history and generally does not
require collateral.  The Company has historically incurred minimal credit losses.   No customers accounted for
more than 10% of trade accounts receivable at December 31, 2001 and 2000.

Inventories

Inventories
consist primarily of finished goods, and are stated at cost (determined under
the first-in, first-out cost method) or market, whichever is lower.  At December 31,
2001 and 2000, the Company had reserves of $972 and $1,107, respectively, for demonstration inventory, lower of cost or market
pricing and potential excess and obsolete inventory.

Deferred
Advertising Revenue and Costs

The
Company produces and circulates catalogs at various dates throughout the year. 
The Company receives market development funds and cooperative (co-op)
advertising funds from vendors included in each catalog.  These funds are recognized based on sales generated over the life of the
catalog, which approximates eight weeks.  The
costs of developing and circulating each catalog are deferred and charged to
advertising expense in the same time period as the co-op funds based on sales
over the life of the catalog.  Deferred
advertising revenue is included in accrued expenses and other current
liabilities.  Advertising expense,
net of advertising revenue earned, included in selling, general and
administrative expenses, was $556, $13,355 and $7,325  in 2001, 2000 and
1999,
respectively.  Deferred advertising
costs were $1,422 and $1,784 at December 31, 2001 and 2000, respectively,
and are included in prepaid expenses and other current assets in the
consolidated balance sheet.

Property
and Equipment

Property
and equipment (including equipment acquired under capital leases) are stated at
cost and are depreciated using straight-line methods over the estimated useful
lives of the assets, as follows:

Furniture and fixtures
      5 - 7 yearsLeasehold improvements
      Life of lease - not to exceed 15 yearsComputers, machinery and equipment
      3 - 7 yearsBuilding
      31.5 years


Disclosures
About Fair Value of Financial Instruments

The
carrying amount of cash, cash equivalents, accounts receivable, accounts payable
and accrued expenses and other current liabilities approximates fair value
because of the short-term maturity of these instruments.  The carrying amount of the Company's notes payable approximates fair
value based upon the current rates offered to the Company for obligations of
similar terms and remaining maturities.

Goodwill

Goodwill,
resulting from acquisitions, was amortized using the straight-line method over
periods not exceeding twenty-five years and was subject to periodic review for
impairment.  Accumulated amortization at December 31, 2001 and 2000 was
$2,126 and $1,606, respectively.  Amortization expense totaled $520, $520
and $482  in 2001, 2000 and 1999, respectively. 
Beginning in 2002, the Company will no longer amortize goodwill pursuant to its
adoption of  SFAS No. 142, "Goodwill and Other Intangible
Assets."  See Recent Accounting Pronouncements for additional
information.

Accounting
for the Impairment of Long-Lived Assets

The Company reviews long-lived assets and certain
intangible assets for impairment when events or changes in circumstances
indicate the carrying amount of an asset may not be recoverable.  In the event the sum of the expected undiscounted future cash flows
resulting from the use of the asset is less than the carrying amount of the
asset, an impairment loss equal to the excess of the asset's carrying value
over its fair value is recorded.

Income
Taxes

The
Company accounts for income taxes under the liability method.  Under this method, deferred income taxes are recognized by applying
enacted statutory tax rates applicable to future years to differences between
the tax bases and financial reporting amounts of existing assets and
liabilities.  A valuation allowance
is provided when it is more likely than not that all or some portion of deferred
tax assets will not be realized.

Earnings
(Loss) per Share

Basic
EPS excludes dilution and is computed by dividing net income (loss) by the
weighted average number of common shares outstanding during the reported
periods.  Diluted EPS reflects the
potential dilution that could occur if stock options and other commitments to
issue common stock were exercised using the treasury stock method.

The
computation of Basic and Diluted EPS is as follows:

2001
    
    
    2000
    
    
    1999Income (loss) from continuing
      operations
    $
    4,488
    
    $
    (8,620)
    
    $
    (4,703)Loss from discontinued operations
    
    -
    
    
    -
    
    
    (6,240)Cumulative
      effect of change in accounting principle
    
    -
    
    
    (536)
    
    
    -Net income (loss)
    $
    4,488
    
    $
    (9,156)
    
    $
    (10,943)Weighted average shares - Basic
    
    10,435,585
    
    
    10,418,558
    
    
    10,383,052Effect of dilutive stock options
      and warrants (a)
    
    115,759
    
    
    -
    
    
    -Weighted average shares - Diluted
    
    10,551,344
    
    
    10,418,558
    
    
    10,383,052Basic earnings (loss) per share:Continuing
      operations
    $
    0.43
    
    $
    (0.83)
    
    $
    (0.45)Discontinued
      operations
    
    
    
    
    -
    
    
    (0.60)Cumulative
      effect of change in accounting principle
    
    -
    
    
    (0.05)
    
    
    -Net income
      (loss)
    $
    0.43
    
    $
    (0.88)
    
    $
    (1.05)Diluted earnings (loss) per share:Continuing
      operations
    $
    0.43
    
    $
    (0.83)
    
    $
    (0.45)Discontinued
      operations
    
    
    
    
    -
    
    
    (0.60)Cumulative
      effect of change in accounting principle
    
    -
    
    
    (0.05)
    
    
    -Net income
      (loss)
    $
    0.43
    
    $
    (0.88)
    
    $
    (1.05)


(a)  Potential common shares of 168,133 and 339,609 for 2000 and 1999, respectively, have been excluded from the earnings (loss) of per share
computations because the effect of their inclusion would be anti-dilutive.

Accounting
for Stock-Based Compensation

The
Company accounts for employee stock-based compensation in accordance with
Accounting Principles Board Opinion No. 25 and related interpretations.  The disclosures required by Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), have been
included in Note 7.

Reclasifications

Certain
reclassifications have been made to the 1999 and 2000 financial statement
amounts to conform to the 2001 presentation.

Recent Accounting Pronouncements

In July 2001, the FASB issued SFAS No. 142, "Goodwill and
Other Intangible Assets."  SFAS 142, which changes the accounting for
goodwill and indefinite-lived intangible assets from an amortization method to
an impairment-only approach, will be effective for fiscal years beginning after
December 15, 2001.  The Company has not determined the full impact that adoption
of this Standard will have on its consolidated financial statements.
 However, the Company does anticipate that selling, general and
administrative expenses will be reduced by approximately $520 per year due to
the discontinuance of goodwill amortization as required by the Standard.

In August 2001, the FASB issued SFAS No. 144,
"Accounting for the Impairment of Long-Lived Assets."  SFAS
No.144 supercedes FAS No. 121," Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed Of" and APB Opinion No. 30, "Reporting
Extraordinary, Unusual and Infrequently Occurring Events and Transactions"
and amends APB No. 51, "Consolidated Financial Statements."  This
Statement was issued to address the accounting for a segment of a business
accounted for as a discontinued operation under APB No. 30 and to establish a
single accounting model based on the framework established in FAS No. 121, for
long-lived assets to be disposed of by sale.  The Statement is effective
for financial statements issued for fiscal years beginning after December 15,
2001.  The adoption of this statement
will not have a material impact on the Company's consolidated financial
statements.

2.    
Property and Equipment

Property
and equipment consist of the following as of December 31:

2001
    
    
    2000Furniture and fixtures
    $
    2,845
    
    $
    2,819Leasehold improvements
    
    3,363
    
    
    3,071Computers, machinery and equipment
    
    23,047
    
    
    23,066Buildings
    
    3,349
    
    
    3,512Land
    
    1,406
    
    
    1,44634,010
    
    
    33,914Less: Accumulated depreciation and
      amortization
    
    (22,706)
    
    
    (18,986)$
    11,304
    
    $
    14,928


Depreciation expense in 2001, 2000 and 1999 totaled $4,847, $5,378
and $4,415, respectively.

3.     Line of Credit

In March 2001, the Company replaced its existing $40 million credit facility
with a new $75 million, three-year asset-based revolving credit facility from a
lending unit of a large commercial bank (the "New Line of Credit"). 
The New Line of Credit functions as a working capital line of credit with a
borrowing base of inventory and accounts receivable, and bears interest at prime
with a LIBOR option.  At December 31, 2001, the Prime Rate was 4.75%. 
The New Line of Credit is secured by substantially all of
the Company's assets.  The New Line of Credit has as its single financial
covenant a minimum tangible net worth requirement and also includes a commitment
fee of 0.25% annually on the unused portion of the line up to $60 million.  In
addition, in March 2001, the Company entered into a new $40 million flooring
credit facility, which functions in lieu of a vendor trade payable for inventory
purchases and does not bear interest if paid within terms specific to each
vendor (the "New Flooring Facility").  The New Flooring Facility is
secured by substantially all of the Company's assets and is also supported by a
letter of credit issued under the New Line of Credit in the amount outstanding
under the New Flooring Facility from time to time.  The amount of the Letter of
Credit is applied against the credit limit under the New Line of Credit.  The Company had
$4.6 million of borrowings under the credit facility included in accounts
payable and $1.6 million of net working capital advances outstanding at
December 31, 2001.

At December 31, 2001 and 2000, the Company had cash and short-term
investments of $10.0 million and $12.2 million, respectively, and working
capital of $17.3 million and $10.2 million, respectively.  The Company believes
that current working capital, together with cash flows from operations and
available lines of credit, will be adequate to support the Company's current
operating plans through 2002.  However, if the Company needs extra funds, such as
for acquisitions or expansion or to fund a significant downturn in sales that
causes losses, there are no assurances that adequate financing will be available
at acceptable terms, if at all.

4.      
Income
Taxes

The
provision (benefit) for income taxes consists of the following for the years
ended December 31:

> 2001
>     
>     2000
>     
>     1999CurrentFederal
>     $
>     106
>     $
>     -
>     $
>     106State
>     
>     14
>     
>     -
>     
>     13118
>     
>     -
>     
>     119DeferredFederal
>     
>     (104)
>     
>     -
>     
>     620State
>     
>     (14)
>     
>     -
>     
>     73(118)
>     
>     -
>     
>     693$
>     -
>     $
>     -
>     $
>     812

The
provision (benefit) for income taxes differed from the amount computed by
applying the U.S. federal statutory rate to income (loss) before income taxes
due to the effects of the following:

> 2001
>     
>     2000
>     
>     1999Expected taxes at federal
>       statutory tax rate
>     34.0
>     %
>     (34.0)
>     %
>     (34.0)
>     %State income taxes, net of
>       federal income tax benefit
>     0.2
>     
>     -
>     
>     (2.9)Change in valuation allowance
>     (36.8)
>     
>     34.0
>     
>     53.7Other
>     2.6
>     
>     -
>     
>     4.0-
>     %
>     -
>     %
>     20.8
>     %

The
significant components of deferred tax assets and liabilities are as follows at
December 31:

2001
    
    
    2000Accounts Receivable
    $
    866
    
    $
    465Inventories
    
    272
    
    
    219Property and Equipment
    
    934
    
    
    379Amortization
    
    (651)
    
    
    (539)Accrued expenses and reserves
    
    466
    
    
    755Tax credits and loss carryforwards
    
    8,875
    
    
    11,016Other
    
    -
    
    
    -(4,860)
    
    
    (6,510)$
    5,902
    
    $
    5,785


At
December 31, 2001, the Company had federal net operating loss carryforwards of
$23,934, which begin to expire at the end of 2018.  At
December 31, 2001, the Company had various state net operating loss
carryforwards ranging in amounts from $130 to $4,844, which begin to expire at
the end of 2003.  At December 31, 2001, the Company had Federal and
State minimum tax credit carryforwards of $118 and $12, respectively, which do not expire.

5.      
Commitments and Contingencies

Leases

The
Company leases office and warehouse space and equipment under various operating
and capital leases which provide for minimum annual rentals and escalations
based on increases in real estate taxes and other operating expenses.

Minimum
annual rentals under non-cancelable leases at December 31, 2001 were as follows:

Capitalized
      Leases
    
    
    Operating
      Leases2002
    $
    507
    
    $
    2,4502003
    
    148
    
    
    2,0942004
    
    -
    
    
    2,0172005
    
    -
    
    
    1,5462006
    
    -
    
    
    1,395Thereafter
    
    -
    
    
    1,046Total minimum lease payments
    
    655
    
    $
    10,548Less amount representing interest
    
    93Present value of minimum lease
      payments, including current maturity of $437
    $
    562


In
2001, 2000 and 1999 rent expense included in selling, general and administrative
costs was $3,744, $3,969 and $3,206, respectively.  Some of the leases contain renewal options and escalation clauses and
require the Company to pay taxes, insurance and maintenance costs.

Legal
Proceedings

Various claims and
actions, considered normal to the Company's business, have been asserted and are
pending against the Company.  The
Company believes that such claims and actions will not have any material adverse
effect upon the Company's consolidated financial position or results of
operations.

6.      
Stockholders' Equity

Initial Public Offering and
Spin-off of uBid, Inc.

On
December 9, 1998, uBid, Inc., a
subsidiary of the Company at that time, completed an initial public offering
(the "Offering") of 1,817,000 shares of common stock at an offering price of
$15.00 per share.  Net proceeds to uBid were $23,847.  The
shares sold to the public in the offering represented approximately 19.9% of uBid's
outstanding common stock.  As discussed in Note 1, the Company's remaining interest in
uBid
was subsequently spun off to the Company's shareholders in June 1999,
resulting in a charge of $8,877 to additional paid-in capital in 1999.

Treasury Stock

In
July 1996, the Company announced its plan to repurchase up to 1,000,000 shares
of its Common Stock.  The shares will be repurchased from time to time at
prevailing market prices, through open market or negotiated transactions,
depending upon market conditions.  No limit was placed on the duration of
the repurchase program. There is no guarantee as to the exact number of shares
that the Company will repurchase.  Subject to applicable securities laws,
repurchases may be made at such times and in such amounts as the Company's
management deems appropriate.  The program can also be discontinued at any
time management feels additional purchases are not warranted.  As of
December 31, 2001, the Company has repurchased 15,000 shares.

7.      
Employee Benefits

401(k) Savings Plan

Effective
January 1, 1994, the Company adopted a 401(k) Savings Plan which covers
substantially all full-time employees who meet the plan's eligibility
requirements.  Participants may make
tax-deferred contributions of up to 15% of annual compensation (subject to other
limitations specified by the Internal Revenue Code).  In December 1995, the Company amended the Plan to make a 25% matching
contribution for amounts that do not exceed 4% of the participants' annual
compensation.  During 2001, 2000 and
1999, the Company incurred $135, $154, and $142, respectively, of expenses related
to the 401(k) matching component of this plan.

1994
Employee Stock Option Plan

In
November 1994, the Board of Directors and stockholders of the Company approved
the 1994 Stock Option Plan (the "1994 Plan"), which provides for the grant
of stock options to employees and consultants of the Company.  Under the 1994 Plan, the Company may grant options ("Incentive Stock
Options") within the meaning of Section 422A of the Internal Revenue Code, or
options not intended to qualify as Incentive Stock Options ("Nonstatutory
Stock Options").

In
May 2000, the Board of Directors and stockholders of the Company approved
amendments to the 1994 Plan which (i) increased the number of shares authorized
to be issued under the Plan from 1,950,000 shares to 2,950,000 shares, (ii)
added an "evergreen provision" the effect of which automatically increases
the number of shares of the Company's Common Stock available for issuance
under the Plan as of January 1 of each year by three percent (3%) of the
Company's outstanding Common Stock as of December 31 of the immediately
preceding fiscal year, (iii) added non-employee directors as persons eligible to
receive options and other stock-based awards under the Plan, and (iv) added
certain provisions to the Plan to ensure that options may qualify as
performance-based compensation under Section 162(m) of the Code.

As
of December 31, 2001, a total of 876,702 shares of authorized but unissued
shares are available for future grants.  All options granted through December 31,
2001 have been Nonstatutory
Stock Options.

The
1994 Plan is administered by the Compensation and Stock Option Committee of the
Board of Directors.  Subject to the
provisions of the 1994 Plan, the Committee has the authority to select the
employees and consultants to whom options are granted and determine the terms of
each option, including (i) the number of shares of common stock covered by the
option, (ii) when the option becomes exercisable, (iii) the option exercise
price, which must be at least 100%, with respect to Incentive Stock Options, and
at least 85%, with respect to Nonstatutory Stock Options, of the fair market
value of the common stock as of the date of grant, and (iv) the duration of the
option (which may not exceed ten years).  All
options generally vest annually over four to five years, and are nontransferable
other than by will or by the laws of descent and distribution.

1995
Director Stock Option Plan

The
Company adopted the Directors' Non-Qualified Stock Option Plan (the
"Director Plan") in 1995 under which each non-employee director of the
Company ("Non-Employee Director") receives a non-qualified option to
purchase 5,000 shares of Common Stock upon his or her first election or
appointment to the Board of Directors, as well as subsequent grants each year
after the annual meeting of the Company's stockholders.  In 1999, the Company increased the total number of shares reserved for
issuance under the Director Plan to 100,000 from 50,000.  However, in May 2000, the Company's Board of Directors and shareholders
voted to terminate the Director Plan such that no further grants would be made
thereunder, and further provided that Non-Employee Directors are persons
eligible to receive future options and other stock-based awards under the 1994
Employee Stock Option Plan.

The
following table summarizes stock option activity:

> Number
>     
>     
>     Weighted Average Exercise PriceOutstanding
>       at December 31, 1998
>     904,353
>     
>     $
>     7.34Granted
>     1,758,048
>     
>     
>     5.04Canceled
>     (1,014,907)
>     
>     
>     7.72Exercised
>     (139,029)
>     
>     
>     6.15Outstanding
>       at December 31, 1999
>     1,508,465
>     
>     
>     4.54Granted
>     511,150
>     
>     
>     5.52Canceled
>     (369,223)
>     
>     
>     5.58Exercised
>     (29,797)
>     
>     
>     2.22Outstanding
>       at December 31, 2000
>     1,620,595
>     
>     
>     4.67Granted
>     936,275
>     
>     
>     1.69Canceled
>     (504,182)
>     
>     
>     5.47Exercised
>     (9,750)
>     
>     
>     1.48Outstanding
>       at December 31, 2001
>     2,042,938
>     
>     $
>     3.10

Of
the options outstanding at December 31, 2001, 2000 and 1999, options to purchase
865,856, 599,000 and 361,632 shares were exercisable at weighted average prices
of $3.09, $3.24 and $1.88 per share, respectively.  The following table summarizes information concerning
currently outstanding and exercisable stock options:

> Options Outstanding at December 31,
>         2001
>       
>       Options
>         Exercisable at December 31, 2001Range of Exercise Prices
>       
>       Number Outstanding
>       Weighted
>         Average Remaining Contractual Life
>       Weighted
>         Average Exercise Price
>       
>       Number
>         Exercisable
>       Weighted
>         Average Exercise Price$0.88 - $1.49
>       
>       534,975
>       8.58
>       $1.47
>       
>       201,150
>       $1.47$1.49 - $1.89
>       
>       604,772
>       7.25
>       $1.73
>       
>       306,212
>       $1.73$1.91 - $5.00
>       
>       511,266
>       8.34
>       $3.27
>       
>       175,740
>       $2.98$5.03 - $12.31
>       
>       391,925
>       7.68
>       $7.22
>       
>       182,754
>       $7.232,042,938
>       
>       
>       
>       865,856

FAS 123
Pro Forma Information

The
Company accounts for its stock option plans under APB Opinion No. 25.  Had compensation expense for these plans been determined consistent with
SFAS 123, the Company's net income (loss) and net income (loss) per share would
have been adjusted to the pro forma amounts in the following table.

> 2001
>     
>     2000
>     
>     1999Net income (loss)
>     
>     As Reported
>     $
>     4,488
>     
>     $
>     (9,156)
>     
>     $
>     (10,943)Pro Forma
>     $
>     3,553
>     
>     $
>     (10,818)
>     
>     $
>     (12,943)Basic and diluted net income
>       (loss) per share
>     
>     As Reported
>     $
>     0.43
>     
>     $
>     (0.88)
>     
>     $
>     (1.05)Pro Forma
>     $
>     0.34
>     
>     $
>     (1.04)
>     
>     $
>     (1.25)

The
fair value of each stock option grant has been estimated pursuant to SFAS 123 on
the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions:

|                               | 2001   |  | 2000         |  | 1999        
|------------------------------ | ------ |  | ------------ |  | ------------
|Risk
      free interest rates | 4.92%  |  | 6.22%        |  | 6.10%       
|Expected
      dividend yield  | none   |  | none         |  | none        
|Expected
      lives           | 7 yrs. |  | 7
      yrs. |  | 7
      yrs.
|Expected
      volatility      | 135%   |  | 112%         |  | 124%        

The
weighted average grant date fair values of options granted under the Plans
during 2001, 2000 and 1999 were $1.59, $4.91 and $7.41 respectively.

1999
eCOST.com Employee Stock Option Plan

The
Company adopted the eCOST.com Employee Stock Option Plan in 1999.  During
2000 and 1999, options to purchase 598,000 and 537,000 shares,
respectively, of eCOST.com common stock were granted at a weighted average
exercise price of $2.59 and $0.20.  No options were granted in 2001.  Options generally vest annually over four to
five years, and are nontransferable other than by will or by the laws of descent
and distribution.  As of December 31, 2001, options to purchase 362,200 eCOST.com shares
were outstanding at a weighted average exercise price of $0.40.

8.      
Supplemental Disclosures of Cash Flow Information



2001
    
    2000
    
    1999Cash paid
      during the year ending December 31:Interest
    $ 
       765
    
    $1,035
    
    $    
      407Income taxes
    -
    
    -
    
    12Non-cash
      investing and financing activities:Equipment acquired under capital leases
    -
    
    1,311
    
    409


9.  
Segment Information

The Company operates in three
reportable business segments: 1) a rapid response supplier of computers,
hardware, software, peripheral and electronics products under the PC Mall, MacMall, and CCIT brands, collectively referred to as the "Core
Business"; 2) a multi-category Internet retailer of computer and consumer
electronics products under the eCOST.com brand,
and 3) a rapid response supplier for Linux-based products and services provided under the eLinux
brand.

Summarized segment information
for continuing operations for the years ended December 31, 2001, 2000 and 1999 is as
follows:

Year Ended December 31, 2001
    Core
      Business
    
    eCOST.com
    
    eLinux
    
    ConsolidatedNet sales
    $625,046
    
    $
      84,677
    
    $    8,360
    
    $718,083Gross profit
    70,450
    
    7,716
    
    806
    
    78,972Operating income (loss)
    5,285
    
    435
    
    (523)
    
    5,197Year Ended December 31, 2000
    Core
      Business
    
    eCOST.com
    
    eLinux
    
    ConsolidatedNet sales
    $702,448
    
    $109,965
    
    $ 
      6,214
    
    $818,627Gross profit
    82,006
    
    5,161
    
    666
    
    87,833Operating income (loss)
    4,529
    
    (9,441)
    
    (2,791)
    
    (7,703)Year Ended December 31,
      1999
    Core
      Business
    
    eCOST.com
    
    eLinux
    
    ConsolidatedNet sales
    $693,391
    
    $36,790
    
    -
    
    $730,181Gross profit
    79,290
    
    261
    
    -
    
    79,551Operating income (loss)
    2,047
    
    (6,183)
    
    -
    
    (4,136)


Segment information for eLinux
is not presented for the year ended December 31, 1999, as
the Company did not operate that segment until January 2000.

F-7

---



PC
MALL,
INC.

QUARTERLY
FINANCIAL INFORMATION

(unaudited,
in
thousands, except per share data)



20011st
      Quarter
    2nd
      Quarter
    3rd
      Quarter
    4th
      QuarterNet sales
    $
    198,531
    $
    171,980
    $
    171,904
    $
    175,850Gross profit
    
    21,923
    
    18,275
    
    18,929
    
    19,845Net income
    
    1,232
    
    585
    
    493
    
    2,177Basic earnings per share
    
    0.12
    
    0.06
    
    0.05
    
    0.21Diluted earnings per share
    $
    0.12
    $
    0.06
    $
    0.05
    $
    0.20


2000(1)1st
      Quarter
    2nd
      Quarter
    3rd
      Quarter
    4th
      QuarterNet sales
    $
    237,137
    $
    195,892
    $
    187,187
    $
    198,411Gross profit
    
    22,987
    
    21,197
    
    21,330
    
    22,409Income (loss)
      from continuing operations
    
    (6,935)
    
    (3,370)
    
    (714)
    
    2,399Cumulative
      effect of change in accounting principle
    
    (536)
    
    -
    
    -
    
    -Net income
      (loss)
    
    (7,471)
    
    (3,370)
    
    (714)
    
    2,399Basic and
      diluted earnings (loss) per share
    $
    (0.67)
    $
    (0.32)
    $
    (0.07)
    $
    0.23


(1)  During the fourth quarter of 2000, the Company implemented Staff
Accounting Bulletin  (SAB) 101, Revenue Recognition in Financial Statements. 
Effective January 1, 2000, the Company recorded  the cumulative effect of the accounting change and, accordingly, the
quarterly information for the first three quarters of 2000, which had been
previously reported, has been restated.

F-8

---



SCHEDULE II



PC
MALL,
INC.

Valuation
and Qualifying Accounts

For
the years ended December 31, 2001, 2000, and 1999

(in
thousands)



Balance
        at Beginning of Year
      
      Additions
        Charged to Operations
      
      Deduction
        from
        Reserves
      
      Balance
        at End of
        YearAllowance for doubtful accounts for the year ended:December 31, 1999
      3,676
      
      3,206
      
      (5,399)
      
      1,483December 31, 2000
      1,483
      
      2,341
      
      (2,662)
      
      1,162December 31, 2001
      1,162
      
      2,789
      
      (1,611)
      
      2,340Reserve
        for inventory for the year ended:December 31, 1999
      4,740
      
      2,019
      
      (4,428)
      
      2,331December 31, 2000
      2,331
      
      2,478
      
      (3,702)
      
      1,107December 31, 2001
      1,107
      
      1,554
      
      (1,689)
      
      972Deferred
        tax asset valuation allowance for the year ended:December 31, 1999
      -
      
      3,380
      
      -
      
      3,380December 31, 2000
      3,380
      
      3,130
      
      -
      
      6,510December 31, 2001
      6,510
      
      -
      
      (1,650)
      
      4,860


F-9

---

SIGNATURES

Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized in the City of Torrance, State of
California, on March 29, 2002.

| |  |  |     |                                                                                                       
| |  |  | --- | ------------------------------------------------------------------------------------------------------
| |  |  |     | PC MALL, INC.                                                                                         
|
| |  |  | By: | /s/ FRANK F. KHULUSIFrank F. KhulusiChairman of the Board, President and Chief
      Executive Officer

POWER OF ATTORNEY



KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Frank F. Khulusi and Theodore R. Sanders,
and each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this Report
on Form 10-K, and to file the same, with exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant in the capacities and on the dates indicated.

> Signature
>     
>     Title
>     
>     Date/s/
>       FRANK F. KHULUSI
>       Frank
>       F. Khulusi
>     
>     Chairman of the Board of
>       Directors, Chief Executive Officer and President (Principal Executive
>       Officer)
>     
>     March 29, 2002/s/
>       THEODORE R.
>       SANDERS
>       Theodore
>       R. Sanders
>     
>     Chief Financial Officer
>       (Principal Financial and Accounting Officer)
>     
>     March 29, 2002/s/
>       SAM U. KHULUSI
>       Sam
>       U. Khulusi
>     
>     Director
>     
>     March 29, 2002/s/
>       THOMAS MALOOF
>       Thomas
>       Maloof
>     
>     Director
>     
>     March 29, 2002/s/
>       RONALD B. RECK
>       Ronald
>       B. Reck
>     
>     Director
>     
>     March 29, 2002/s/
>       MARK C. LAYTON
>       Mark
>       C. Layton
>     
>     Director
>     
>     March 29, 2002

PC MALL, INC.

EXHIBIT INDEX

> Exhibit
>           Number
>         Description3.1
>         Certificate of Incorporation
>           of the Company (1)3.1(A)
>         Certificate of Amendment of
>           Certificate of Incorporation, dated June 1, 2000 (13)3.1(B)
>         Certificate of Amendment of
>           Certificate of Incorporation, dated June 19, 2001 (14)3.2
>         Amended and Restated Bylaws
>           of the Company (13)10.1*
>         Amended and Restated 1994
>           Stock Incentive Plan (10)10.2*
>         Employment Agreement dated
>           January 1, 1995, between Creative Computers, Inc. and Frank F. Khulusi
>           (1)10.4*
>         Employment Agreement dated
>           January 1, 1994, between Creative Computers, Inc. and Dan DeVries (1)10.18*
>         Directors' Non-Qualified
>           Stock Option Plan, amended and restated as of May 18, 1999 (7)10.25
>         Industrial Lease Agreement
>           between Corporate Estates, Inc. and Creative Computers, Inc. dated
>           September 15, 1995 for the premises located at 4515 E. Shelby Drive,
>           Memphis, Tennessee, filed in connection with the Company's 10-Q for
>           the quarter ended September 30, 1995 (4)10.28
>         Authorized Apple Dealer U.S.
>           Sales Agreement dated August 29, 1996; Authorized Apple Catalog
>           Reseller Sales Agreement dated August 29, 1996; Dealer Apple
>           Authorized Service Provider Agreement dated August 29, 1996; Apple
>           Corporate Alliance Program Addendum to the Authorized Apple Dealer
>           Sales Agreement dated August 29, 1996 (4)10.35
>         Separation and Distribution
>           Agreement by and between Creative Computers, Inc. and uBid, Inc.,
>           dated as of December 7, 1998, as amended (7)10.37(A)
>         Tax Indemnification and
>           Allocation Agreement by and between Creative Computers, Inc. and uBid,
>           Inc., dated as of December 7, 1998, as amended (8)10.37(B)
>         Amendment No. 1 to the Tax
>           Indemnification and Allocation Agreement by and among uBid, Creative
>           Computers and CMGI, Inc., dated as of February 9, 2000 (9)10.38
>         Sublease Agreement between
>           Creative Computers, Inc. and uBid, Inc., dated as of July 1, 1998 (6)10.41(A)
>         Sublease Agreement between
>           Creative Computers, Inc. and uBid, Inc., dated as of December 1, 1999 (12)10.41(B)
>         Amendment No. 1
>           to the Sublease Agreement between the Company and uBid, Inc., dated as of
>           February 1, 200110.43
>         Loan and Security Agreement,
>           dated March 7, 2001, between Congress Financial Corporation and
>           IdeaMall, Inc. and Subsidiaries (13)10.44
>         Agreement for Wholesale
>           Financing dated March 15, 2001, between Deutsche Financial Services
>           and IdeaMall, Inc. and Subsidiaries (13)10.45*
>         Employment
>           Agreement dated as of January 20, 2000 between the Company and
>           Kristin M. Rogers.21.1
>         Subsidiaries23.1
>         Consent of
>           PricewaterhouseCoopers LLP(1)
>         Incorporated by
>           reference to the Company's Registration Statement on Form S-1
>           (33-89572) declared effective on April 4, 1995.(2)
>         Incorporated by reference to
>           the Company's Registration Statement on Form S-1 (33-95416) declared
>           effective on August 23, 1995.(3)
>         Intentionally omitted.(4)
>         Incorporated by reference to
>           the Company's 1996 Form 10-K, filed with the Commission on March 31,
>           1997.(5)
>         Intentionally omitted.(6)
>         Incorporated by reference to
>           the Registration Statement on Form S-1 of uBid,
>           Inc. (File No. 333-58477), on file with the Commission.(7)
>         Incorporated by reference to
>           the Company's Report on Form 10-Q for the quarter ended June 30,
>           1999, filed with the Commission on August 16, 1999.(8)
>         Incorporated by reference to
>           the Company's Report on Form 10-Q for the quarter ended March 31,
>           1999, filed with the Commission on May 17, 1999.(9)
>         Incorporated by reference to
>           the Annual Report on 10-K of uBid, Inc. (Commission File No.
>           000-25119) for the year ended December 31, 1999.(10)
>         Incorporated by reference to
>           Annex A of the registrant's Definitive Proxy Statement filed with
>           the Commission on April 24, 2000.(11)
>         Intentionally
>           omitted.(12)
>         Incorporated by reference to
>           the Company's Annual Report of Form 10-K, File Number 0-25790, for
>           the year ended December 31, 1999, filed with the Commission on March
>           30, 2000.(13)
>         Incorporated by reference to
>           the Company's Annual Report of Form 10-K, File Number 0-25790, for
>           the year ended December 31, 2000, filed with the Commission on March
>           30, 2001.(14)
>         Incorporated by reference to
>           the Company's Annual Report of Form 10-Q for
>           the quarter ended June 30, 2001, filed with the Commission on August
>           14, 2001.

---

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS



We
hereby consent to the incorporation by reference in the RegistrationStatements
on Form S-8 (No. 333-848, No. 333-76851, No. 333-79337, No. 333-82257, No.
333-38860 and No. 333-66068) of PC Mall, Inc. (formerly IdeaMall, Inc. and
Creative Computers, Inc.) of our report dated January 18, 2002, relating to the
financial statements and financial statement schedule, which appears in this
Form 10-K.



/s/
PRICEWATERHOUSECOOPERS LLP

Los
Angeles, California

March 29, 2002