##### Table of Contents

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended: June 30,
2003

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 of
incorporation or organization) |  | (I.R.S. Employer Identification Number)

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

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.  Yes [X]    No [  ]

Indicate by check mark whether the Registrant
is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  Yes [ 
]    No [X]

There were 10,609,851 outstanding shares of Common Stock at
August 13, 2003.



---

PC Mall, Inc.

TABLE OF CONTENTS

|                                                                                                    |      |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------------- | ---- |  |  |  |  |  |  | 
|                                                                                                    | Page
|PART I - FINANCIAL INFORMATION                                                                      |     
|Item 1.  Financial Statements                                                                       | 3   
|Condensed Consolidated Balance Sheet                                                                | 3   
|Condensed Consolidated Statement of Operations                                                      | 4   
|Condensed Consolidated Statement of Cash Flows                                                      | 5   
|Condensed Notes to
    Consolidated Financial Statements                                            | 6   
|Item 2. Management's
      Discussion and Analysis of Financial Condition and Results of Operations | 10  
|Item 3. Quantitative
      and Qualitative Disclosures About Market Risk                            | 15  
|Item 4. 
    Controls and Procedures                                                                | 15  
|PART II - OTHER INFORMATION                                                                         |     
|Item 2. Changes in Securities and Use
    of Proceeds                                               | 16  
|Item
    4. Submission of Matters to a Vote of Security Holders                                     | 16  
|Item 6. Exhibits
      and Reports on Form 8-K                                                      | 16  
|Signature                                                                                           | 17  
|                                                                                                    |     

2



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##### Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

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

|                            |                                                                                                                                                                                                    |                                      |          |         | June 30,
        2003
        (unaudited) |          |         | December 31, 2002
|--------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | -------- | ------- | ----------------------------------------- | -------- | ------- | -----------------
|                            |                                                                                                                                                                                                    | Assets                               |         
|Current assets:            
|                            | Cash and cash equivalents                                                                                                                                                                          | $                                    | 3,763    |         | $                                         | 11,422  
|                            | Accounts receivable, net of allowance for doubtful accounts                                                                                                                                        |                                      | 61,854   |         |                                           | 54,747  
|                            | Inventories                                                                                                                                                                                        |                                      | 56,867   |         |                                           | 55,235  
|                            | Prepaid expenses and other current assets                                                                                                                                                          |                                      | 2,214    |         |                                           | 3,038   
|                            | Deferred income taxes                                                                                                                                                                              |                                      | 2,657    |         |                                           | 2,657   
|                            |                                                                                                                                                                                                    | Total current
          assets       |          | 127,355 |                                           |          | 127,099
|                            |                                                                                                                                                                                                    |                                      |          |         |                                          
|Property and equipment, net |                                                                                                                                                                                                    | 9,726                                |          |         | 9,214                                    
|Goodwill, net               |                                                                                                                                                                                                    | 861                                  |          |         | 804                                      
|Deferred income taxes       |                                                                                                                                                                                                    | 9,990                                |          |         | 10,718                                   
|Other assets                |                                                                                                                                                                                                    | 1,788                                |          |         | 1,525                                    
|                            | $                                                                                                                                                                                                  | 149,720                              |          | $       | 149,360                                  
|                            |                                                                                                                                                                                                    | Liabilities and Stockholders' Equity
|Current liabilities:       
|                            | Accounts payable                                                                                                                                                                                   | $                                    | 52,063   |         | $                                         | 61,865  
|                            | Accrued expenses and other current liabilities                                                                                                                                                     |                                      | 11,577   |         |                                           | 14,066  
|                            | Deferred revenue                                                                                                                                                                                   |                                      | 8,065    |         |                                           | 10,532  
|                            | Line of credit                                                                                                                                                                                     |                                      | 30,364   |         |                                           | 17,497  
|                            | Capital leases - current                                                                                                                                                                           |                                      | -        |         |                                           | 124     
|                            | Notes payable - current                                                                                                                                                                            |                                      | 1,750    |         |                                           | 167     
|                            |                                                                                                                                                                                                    | Total current liabilities            |          | 103,819 |                                           |          | 104,251
|                            |                                                                                                                                                                                                    |                                      |          |         |                                           |          |        
|                            |                                                                                                                                                                                                    | Total liabilities                    |          | 103,819 |                                           |          | 104,251
|                            |                                                                                                                                                                                                    |                                      |          |        
|Stockholders' equity:      
|                            | Preferred stock, $.001 par value, 5,000,000 shares
          authorized; none issued and outstanding                                                                                               |                                      | -        |         |                                           | -       
|                            | Common stock, $.001 par value;
          30,000,000 shares authorized;
          10,795,997 and 10,789,947 shares issued; and 10,501,997 and 10,632,347
          shares outstanding, respectively |                                      | 11       |         |                                           | 11      
|                            | Additional paid-in capital                                                                                                                                                                         |                                      | 75,845   |         |                                           | 75,833  
|                            | Treasury stock at cost:
        294,200 and 157,600 shares, respectively                                                                                                                           |                                      | (1,015)  |         |                                           | (556)    |        
|                            | Retained earnings (accumulated deficit)                                                                                                                                                            |                                      | (28,940) |         |                                           | (30,179) |        
|                            | Total stockholders' equity                                                                                                                                                                         |                                      | 45,901   |         |                                           | 45,109   |        
|                            |                                                                                                                                                                                                    |                                      | $        | 149,720 |                                           | $        | 149,360

See condensed notes to consolidated financial statements.

3

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Table of Contents

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

Three months ended
        
        Six
        months endedJune 30,
        
        June
        30,2003
        
        2002
        
        2003
        
        
        2002Net sales
        $

        218,862

        
        $

        204,945

        
$
        453,659
        
        $
        396,450Cost of goods sold
        

        188,160


        
        

        182,452


        

        394,092
        
        
        354,087Gross profit
        

        30,702


        
        

        22,493


        

        59,567
        
        
        42,363Selling,
          general and administrative expenses
        
        23,095


        
        
        20,275


        
        
        47,116
        
        
        38,919Advertising expense (see Note 2)
        
        5,773


        
        
        941


        
        
        9,965


        
        
        1,408Loss on  sale of building
        

        -


        
        

        350


        

        -
        
        
        350Income from operations
        

        1,834


        
        

        927


        

        2,486
        
        
        1,686Interest expense, net
        

        331


        
        

        202


        

        519
        
        
        397Income  before income taxes
        

        1,503


        
        

        725


        

        1,967
        
        
        1,289Income tax provision
        

        556


        
        

        269


        

        728
        
        
        477Income before cumulative
          effect of change in accounting principle
        

        947


        
        

        456


        

        1,239
        
        
        812Cumulative
          effect of change in accounting principle
        

        -


        
        

        -


        

        -
        
        
        (6,801)Net income (loss)
        $

        947


        
        $

        456


        
$
        1,239
        
        $
        (5,989)Earnings (loss) per share:Income before cumulative effect of change in accounting principle
        $

        0.09


        
        $

        0.04


        
$
        0.12
        
        $
        0.08Cumulative
          effect of change in accounting principle
        

        -


        
        

        -


        

        -
        
        
        (0.64)$

        0.09


        
        $

        0.04


        
$
        0.12
        
        $
        (0.56)Diluted Earnings (loss) per share:Income
          before cumulative effect of change in accounting principle
        $

        0.09


        
        $

        0.04


        
$
        0.11
        
        $
        0.07Cumulative
          effect of change in accounting principle
        

        -


        
        

        -


        

        -
        
        
        (0.60)$

        0.09


        
        $

        0.04


        
$
        0.11
        
        $
        (0.53)Basic weighted average number of shares outstanding
        

        10,535


        
        

        10,716


        

        10,566
        
        
        10,680Diluted weighted average number of
          common and common equivalent shares outstanding
        

        11,115


        
        

        11,263


        

        11,119
        
        
        11,199


See condensed notes to consolidated financial statements.

4

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##### Table of Contents

PC Mall, Inc. 
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands)

For the
          six months endedJune
          30,2003
        
        2002Cash flows from operating activities:Net income (loss)


        $


        1,239
        


        $


        (5,989)Adjustments to reconcile net
          income (loss) to net cash used in operating activities:Cumulative effect of change in accounting
          principle
        
        -
        
        
        6,801Depreciation and amortization
        
        2,090
        
        
        1,989Provision for deferred income taxes
        
        728
        
        
        477Gain on sale of fixed assets
        
        (64)
        
        
        -Loss on sale of building
        
        -
        
        
        350Changes in assets and liabilities, net of acquisitions:Accounts receivable
        
        (7,107)
        
        
        (8,526)Inventories
        
        (1,632)
        
        
        1,469Prepaid expenses and other current assets
        
        824
        
        
        (411)Other assets
        
        (106)
        
        
        (693)Accounts payable
        
        (1,816)
        
        
        (16,439)Accrued expenses and other current
          liabilities
        
        (2,492)
        
        
        (56)Deferred revenue
        
        (2,467)
        
        
        (685)Total adjustments
        
        (12,042)
        
        
        (15,724)Net cash    used in operating activities
        
        (10,803)
        
        
        (21,713)Cash flows from investing activities:Purchase of property and equipment
        
        (2,255)
        
        
        (1,453)Payments for
        costs incurred for acquisition of business
        
        -
        
        
        (109)Net cash used in
        investing activities
        
        (2,255)
        
        
        (1,562)Cash flows from financing activities:Payments for
          deferred financing costs
        
        (440)
        
        
        (179)Borrowings under notes payable
        
        2,000
        
        
        -Payments under notes payable
        
        (417)
        
        
        (500)Net

        borrowings under line of credit
        
        12,867
        
        
        5,586Increase
        (decrease) in book overdraft
        
        (8,040)
        
        
        14,683Principal payments of obligations under capital leases
        
        (124)
        
        
        (218)Repurchase of
        common stock
        
        (459)
        
        
        -Proceeds from stock issued under stock option plans
        
        12
        
        
        69Net cash
        provided by financing activities
        
        5,399
        
        
        19,441Net decrease in
        cash and cash equivalents
        
        (7,659)
        
        
        (3,834)Cash and cash equivalents:Beginning of period
        
        11,422
        
        
        9,972End of period

        $


        3,763
        
        $
        6,138


See condensed notes to consolidated financial statements.

5

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##### Table of Contents

PC Mall, Inc.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.Basis of Presentation

> The
> consolidated interim financial statements include the accounts of PC Mall, Inc.,
> a Delaware corporation, (formerly IdeaMall, Inc. and Creative Computers, Inc.)
> and its wholly owned subsidiaries (collectively, the "Company") and have been
> prepared without audit pursuant to the rules and regulations of the Securities
> and Exchange Commission ("SEC"). Certain information and footnote disclosures
> normally included in financial statements prepared in accordance with generally
> accepted accounting principles have been condensed or omitted pursuant to such
> regulations.  These financial statements should be read in conjunction with
> the audited financial statements and the notes thereto included in the Company's
> Annual Report on Form 10-K for the year ended December 31, 2002.
> In
> the opinion of management, the accompanying unaudited condensed consolidated
> financial statements contain all adjustments consisting solely of normal
> recurring items necessary to present fairly the financial position of the
> Company at June 30, 2003 and December 31, 2002 and the results of operations for
> the three and six  months ended June 30, 2003 and 2002, and cash flows for
> the six months ended June 30, 2003 and 2002.  The results of operations for
> the interim periods are not necessarily indicative of the results of operations
> for the full year.
>   Reclassifications
>   Certain reclassifications have been made
>   to the 2002 financial statement amounts to conform to the 2003 presentation.

2.
Change in  Accounting Principle and Recent Accounting Pronouncements

> In July 2001, the Financial Accounting Standards Board ("FASB") issued
>   Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
>   Other Intangible Assets," which changes the accounting for goodwill and
>   indefinite-lived intangible assets from an amortization method to an
>   impairment-only approach. Under SFAS 142, goodwill impairment is deemed to
>   exist if the net book value of a reporting unit exceeds its estimated fair
>   value, including consideration of the Company's market capitalization. This
>   methodology differs from the Company's previous policy, as permitted under
>   accounting standards existing at that time, of using undiscounted cash flows
>   to determine if goodwill is recoverable. The Company's reporting units are
>   generally consistent with the operating segments underlying the segments
>   identified in Note 4 - Segment Information.
>   In the second quarter of 2002, the Company completed its assessment of the
>   impact of SFAS 142, and, as required by the provisions of SFAS 142, effective
>   January 1, 2002, the Company recorded a one-time, non-cash charge of
>   approximately $6.8 million, net of tax, to reduce the carrying value of its
>   goodwill.  Such charge is reflected as a cumulative effect of a change in
>   accounting principle in the accompanying condensed consolidated statement of
>   operations and statement of cash flows.
>   The Company has adopted the provisions of SFAS No. 148, "Accounting for Stock
>   Based Compensation -- Transition and Disclosure" ("SFAS 148"), which amends
>   FASB Statement No. 123, "Accounting for Stock-Based Compensation." As
>   permitted by SFAS 148, the Company continues to measure compensation cost in
>   accordance with Accounting Principles Board Opinion No. 25, "Accounting for
>   Stock Issued to Employees" ("APB 25") and related interpretations, but
>   provides pro forma disclosures of net income and earnings per share as if the
>   fair-value method had been applied. See Note 6 - Stock-Based Compensation for
>   related disclosures.
>   In November 2002, the FASB issued EITF No. 02-16, "Accounting by a Customer
>   (Including a Reseller) for Certain Consideration Received from a Vendor" ("EITF
>   02-16"). EITF 02-16 requires that consideration received by a customer from a
>   vendor is considered (a) an adjustment of the prices of the vendor's products
>   or services and therefore, characterized as a reduction of cost of sales when
>   recognized in the reseller's statement of operations, (b) an adjustment to a
>   cost incurred by the reseller and, therefore, characterized as a reduction of
>   that cost when recognized in the reseller's statement of operations, or (c) a
>   payment for assets or services delivered to the vendor, and therefore,
>   characterized as revenue when recognized in the reseller's statement of
>   operations. Adoption of EITF 02-16 is required for the Company for new
>   agreements, including modifications of existing agreements, entered into after
>   December 31, 2002.  As a result of the adoption of EITF 02-16, the
>   Company recorded approximately $6.7 million and $10.3 million as a reduction
>   of cost of sales for the three and six months ended June 30, 2003,
>   respectively.  Of these amounts, $6.6 million and $10.2 million would have
>   previously been netted against advertising expense, respectively, and $0.1
>   million against selling, general, and administrative expenses.
> 
> In April 2003, the FASB issued SFAS No. 149, "Amendment of
> Statement 133 on Derivative Instruments and Hedging Activities" ("SFAS 149").  This
> Statement amends and clarifies financial accounting and reporting for derivative
> instruments, including certain derivative instruments embedded in other
> contracts (collectively referred to as derivatives) and for hedging activities
> under SFAS No. 133, "Accounting for Derivative Instruments and Hedging
> Activities".  The Company does not expect SFAS 149 to have a significant
> impact on its consolidated financial statements.
> In May 2003, the FASB issued Statement No. 150, "Accounting for Certain Financial Instruments with Characteristics of
> Both Liabilities and Equity" ("SFAS 150").  SFAS 150 establishes standards for how an
> issuer classifies and measures in its statement of financial position certain
> financial instruments with characteristics of both liabilities and equity. 
> It requires that an issuer classify a financial instrument that is within its
> scope as a liability (or an asset in some circumstances) because that financial
> instrument embodies an obligation of the issuer.  This Statement is
> effective for financial instruments entered into or modified after May 31, 2003,
> and otherwise is effective at the beginning of the first interim period
> beginning after June 15, 2003.  Adoption of SFAS 150 is not expected to
> materially affect the Company's financial statements.

6

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3. Net income (loss) per share

> Basic Earnings Per Share ("EPS") excludes dilution and is computed by dividing
>   net income by the weighted average number of common shares outstanding during
>   the reported periods.  Diluted EPS reflects the potential dilution that
>   could occur under the treasury stock method if stock options and other
>   commitments to issue common stock were exercised. The computation of Basic and
>   Diluted EPS is as follows (in thousands, except per share data):
>   
>   Three Months Ended
>         
>         Six
>           Months EndedJune
>           30,
>         
>         June
>           30,2003
>         
>         
>         2002
>         
>         
>         2003
>         
>         
>         2002Income before
>           cumulative effect of change in accounting principle
>         
>         $
>         947
>         
>         
>         $
>         456
>         
>         
>         $
>         1,239
>         
>         
>         $
>         812Cumulative
>           effect of change in accounting principle
>         
>         
>         -
>         
>         
>         
>         -
>         
>         
>         
>         -
>         
>         
>         
>         (6,801)Net income (loss)
>         
>         $
>         947
>         
>         
>         $
>         456
>         
>         
>         $
>         1,239
>         
>         
>         $
>         (5,989)Weighted average shares -
>           Basic
>         
>         
>         10,535
>         
>         
>         
>         10,716
>         
>         
>         
>         10,566
>         
>         
>         
>         10,680Effect of
>           dilutive stock options and warrants
>         
>         
>         580
>         
>         
>         
>         547
>         
>         
>         
>         553
>         
>         
>         
>         519Weighted
>           average shares - Diluted
>         
>         
>         11,115
>         
>         
>         
>         11,263
>         
>         
>         
>         11,119
>         
>         
>         
>         11,199Net earnings
>           (loss) per share - BasicIncome
>           before cumulative effect of change in accounting principle
>         
>         $
>         0.09
>         
>         
>         $
>         0.04
>         
>         
>         $
>         0.12
>         
>         
>         $
>         0.08Cumulative
>           effect of change in accounting principle
>         
>         
>         -
>         
>         
>         
>         -
>         
>         
>         
>         -
>         
>         
>         
>         (0.64)Net income (loss)
>         
>         $
>         0.09
>         
>         
>         $
>         0.04
>         
>         
>         $
>         0.12
>         
>         
>         $
>         (0.56)Net earnings (loss) per share - DilutedIncome
>           before cumulative effect of change in accounting principle
>         
>         $
>         0.09
>         
>         
>         $
>         0.04
>         
>         
>         $
>         0.11
>         
>         
>         $
>         0.07Cumulative
>           effect of change in accounting principle
>         
>         
>         -
>         
>         
>         
>         -
>         
>         
>         
>         -
>         
>         
>         
>         (0.60)Net income (loss)
>         
>         $
>         0.09
>         
>         
>         $
>         0.04
>         
>         
>         
>         0.11
>         
>         
>         $
>         (0.53)

7

---

4. Segment Information

> The Company operates in two reportable segments: 1) a rapid response supplier
>   of technology solutions for business, government and educational institutions
>   as well as consumers, collectively referred to as the "Core Business", and 2)
>   a multi-category Internet retailer of new, refurbished and close-out products under the eCOST.com brand.  Beginning
>   in the first quarter of 2003,  the Company integrated its eLinux segment
>   into the Core Business segment.  The Company allocates resources to and
>   evaluates the performance of its segments based on operating income.  Corporate
>   expenses are included in the Company's measure of segment operating income for
>   management reporting purposes.
>   Summarized segment information for the three and six months ended
>   June 30, 2003
>   and 2002 is as follows (in thousands):
>   Three months ended June 30, 2003
>         
>         Core Business (1)
>         
>         eCOST.com
>         
>         ConsolidatedNet sales
>         
>         $
>         194,793
>         
>         $
>         24,069
>         
>         $
>         218,862Gross profit
>         
>         
>         27,832
>         
>         
>         2,870
>         
>         
>         30,702Income from operations
>         
>         
>         1,601
>         
>         
>         233
>         
>         
>         1,834Three
>           months ended June 30, 2002
>         
>         Core Business(2)
>         
>         eCOST.com
>         
>         ConsolidatedNet sales
>         
>         $
>         183,625
>         
>         $
>         21,320
>         
>         $
>         204,945Gross profit
>         
>         
>         20,437
>         
>         
>         2,056
>         
>         
>         22,493Income from operations
>         
>         
>         734
>         
>         
>         193
>         
>         
>         927Six months ended June
>           30, 2003
>         
>         Core Business(1)
>         
>         eCOST.com
>         
>         ConsolidatedNet sales
>         
>         $
>         405,615
>         
>         $
>         48,044
>         
>         $
>         453,659Gross profit
>         
>         
>         54,001
>         
>         
>         5,566
>         
>         
>         59,567Income from operations
>         
>         
>         2,134
>         
>         
>         352
>         
>         
> 
>       2,486Six
>           months ended June 30, 2002
>         
>         Core Business(2)
>         
>         eCOST.com
>         
>         ConsolidatedNet sales
>         
>         $
>         353,692
>         
>         $
>         42,758
>         
>         $
>         396,450Gross profit
>         
>         
>         38,495
>         
>         
>         3,868
>         
>         
>         42,363Income from operations
>         
>         
>         1,486
>         
>         
>         200
>         
>         
>         1,686(1)
>         The results of ClubMac and Wareforce are
>         included in the Core Business segment for the three and six months ended
>         June 30, 2003.  See Note 5 for a description of the ClubMac and
>         Wareforce Acquisitions.  The Core Business segment also includes the Company's
>         eLinux operations, which was previously reported as a separate segment.
>         
>         (2)
>         The results of ClubMac are included in the Core
>         Business segment for the three months ended June 30, 2002, as the
>         acquisition of ClubMac occurred in April 2002.  The results of Wareforce are excluded from the
>         Core Business segment for the three and six months ended June 30, 2002,
>         as the acquisition of Wareforce took place in July 2002.  See Note
>         5 for a description of the ClubMac and Wareforce Acquisitions.

5. Acquisitions

> In July 2002, the Company completed the acquisition of
> substantially all of the assets of Wareforce, Inc. ("Wareforce") through a
> United States Bankruptcy proceeding under Chapter 11 of the United States
> Bankruptcy Code.  The Company paid initial consideration in the amount of
> approximately $9.0 million to Wareforce's creditors and $436,000 directly to
> Wareforce on the closing date in exchange for trade accounts receivable and
> inventory with an initial valuation of $10.9 million as well as all fixed and intangible assets. 
> In connection with these payments, the Company drew on its line of credit. 
> The Company paid to Wareforce $768,000 as additional contractual consideration
> in September 2002.  In connection with the acquisition, the Company hired
> substantially all of the sales and sales support employees of Wareforce, and
> recorded approximately $344,000
> of definite-lived intangible assets with amortizable lives of five to six years.   The Company considers Wareforce to be a part of the Core Business
> segment.
> In April 2002, the Company acquired substantially all of the
> assets of Pacific Business Systems, Inc. ("PBS"), a privately held direct
> marketer of computer products to business and consumer customers under the
> ClubMac and PBS brands. Under the terms of the asset purchase agreement, the
> Company acquired PBS' customer database, accounts receivable, inventory, certain
> fixed assets and certain intellectual property and has assumed certain
> liabilities equal to the negotiated values of acquired accounts receivable and
> inventory. In addition to certain liabilities assumed, the Company issued
> 300,000 shares of its common stock valued at approximately $1.3 million to PBS
> and agreed to a capped three year earn-out, whereby additional consideration
> may be paid to PBS based on the future results of the acquired business.  As a
> result of the acquisition, the Company recorded approximately $804,000  of goodwill, and $200,000 of definite-lived
> intangible assets with amortizable lives between three and six years. 
> Through June 30, 2003 the Company estimated additional purchase price consideration
> of $57,000 resulting from the
> earn-out.  The
> Company operates the acquired business as ClubMac, and considers this business
> to be a part of the Core Business segment.
> The following table presents unaudited pro forma information as if the acquired
> businesses had been combined with the Company at the beginning of the periods
> presented (in thousands, except per share amounts).  The unaudited pro
> forma information is not necessarily indicative of future combined operating
> results.  The actual results for the three and six months ended June 30,
> 2003 are included in the Company's Condensed Consolidated Statement of
> Operations.
>   Threemonths ended
> 
>         
> 
>         Six months endedJune 30,
> 
>         
> 
>         June 30,2002
> 
>         
> 
>         2002Net sales
>         $
>         221,557
> 
>         $
>         447,373Income before
>           cumulative effect of change in accounting principle
>         $
>         296
> 
>         $
>         362Cumulative effect of change
>         in accounting principle
>         
>         -
>         
>         (6,801)Net income/(loss)
>         $
>         296
>         $
>         (6,439)Weighted average shares -
>         Basic
>         
>         10,716
>         
>         10,680Weighted
>           average shares - Diluted
>         
>         11,263
>         
>         11,199Net
>           earnings (loss) per share - BasicIncome
>           before cumulative effect of change in accounting principle
>         $
>         0.03
>         $
>         0.03Cumulative effect of change in accounting principle
>         
>         -
>         
>         (0.63)Net earnings (loss) per share - Basic
>         $
>         0.03
>         $
>         (0.60)Net earnings (loss) per share - DilutedIncome
>           before cumulative effect of change in accounting principle
>         $
>         0.03
>         $
>         0.03Cumulative effect of change in accounting principle
>         
>         -
>         
>         (0.60)Net
>           earnings (loss) per share - Diluted
>         $
>         0.03
>         $
>         (0.57)
> 8

6.          
Stock-Based Compensation

> The Company accounts for its stock option plans using the
> intrinsic value-based method of accounting prescribed by Accounting Principles
> Board Opinion No. 25, "Accounting for Stock Issued to Employees," ("APB 25") and
> related interpretations.  Under this method, compensation expense is
> recorded on the date of grant only if the current market price of the underlying
> common stock exceeded the exercise price.  Statement of Financial
> Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
> 123") established accounting and disclosure requirements using a fair
> value-based method for stock option plans.  As allowed by SFAS 123, the
> Company continues to apply the intrinsic value-based method of accounting, and
> has adopted the disclosure requirements of SFAS 123.  Accordingly, the
> Company does not record compensation expense on issuance of stock options, as
> all options issued to date were granted at the then-current market value at the
> date of grant.  Had compensation cost been determined consistent with SFAS
> 123, the Company's net income and earnings per share would have been reduced to
> the pro forma amounts shown below (in thousands, except per share amounts).

Three months ended



    



    Six months endedJune30,



    



    June30,2003



    


    


    2002


    



    2003



    


    


    2002Income before cumulative effect of
    change in accounting principle


    $



    947



    


    $
    456


    $



    1,239



    


    $
    812Cumulative effect of change in
    accounting principle

    
    -
    

    
    -

    
    -
    

    
    (6,801)Net income (loss) (as reported)


    



    947



    


    
    456


    



    1,239



    


    
    (5,989)Total
    stock-based compensation expense determined under fair value based method
    for all awards, net of related tax effects


    



    (254)



    


    
    (203)


    



    (517)



    


    
    (397)Pro
    forma net income (loss)


    $



    693



    


    $
    253


    $



    722



    


    $
    (6,386)Basic earnings (loss) per share (as reported)


    $



    0.09



    


    $
    0.04


    $



    0.12



    


    $
    (0.56)Basic earnings (loss) per share (pro forma)


    $



    0.07



    


    $
    0.02


    $



    0.07



    


    $
    (0.60)Diluted earnings (loss) per share (as reported)


    $



    0.09



    


    $
    0.04


    $



    0.11



    


    $
    (0.53)Diluted earnings (loss) per share (pro forma)


    $



    0.06



    


    $
    0.02


    $



    0.06



    


    $
    (0.57)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 presented in the table for the respective
periods:Risk
      free interest rates


    



    3.34%



    


    



    4.60%



    



    3.51%



    


    



    4.75%Expected
      dividend yield


    



    None



    


    



    None



    



    None



    


    



    NoneExpected
      lives


    



    7 years



    


    



    7 years



    



    7 years



    


    



    7 yearsExpected
      volatility


    



    126%



    


    



    129%



    



    127%



    


    



    129%




9

---

##### Table of Contents

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSOverview and Recent Developments

PC Mall, Inc. ("PC Mall"), formerly IdeaMall,
Inc. and Creative Computers, Inc., together with its subsidiaries ("the
Company"), founded in 1987, is a rapid response direct
marketer of computer hardware, software, peripheral and electronics products.
The Company offers products to business, government and educational
institutions as well as individual consumers through direct marketing techniques, direct
response catalogs, dedicated inbound and Outbound telemarketing sales executives, the
Internet, a direct sales force and three retail showrooms.  The Company offers
a broad selection of products through its distinctive full-color catalogs under
the PC Mall, MacMall, ClubMac, PC Mall Gov and eCOST.com brands, its worldwide
Web sites on the Internet: pcmall.com, macmall.com, clubmac.com, pcmallgov.com,
and ecost.com, and other promotional materials.  The Company believes that
its rapid response service and its broad product selection result in customer
loyalty and repeat customer orders.



In September 1997, PC Mall 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, PC Mall owned 80.1% of the outstanding Common Stock
of uBid.  On June 7, 1999, PC Mall 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 PC Mall's stockholders of record as of May 24, 1999.  In
April 2000, uBid was acquired by CMGI.



In February 1999, PC Mall formed eCOST.com as a wholly-owned
subsidiary.  eCOST.com is a multi-category Internet retailer of new,
refurbished, and close-out computer products, consumer electronics, and other
products.  eCOST.com 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.



During 2000, the Company shifted its strategy to focus primarily on its
Outbound telemarketing operations (the "Outbound" business).  Accordingly, the Company changed its
operating strategy for  eCOST.com,
emphasizing profitability over growth.



During 2002, the Company completed two acquisitions.  In April 2002, the Company acquired substantially all of the assets of
Pacific Business Systems, Inc. ("PBS"), a privately held direct marketer of
computer products to businesses and consumer customers under the ClubMac and PBS
brands.  The Company operates the acquired business as
ClubMac.  In July 2002, the Company completed the acquisition of substantially all
of the assets of Wareforce, Inc. ("Wareforce") through a United States
Bankruptcy proceeding under Chapter 11 of the United States Bankruptcy Code. 
The Company considers ClubMac and Wareforce to be  part of its Core Business
segment.  Also during 2002, PC Mall formed a new subsidiary, PC Mall Gov,
Inc., to focus on the public sector market, and hired an experienced public sector
technology sales executive to lead the entity's operations.



Critical Accounting Policies

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

Revenue
Recognition.Net sales include product sales and
gross outbound shipping charges, net
of returns and allowances.  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 limited 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 upon
various factors, including payment history.  Should actual collections of
customer and vendor receivables differ from the Company's estimates, adjustments
to the provision for losses on accounts receivable and the related allowances
for doubtful accounts would be necessary.

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 each product.  The Company continually evaluates the adequacy of its
inventory reserve.

Deferred
Catalog Advertising Revenue and Costs.The
Company produces and circulates catalogs at various dates throughout the year
and receives market development funds and co-op
advertising funds from vendors included in each catalog. The
costs of developing, producing and circulating each catalog are deferred and charged to
advertising expense ratably over the life of the catalog based on the revenue
generated from each catalog, approximately eight weeks.Pursuant to the adoption of EITF 02-16, the related catalog market development
funds and co-op advertising funds are deferred and recognized as an offset to
cost of sales at a rate consistent with the recognition of the advertising
costs, which approximates the rate of product sales included in the catalog.  Deferred
advertising revenue is included in accrued expenses and other current
liabilities, and deferred advertising costs are included in prepaid
expenses and other current assets.

Impairment of Long Lived Assets.  The
Company reviews property and equipment and  intangible assets
for impairment whenever events or changes in circumstances indicate the carrying
value of an asset may not be recoverable.  The Company's asset impairment
review assesses the fair value of the assets based on the future cash flows the
assets are expected to generate.  An impairment loss is recognized when
estimated undiscounted future cash flows expected to result from the use of the
asset plus net proceeds expected from disposition of the asset (if any) are less
than the carrying value of the asset.  The Company's estimates include projections of
future market growth, forecasted revenue and costs and expected periods the
assets will be utilized.

The Company assesses whether goodwill is impaired
on an annual basis.  Upon determining the existence of goodwill impairment,
the Company measures that impairment based on the amount by which the book value
of goodwill exceeds its implied fair value which includes consideration of the
Company's market capitalization.  The implied fair value of goodwill is
determined by deducting the fair value of a reporting unit's identifiable assets
and liabilities from the fair value of the reporting unit as a whole. 
Additional impairment assessments may be performed on an interim basis if the
Company encounters events or changes in circumstances that would indicate that,
more likely than not, the book value of goodwill has been impaired.

Deferred Tax Assets. 
The Company's financial position at June 30, 2003 includes short and long-term
deferred tax assets.  It is the policy of the Company to record quarterly
tax provisions based on financial results for the quarter and apply such
provision against the long term portion of the deferred tax asset, until such
time as the asset is fully utilized.  A periodic review of the
recoverability of these assets is performed based on estimates of present and
future Company performance, the likelihood that such assets could be applied
against future income for income tax reporting purposes, and the remaining term and nature
of each class of deferred tax asset.  Upon determination that these
deferred tax assets are, or would likely become unrecoverable, a valuation
reserve would be recorded against the deferred tax asset to report it at its
recoverable value.

There has been no
material change in the policies used in the preparation of the Company's
financial statements since the filing of the Company's Annual Report, except for
adoption of EITF 02-16 effective on January 1, 2003 as
described in "Change in Accounting Principle and Recent Accounting Pronouncements" below.

Results of OperationsThree Months Ended June 30, 2003 Compared to the Three Months Ended
June 30, 2002

Consolidated net sales for the quarter ended June 30, 2003 were $218.9 million,
an increase of $13.9 million, or a 7%
increase over last year's second
quarter net sales of $204.9 million.  The acquisition of Wareforce in July
2002 contributed $18.3 million to the increase.  Outbound and eCOST.com    sales
increased 18% and 13% over Q2 2002, respectively.  These increases were
partially offset by a decline in inbound catalog sales (excluding ClubMac) of 18% from Q2 2002 due to weak consumer demand.  Also
impacting overall sales  was PC Mall Gov, which in Q2 2003 increased 9% from
Q1 2003 due to seasonality, but declined 8% from Q2 2002. 
PC Mall Gov sales for Q2 2003 were impacted by an operational adjustment to sales territories.  eCOST.com
sales for the quarter were $24.1 million, an increase of $2.7 million, or 13%
over the prior year's second quarter.  For the quarter
ended June 30, 2003, sales of Apple and Hewlett Packard products represented 21%
and 18% of net sales, compared to 24% and 19%, respectively, in the prior year's
comparable period.
Consolidated gross profit was $30.7 million for the three months ended June 30,
2003, an increase of $8.2 million, or 36%, over the prior year's comparable
quarter.  Acquired businesses contributed
$2.3 million of the increase in gross profit.  For the Core Business, gross
profit was $27.8 million, an increase of $7.4 million, or 36% the over prior year's
second quarter gross profit of $20.4 million.  For eCOST.com, gross profit
for the second quarter of 2003 was $2.9 million, an increase of $0.8 million, or
40% from the prior year's second quarter.  The adoption of EITF 02-16,
which resulted in the recording of certain types of advertising revenue against
cost of sales, was responsible for $6.7 million of the increase in consolidated
gross profit.  For the Core Business and eCOST.com segments, the adoption of
EITF 02-16 was responsible for $5.8 million and $0.9 million of the increase in
gross profit, respectively.  As a percentage of net sales, consolidated gross profit for
the three months ended June 30, 2003 increased to 14.0% compared with 11.0% in
the prior year.  For the Core Business, gross profit as a percentage of net
sales increased to 14.3% compared with 11.1% in the prior year's second quarter. 
Gross profit as a percentage of net sales for eCOST.com increased to 11.9% from
9.6% in the prior year's second quarter.  The adoption of EITF 02-16 was
responsible for 305 basis points of the increase of consolidated gross profit as
a percentage of sales.  For the Core Business and eCOST.com segments, the
adoption of EITF 02-16 was responsible for increasing gross profit as a
percentage of sales by 298 and 357 basis points, respectively.  The Company's gross profit percentage
may vary from quarter to quarter, depending on the continuation of key vendor support programs, including price
protections, rebates and return policies, and based on product mix, pricing strategies,
acquisitions, competition and other factors.   See "Change in
Accounting Principle and Recent Accounting
Pronouncements" below for a discussion of the Company's adoption of EITF 02-16.

10

---

Consolidated selling, general and administrative ("SG&A")
expenses were $23.1 million for the three months ended June 30, 2003, an
increase of $2.8 million, or 14% from the comparable period in the prior year. 
The increase is primarily due to the acquisition of Wareforce in July 2002,
which contributed $2.2 million of the increase.  As a percent of net sales,
selling, general and administrative expenses increased to 10.6% from 9.9% in the
prior year.   For the Core Business,
selling, general and administrative expenses in the second quarter of 2003 were
$21.2 million, an increase of $2.7 million, or 15%, compared to the second
quarter of the prior year.   As a
percent of net sales, selling, general and administrative expenses for the Core
Business
increased to 10.9%
compared with 10.1% in the second quarter last year.  The Consolidated and
Core Business increases were primarily due to an increase in Outbound account
manager headcount and the acquisition of Wareforce.  Total Outbound account
manager headcount for Q2 2003 increased 13% from Q2 2002.  For eCOST.com, SG&A
expenses in the second quarter of 2003 were $1.9 million, an increase of $0.1
million, or 6% compared with the second quarter of the prior year.  As a
percent of net sales, selling, general and administrative expenses for eCOST.com
decreased to 7.8% in the second quarter of 2003 compared with 8.3% in the second
quarter last year due to a 13% increase in sales over the comparable quarter in
the prior year without a corresponding increase in SG&A expenses.

Consolidated net advertising expense for the second quarter of
2003 was $5.8 million, an increase of $4.9 million, compared to $0.9 million in the prior year's second
quarter.  This increase was due to the adoption of EITF 02-16, which
resulted in the recording of $6.7 million of vendor consideration to cost
of sales, which was previously recorded as a reduction of advertising expenses. 
For the Core Business, net advertising expense was $5.0 million compared to $0.8
million in the prior year's second quarter.  For eCOST.com, net advertising
expense for the second quarter of 2003 was $0.8 million compared to $0.1 million
in the comparable period in the prior year.  The increases in advertising
expense for the Core Business and eCOST.com segments were primarily due to the adoption of EITF 02-16, which
resulted in the recording of $5.8 million and $0.9 million, respectively, of vendor consideration to cost of
sales, which was previously recorded as a reduction of advertising expenses.

Net interest expense
for the three months ended June 30, 2003 increased to $0.3 million, from $0.2
million in the prior year's comparable quarter.  The increase in interest
expense reflects borrowings for increased early payment of vendor payables to obtain payment
discounts.
The Company recorded an income tax provision for the quarter ended June 30, 2003
of $0.6 million, up from $0.3 million  from the comparable quarter in 2002, due
to improved pre-tax earnings, as both quarters used an effective tax rate of 37%.
Net income was $0.9 million, or $0.09 per share, for the three months ended
June 30, 2003 compared to net income of $0.5 million, or $0.04 per share, for the same period last year.
Six Months Ended June 30, 2003 Compared to the Six Months Ended
June 30, 2002

Consolidated net sales for the six months ended June 30, 2003 were $453.7 million, an
increase of  $57.2 million, or
14%

over the six months ended June 30, 2002.  Of this increase, $50.5 million
is attributable to acquisitions of ClubMac and Wareforce in April 2002 and July
2002, respectively.  In addition, there was an 18% increase in total
Outbound sales, and a 12% increase in eCOST.com sales.  The increase was
partially offset by a 15% decrease in consumer catalog sales.  Core business
net sales for the six months ended June 30, 2003 were $405.6 million, an
increase of  $51.9 million, or 15% over the six months ended June 30, 2002,
primarily due to the acquisitions of ClubMac and Wareforce as discussed above.  For the six
months ended June 30, 2003, net sales for eCOST.com were $48.0 million, an
increase of $5.3 million or 12% over the first half of the prior year.  This increase was primarily due to opportunistic buys, continued
enhancements to its marketing and product offerings and increased outbound sales
to business customers. For the six months
ended June 30, 2003, sales of Apple and Hewlett Packard products represented 21%
and 18% of net sales, compared to 24% and 19%, respectively, in the prior year'scomparable period.

11

---

Consolidated gross profit for the six months ended June 30, 2003
was $59.6 million, an increase of  $17.2 million, or 41%, over the prior
year's comparable period.   Acquired businesses contributed $7.0
million of the increase in gross profit.  For the Core Business, gross
profit was $54.0 million, an increase of $15.5 million, or 40%, from the
comparable period in the prior year.  For eCOST.com, gross profit for the
first half of 2003 was $5.6 million, an increase of $1.7 million, or 44% from
the prior year's comparable period.  The adoption of EITF 02-16, which
resulted in the recording of certain types of advertising revenue against cost
of sales, was responsible for $10.3 million of the increase in consolidated gross
profit.   For the Core Business and eCOST.com segments,  the adoption
of EITF 02-16 was responsible for $8.8 million and $1.5 million of the increase,
respectively.  As a percentage of net sales, consolidated gross profit for
the six months ended June 30, 2003 increased to 13.1% compared with 10.7% in the
prior year.  For the Core Business, gross profit as a percentage of sales for
the six months ended June 30, 2003 increased to 13.3% compared with 10.9% in the
prior year.  For eCOST.com, gross profit as a percentage of sales for the six
months ended June 30, 2003 increased to 11.6% compared with 9.0% in the prior
year.  The adoption of EITF 02-16 was responsible for 227 basis points of
the increase of consolidated gross profit as a percentage of sales.  For
the Core Business and eCOST.com segments, the adoption of EITF 02-16 was responsible
for increasing gross profit as a percentage of sales by 216 and 324 basis points,
respectively. The Company's gross profit percentage
may vary from quarter to quarter, depending on the continuation of key vendor support programs, including price
protections, rebates and return policies, and based on product mix, pricing strategies,
acquisitions, competition and other factors.   See "Change in
Accounting Principle and Recent Accounting
Pronouncements" below for a discussion of the Company's adoption of EITF 02-16.
Consolidated selling, general and administrative expenses were $47.1 million for the six months
ended June 30, 2003, an increase of $8.2 million, or 21%, from the comparable
period in the prior year. As a percent of net sales,
selling, general and administrative expenses for the six months ended June 30,
2003 increased to 10.4% from 9.8% from the comparable period in the
prior year.  For the Core
Business, selling, general and administrative expenses for the six months ended
June 30, 2003 were $43.3 million,
an increase of $7.8 million, or 22%, compared to the same period in the prior year.  As a percent of net sales, selling,
general and administrative expenses for the Core Business increased to 10.7% for the
six months ended June 30, 2003 compared with 10.0% for the same period last year. 
The Consolidated and Core Business increases are primarily due to an
increase in Outbound account manager headcount and the acquisition of Wareforce.  For eCOST.com, selling,
general and administrative expenses for the six months ended June 30, 2003
were $3.9 million, an increase of 11% compared with the same six-month period in
the prior year. As a percent of net sales, selling, general and administrative
expenses for eCOST.com decreased slightly to 8.0% for the six months ended June 30, 2003
from 8.1% for the comparable period last year.

Consolidated net advertising expense for the first half of 2003
was $10.0 million compared to $1.4 million in the prior year's comparable period.  This increase was mainly due to the adoption of EITF 02-16, which
resulted in the recording of $10.3 million of vendor consideration to cost
of sales, which was previously recorded as a reduction of advertising expenses. 
For the Core Business, net advertising expense was $8.6 million compared to $1.2
million in the first half of the prior year.  For eCOST.com, net
advertising expense for the first half of 2003 was $1.4 million compared to $0.2
million for the comparable period in the prior year.  The increases in
advertising expense for the Core Business and eCOST.com segments were primarily
due
to the adoption of EITF 02-16, which resulted in the recording of $8.8 million
and $1.6 million, respectively,
of vendor consideration to cost of sales, which was previously recorded as a
reduction of advertising expenses.

Net interest expense for the six months ended June 30, 2003 increased to $0.5
million, from $0.4 million, compared to the same period in 2002.  The
increase in interest expense reflects borrowings for increased early payment of vendor payables to obtain payment
discounts.

The Company recorded an income tax provision of $0.7 million for the six months ended
June 30, 2003 versus $0.5 million for the comparable period in 2002, due to
improved pre-tax earnings in both periods, as both periods used an effective tax rate of
37%.

As described in "Change
in Accounting Principle and Recent Accounting
Pronouncements" below, in the second quarter of 2002, the Company completed its
assessment of the impact of SFAS 142, and, as required by SFAS 142, effective
January 1, 2002, the Company recorded a one-time, non-cash charge of
approximately $6.8 million, net of tax, to reduce the carrying value of its goodwill. 
  Such charge is reflected as a cumulative
  effect of a change in accounting principle in the accompanying consolidated statement of
  operations.The Company
performed its first annual impairment review in the fourth quarter of 2002 and will perform its annual impairment review during the fourth quarter of each
year.  Under SFAS 142, goodwill
impairment is deemed to exist if the net book value of a reporting unit exceeds
its estimated fair value, including consideration of the Company's market
capitalization.

Net income was $1.2 million, or $0.11 per share, for the six months
ended June 30, 2003 compared to a net loss of $6.0 million, or $0.53 per share, for the same period last year. 
The loss for the six months ended June 30, 2002 was due in part to the adoption of SFAS 142,
which resulted in a one-time non-cash charge of $6.8 million, net of tax, as
discussed above.

12

---

Liquidity and Capital Resources

The
Company's primary capital need has been the funding of the working capital
requirements of its operations, recent acquisitions and the development of the Outbound business.  Historically, the Company's
primary sources of financing have been from cash flow from operations, public
offerings and borrowings from its financial institutions.

The
Company maintains a $75 million, three-year asset-based revolving credit
facility from a lending unit of a large commercial bank (the "Line of
Credit") that commenced in March 2001.  In March 2003, the Line of
Credit was amended to extend the term by an additional three years to expire in
March 2007, and obtain
improved terms.  The 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 June 30, 2003, the Prime Rate
was 4%.  The Line of Credit is secured by substantially all of the
Company's assets.  The 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.  The
Company also maintains a $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 "Flooring
Facility").  The Flooring Facility is secured by substantially all of
the Company's assets and is also supported by a letter of credit issued under
the Line of Credit in the amount outstanding under the Flooring Facility from
time to time.  The amount outstanding under the Flooring Facility is applied against the
credit limit under the Line of Credit.  The Company had no borrowings under the Flooring Facility included in accounts payable and $30.4
million of net working capital advances outstanding at June 30, 2003.
The Company
had $14.0 million available to borrow atJune
30, 2003.  Loan availability under the Line of Credit fluctuates daily and is
affected by many factors including eligible assets on-hand, opportunistic
purchases of inventory and early pay discounts.  The Company was in
compliance with its financial covenants under the Line of Credit at June 30,
2003.

As of June 30, 2003, the Company had cash and cash equivalents of
$3.8 million and working capital of $23.5 million. Inventory increased $1.6
million to $56.9 million from December 31, 2002.  Accounts receivable
increased $7.1 million to $61.9 million from December 31, 2002 due to an 18%
increase in Outbound sales.  For the six months ended June 30, 2003, capital
expenditures were $2.3 million versus $1.5 million for the comparable period
last year.  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 for at least the next twelve
months.  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. 
In September 2002, the Company announced the resumption of the share repurchase
program.  During the second quarter of 2003, the Company purchased an
aggregate of 45,500
shares at an aggregate cost of $150,950 which included 5,500 shares purchased
under the repurchase program and 40,000 shares purchased outside of the program.  The shares may 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.  The  Company  will  finance the  repurchase  plan with  existing  working  capital.  As of
June 30, 2003,  the Company has
repurchased a total of 294,200 shares, which includes 254,200
shares repurchased under the program.
As part of its growth strategy, the Company may, in the future, acquire other
companies in the same or complementary lines of business. Any such acquisition
and the ensuing integration of the operations of the acquired company would
place additional demands on the Company's management and operating and financial
resources.

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InflationInflation 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.

Change in Accounting Principle and Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued
  Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
  Other Intangible Assets," which changes the accounting for goodwill and
  indefinite-lived intangible assets from an amortization method to an
  impairment-only approach. Under SFAS 142, goodwill impairment is deemed to
  exist if the net book value of a reporting unit exceeds its estimated fair
  value, including consideration of the Company's market capitalization. This
  methodology differs from the Company's previous policy, as permitted under
  accounting standards existing at that time, of using undiscounted cash flows
  to determine if goodwill is recoverable. The Company's reporting units are
  generally consistent with the operating segments underlying the segments
  identified in Note 4 - Segment Information.
  In the second quarter of 2002, the Company completed its assessment of the
  impact of SFAS 142, and, as required by the provisions of SFAS 142, effective
  January 1, 2002, the Company recorded a one-time, non-cash charge of
  approximately $6.8 million, net of tax, to reduce the carrying value of its
  goodwill. Such charge is reflected as a cumulative effect of a change in
  accounting principle in the accompanying condensed consolidated statement of
  operations and statement of cash flows.
  The Company has adopted the provisions of SFAS No. 148, "Accounting for Stock
  Based Compensation -- Transition and Disclosure" ("SFAS 148"), which amends
  FASB Statement No. 123, "Accounting for Stock-Based Compensation." As
  permitted by SFAS 148, the Company continues to measure compensation cost in
  accordance with Accounting Principles Board Opinion No. 25, "Accounting for
  Stock Issued to Employees" ("APB 25") and related interpretations, but
  provides pro forma disclosures of net income and earnings per share as if the
  fair-value method had been applied. See Note 6 - Stock-Based Compensation for
  related disclosures.
  In November 2002, the FASB issued EITF No. 02-16, "Accounting by a Customer
  (Including a Reseller) for Certain Consideration Received from a Vendor" ("EITF
  02-16"). EITF 02-16 requires that consideration received by a customer from a
  vendor is considered (a) an adjustment of the prices of the vendor's products
  or services and therefore, characterized as a reduction of cost of sales when
  recognized in the reseller's statement of operations, (b) an adjustment to a
  cost incurred by the reseller and, therefore, characterized as a reduction of
  that cost when recognized in the reseller's statement of operations, or (c) a
  payment for assets or services delivered to the vendor, and therefore,
  characterized as revenue when recognized in the reseller's statement of
  operations. Adoption of EITF 02-16 is required for the Company for new
  agreements, including modifications of existing agreements, entered into after
  December 31, 2002.  As a result of the adoption of EITF 02-16, the
  Company recorded approximately $6.7 million and $10.3 million as a reduction
  of cost of sales for the three and six months ended June 30, 2003,
  respectively.  Of these amounts, $6.6 million and $10.2 million would have
  previously been netted against advertising expense, respectively, and $0.1
  million against selling, general and administrative expenses.

In April 2003, the FASB issued SFAS No.
149, "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities" ("SFAS 149").  This Statement amends and clarifies financial accounting and
reporting for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives) and for
hedging activities under SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities.  The Company does not expect SFAS 149 to have a
significant impact on its consolidated financial statements.

In May 2003, the FASB issued Statement No. 150, "Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity" ("SFAS 150").  SFAS 150 establishes standards for how an
issuer classifies and measures in its statement of financial position certain
financial instruments with characteristics of both liabilities and equity. 
It requires that an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances) because that financial
instrument embodies an obligation of the issuer.  This Statement is
effective for financial instruments entered into or modified after May 31, 2003,
and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003.  Adoption of SFAS 150 is not expected to
materially affect the Company's financial statements.

14

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Forward Looking Statements
Except for historical information, all of the statements, expectations and
assumptions contained in the foregoing are forward-looking statements. The
realization of any or all of these expectations is subject to a number of risks
and uncertainties and it is possible that the assumptions made by management may
not materialize, causing actual results to differ materially from the forward
looking statements. In that regard, there can be no assurance that the
transition in the Company's business strategy to an increasingly Outbound sales
model will be successful, that enhancements to Outbound account executive
support or other actions by the Company will result in improved productivity,
that profitability can be optimized, that infrastructure investments in the
Company's Outbound business will result in expanded market share, or that the
Company will be profitable in 2003 or for the ensuing periods.  There also can be no assurance that the growth in Outbound sales
will continue, that the Company's expansion of its Outbound sales force will
increase sales sufficiently to offset costs, that Core Business sales,
particularly catalog sales, will rebound to historic levels, or that cost
reductions, EBITDA or profitability for the Company's Core Business and
eCOST.com
will continue or improve.  There can also be no assurance that the Company
will successfully integrate businesses acquired by the Company or that the
Company will realize the potential synergies of such acquired businesses.  
Increases in the percentage of direct
sales by the Company's vendors could adversely affect the Company's business.
In addition to the factors set forth above, other important factors that could
cause actual results to differ materially from the Company's expectations include:
competition from companies either currently in the market or entering the
market; competition from other catalog and retail store resellers and price
pressures related thereto; uncertainties surrounding the supply of and demand
for products manufactured by and compatible with  Apple Computer or
Hewlett-Packard; the Company's reliance on Apple Computer, Hewlett-Packard, IBM, and other vendors;
risks due to shifts in market demand and/or price erosion of owned inventory;
general economic and computer industry conditions; the continued acceptance of
the Company's distribution channel by vendors and customers; the timely
availability and acceptance of new products; continuation of key vendor
relationships and support programs; the continuing development, maintenance, and
operation of the Company's information technology ("IT") and telephone systems; changes and
uncertainties in economic conditions that could affect the rate of IT spending
by the Company's customers; the ability of the Company to successfully operate
its facility in Canada; changes in pricing by the Company's vendors; the timing and
extent of repurchases under the Company's share repurchase program; inability to convert
back orders to completed sales; the ability of the Company to hire and retain
qualified sales account executives; the effects of natural disasters or
geopolitical events on the Company or the general economy; dependence on key
personnel; the effect of narrow gross operating margins on operating results;
quarterly fluctuations in results; the ability of the Company to successfully
expand into the public sector market; the Company's dependence on one or more
shipping companies for delivery of products; the effect of increased postage,
shipping or packaging costs; technological changes and inventory obsolescence;
dependence on the continued viability of the Internet; volatility of the
Company's stock price; and sales or use tax collection.
In addition, 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.  This list of risk factors is not intended to be exhaustive. 
Reference should also be made to the risk factors set forth from time to time in
the Company's SEC reports, including but not limited to those set forth in the
section entitled, "Certain Factors Affecting Future Results" in its Annual
Report on Form 10-K for 2002.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's financial instruments consist primarily of cash.  As of June
30, 2003, the carrying values of the Company's financial instruments
approximated their fair values based on current market prices and rates.

The Company has exposure to the risks of fluctuating interest
rates on its Line of Credit.  The variable interest rate on the Line of
Credit is tied to the prime rate or the London interbank offered rate at the
discretion of the Company.  If the variable rate on the Line of Credit
changes, the Company may be required to pay more interest.  However, the
Company believes that the near-tern effect of any change in interest rates will
not be material to the Company's financial position, results of operations or
cash flows.

It is the Company's  policy not to enter into  derivative  financial  instruments,
and the Company does not have any  significant  foreign
currency  exposure.   Therefore,  the Company  does not have  significant
overall currency exposure as of June 30, 2003.

ITEM 4.   CONTROLS AND
PROCEDURES

As of the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and with the participation of the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. 
Based on this evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures are
effective in timely alerting them to material information required to be
included in this report.

There has been no change in the Company's internal control over financial
reporting that occurred during the Company's most recent fiscal quarter that has
materially affected or is reasonably likely to materially affect the Company's internal
control over financial reporting.

15

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PART II - OTHER
INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF
PROCEEDS

On June 15, 2003, the Company issued a
warrant to purchase 30,000 shares of the Company's Common Stock to Genesis
Select Corporation, for investor and public relations services to be rendered to
the Company. One twelfth of the Common Stock underlying the warrant vests on
each monthly anniversary of the warrant issue date. The exercise price is $3.99
per share, and the warrant expires on June 15, 2008. The issuance of the warrant
was exempt from registration under the 1933 Securities Act, as amended (the
"Act") pursuant to the private placement exemption under Section 4(2) of the
Act. The recipient of the securities represented (i) it was an "accredited
investor" within the meaning of Rule 501 promulgated under the Act and (ii) its
intent to acquire the securities for investment only and not with a view to, or
for sale in connection with, any distribution thereof.

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

The Company held its 2003 Annual Meeting of Stockholders on
    June 25, 2003.  At the Annual Meeting, the stockholders voted on the
    following matters:

> 1.   The reelection as directors of Frank F. Khulusi, Mark C. Layton, Thomas
>         A. Maloof, and Ronald B. Reck, all of whom were reelected at the Annual
>         Meeting.  Each of the directors received the following votes:FOR
>           WITHHELDFrank F. Khulusi
>           10,176,694
>           196,796Thomas A. Maloof
>           10,262,644
>           110,846Ronald B. Reck
>           10,344,059
>           29,431Mark C. Layton
>           10,252,644
>           120,8462.   The
>         ratification of the appointment of PricewaterhouseCoopers LLP as the
>         Company's independent accountants for the fiscal year ending December
>         31, 2003.FOR
>             AGAINST
>             ABSTENTIONSAccountant's Proposal
>             10,273,646
>             23,891
>             75,953

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

> a.  Exhibits
> 
> Exhibit Number
>     Description31.1
>     Certification of the Chief Executive Officer
>     of the Registrant pursuant to
>     Exchange Act Rule 13a-14(a)31.2
>     Certification of the Chief Financial Officer
>     of the Registrant pursuant to
>     Exchange Act Rule 13a-14(a)32.1
>     Certification
>     of the Chief Executive Officer of the Registrant pursuant to Exchange Act
>     Rule 13a-14(b) and 18 U.S.C. 135032.2
>     Certification
>     of the Chief Financial Officer of the Registrant pursuant to Exchange Act
>     Rule 13a-14(b) and 18 U.S.C. 1350b.  Reports on Form 8-K
> 
>     1. A Current Report on Form 8-K was
>     filed on April 30, 2003 regarding a press release issued to announce
>     unaudited consolidated financial results for the first quarter of 2003.

16

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                      |  |  |     |                                                                            
|--------------------- |  |  | --- | ---------------------------------------------------------------------------
|Date: August 14, 2003 |  |  |     | PC MALL, INC.                                                              
|                     
|                      |  |  | By: | /s/ Ted Sanders
        Ted Sanders
Chief Financial Officer                
|                     
|                      |  |  |     | (Duly Authorized Officer of
the Registrant and Principal
Financial Officer)

17

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PC MALL, INC.

EXHIBIT INDEX

|Exhibit Number | Description                                                                                                                      
|-------------- | ---------------------------------------------------------------------------------------------------------------------------------
|31.1           | Certification of the Chief Executive Officer
    of the Registrant pursuant to
    Exchange Act Rule 13a-14(a)                   
|31.2           | Certification of the Chief Financial Officer
    of the Registrant pursuant to
    Exchange Act Rule 13a-14(a)                   
|32.1           | Certification
    of the Chief Executive Officer of the Registrant pursuant to Exchange Act
    Rule 13a-14(b) and 18 U.S.C. 1350
|32.2           | Certification
    of the Chief Financial Officer of the Registrant pursuant to Exchange Act
    Rule 13a-14(b) and 18 U.S.C. 1350