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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549

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FORM 10-K

|/x/ | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|--- | ------------------------------------------------------------------------------------

For the Fiscal Year Ended September 30, 2001

OR

|/ / | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|--- | ----------------------------------------------------------------------------------------

COMMISSION FILE NUMBER: 000-28052

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EN POINTE TECHNOLOGIES, INC.(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE(State or other jurisdiction of incorporation or organization)

75-2467002(I.R.S. Employer Identification No.)


100 NORTH SEPULVEDA BOULEVARD, 19TH FLOOR, EL SEGUNDO, CALIFORNIA 90245(Address of principal executive offices)

Registrant's
telephone number, including area code:(310) 725-5200

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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 $.001 per share(Title Of Class)

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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 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
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. / /

The
aggregate market value of the voting stock held by non-affiliates of the Registrant, based upon the closing sales price of the Common Stock as of December 21,
2001, was approximately $9,685,810.

The
number of outstanding shares of the Registrant's Common Stock as of December 21, 2001 was 6,654,756.

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DOCUMENTS INCORPORATED BY REFERENCE

PORTIONS OF REGISTRANT'S PROXY STATEMENT FOR THE 2002 ANNUAL MEETING OF STOCKHOLDERS (TO BE FILED WITH THE COMMISSION ON OR BEFORE JANUARY 28,
2002): PART III, ITEMS 10-13.

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EN POINTE TECHNOLOGIES, INC.  FORM 10-K  YEAR ENDED SEPTEMBER 30, 2001  Table of Contents

|PART I     |  |                                                                                       |  |    
|---------- |  | ------------------------------------------------------------------------------------- |  | ---
|ITEM 1.    |  | BUSINESS                                                                              |  | 1  
|ITEM 2.    |  | PROPERTIES                                                                            |  | 20 
|ITEM 3.    |  | LEGAL PROCEEDINGS                                                                     |  | 20 
|ITEM 4.    |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |  | 22 
|PART II    |  |                                                                                       |  |    
|ITEM 5.    |  | MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                 |  | 23 
|ITEM 6.    |  | SELECTED FINANCIAL DATA                                                               |  | 23 
|ITEM 7.    |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  | 25 
|ITEM 7A.   |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  | 34 
|ITEM 8.    |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           |  | 34 
|ITEM 9.    |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES |  | 34 
|PART III   |  |                                                                                       |  |    
|ITEM 10.   |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                    |  | 34 
|ITEM 11.   |  | EXECUTIVE COMPENSATION                                                                |  | 34 
|ITEM 12.   |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                        |  | 34 
|ITEM 13.   |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                        |  | 34 
|PART IV    |  |                                                                                       |  |    
|ITEM 14.   |  | EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K                     |  | 34 
|           |  | CONSOLIDATED FINANCIAL STATEMENTS                                                     |  | F-1
|SIGNATURES |  |                                                                                      
|           |  | CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER, AND DIRECTORS                       |  |    

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PART I

THIS ANNUAL REPORT ON FORM 10-K CONTAINS FORWARD-LOOKING STATEMENTS RELATING TO FUTURE EVENTS OR THE FUTURE FINANCIAL PERFORMANCE OF THE COMPANY,
INCLUDING BUT NOT LIMITED TO STATEMENTS CONTAINED IN "FACTORS WHICH MAY AFFECT FUTURE OPERATING RESULTS," "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND "BUSINESS." READERS ARE CAUTIONED THAT SUCH STATEMENTS, WHICH MAY BE IDENTIFIED BY WORDS INCLUDING "ANTICIPATES," "BELIEVES," "INTENDS," "ESTIMATES," "EXPECTS," AND SIMILAR
EXPRESSIONS, ARE ONLY PREDICTIONS OR ESTIMATIONS AND ARE SUBJECT TO KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES. IN EVALUATING SUCH STATEMENTS, READERS SHOULD CONSIDER THE VARIOUS FACTORS IDENTIFIED IN
THIS ANNUAL REPORT ON FORM 10-K, INCLUDING MATTERS SET FORTH IN "FACTORS WHICH MAY AFFECT FUTURE OPERATING RESULTS," WHICH COULD CAUSE ACTUAL EVENTS, PERFORMANCE OR RESULTS TO DIFFER
MATERIALLY FROM THOSE INDICATED BY SUCH STATEMENTS.

References
made in this Annual Report on Form 10-K to "En Pointe Technologies" or "En Pointe" or the "Company" refer to En Pointe Technologies, Inc. and its
subsidiaries, En Pointe Technologies Sales, Inc., En Pointe Technologies Canada, Inc., En Pointe Technologies Ventures, Inc. The following En Pointe Technologies trademarks are
mentioned or referred to in this Annual Report: En Pointe Technologies-Registered Trademark- and the Building Blocks design-Registered Trademark- are registered trademarks of the Company.

ITEM 1.  BUSINESS

En Pointe Technologies, Inc. ("En Pointe" or the "Company"), originally incorporated in Texas on January 25, 1993 was reincorporated in Delaware
on February 6, 1996. En Pointe is a national provider of information technology products and value-added services to large and medium sized companies and government entities. The Company uses
proprietary and non-proprietary software and systems to drop-ship materials, repair and operation (MRO) products to its customers through an electronically linked network of
the largest allied distributors in the United States. This software allows En Pointe to serve as an electronic clearinghouse of computers and computer related products without many of the risks and
costs associated with maintaining inventory. In addition to seeking efficiencies and growth in its traditional large-enterprise focused core business, En Pointe continues to devote resources to the
development of its professional services infrastructure. En Pointe is represented in more than 22 sales and service markets throughout the United States, and maintains a value-added integration
facility in Ontario, California that is ISO 9002 certified.

En
Pointe provides its customers with cost effective electronic commerce tools that help them to maximize their purchasing power when searching for and acquiring computer equipment
and related technology products. One of the Company's available tools, AccessPointe, is licensed from an affiliate of the Company, SupplyAccess, Inc. ("SupplyAccess") under terms
of a settlement agreement (See Item 3., Legal Proceedings). It is a uniquely powerful and flexible Internet procurement system that is electronically linked to the extensive warehousing, purchasing
and distribution functions of the allied national distributors of information technology products. AccessPointe provides ease-of-use, real-time
accuracy, and the power to control the purchasing process, from paperless requisition creation to line-item detail delivery tracking. These links directly to the distributors, enhance the
Company's capacity to continue to provide customers automated direct access to an extensive range of products at competitive prices. En Pointe co-markets the SupplyAccess advanced
e-commerce platform to existing clients interested in expanding the functionality of the AccessPointe solution to manage all indirect expenditures.

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During the Company's first fiscal quarter of 2000, En Pointe founded SupplyAccess, a provider of e-procurement solutions, private-labeled sell-side
applications, and networked market exchanges for global corporations, government and entities. SupplyAccess's flexible hosted/ASP model facilitates business-to-business direct
procurement of a broad line of information technology (IT) and MRO products and services, as well as a carefully targeted set of vertical market exchanges, for example, maintenance parts and services
for the aviation industry.

THE EVOLVING BUSINESS MODEL

En Pointe's virtual inventory business model has been developed and enhanced over time, but since its inception in 1993, its core concepts remain the same. The
model's essential elements are (i) a low cost overhead structure resulting from the automation of many management and operating functions; (ii) effective electronic information systems;
and (iii) reduced working capital requirements due to the leveraging of its virtual inventory model and its allied distributor relationships. The highly sophisticated Enterprise Resource
Planning ("ERP") system that is in use allows En Pointe to better monitor sales, product returns, inventories, profitability and accounts receivable at the sales representative and customer level.
Additionally, the Company has tightly integrated product purchasing and customer invoicing into its information systems to expedite procurement and billing. AccessPointe, a web portal
based tool, provides En Pointe customers with information and process regarding procurement, rather than simply product. The completely integrated e-commerce information-technology
architecture helps the Company to maintain effective online communication links with its sales representatives, selected distributors and many of its customers. The Company believes that the next
logical extension of its business model will be wrapping the acquisition process with essential services, further simplifying the enterprise space for the customer.

The
Company continues to focus on cost drivers in its business model and strives to maintain a low-cost overhead structure through the automation of many of its management
and operating functions. The next natural step to increase efficiency and streamline operational costs was the design of a field automation process allowing the sales organization to migrate to a
"virtual" model. This step required the conversion of branch offices to virtual offices, with the exception of eight small service hubs strategically located across the nation to provide logistic
support. Additionally, the day-to-day customer support function had to be strategically centralized at head quarters so that customer response could be improved by having
direct access to all back office functions and senior management. The consolidation of customer support at headquarters has enhanced both the telephone and inside sales coverage, as well as, broadened
the technical knowledge base of the team. The Company believes that in a virtual sales model representatives will spend more time addressing customer needs and that the central support team will
deliver more quality information in less time to customers, thus providing additional pre-sale and post-sale value to gain a competitive edge over competitors.

An
integral component of the Company's business model is its ability to access an extensive virtual inventory of information technology products stocked by a number of distributors
through its integrated supply chain information systems. This fusion of a leading back-end business system with a powerful Internet commerce server application and the Company's own
workflow applications, makes product pricing and availability data accessible to the Company's sales representatives and a growing set of direct customers, downloaded on a real time basis, from
several large distributors including Ingram Micro Inc. ("Ingram Micro"), Tech Data Corporation ("Tech Data"), Synnex Information Technologies, Inc. ("Synnex"), (collectively the "allied
distributors"). En Pointe has been able to expand it's supply chain base through direct buying linkages with primary manufacturer's like International Business Machines, (IBM) and Dell Corporation,
(Dell) to gain additional pricing and availability advantages. Additionally, the intelligent purchasing feature of the software allows the Company's purchasing department to place multiple
line-item orders automatically from multiple sources at the lowest possible price, maximizing not only fill rate but may also increase profitability on each order.

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The data provided by the Company's customized information system allows its sales representatives to design each customer's order according to the particular needs of that customer.
Through warehouse aggregation of products, En Pointe helps simplify the ordering, staging, and delivery process through Just in Time ("JIT") supply chain management for any size order. En Pointe's
integration facility is ISO 9002 certified and is located close to major allied distributors' warehouse locations for same day pick-up of orders. This provides the center with the
flexibility to meet stringent service level agreements ("SLA") and still function economically by limiting inventory to customer owned product. Systems are tested and loaded with predefined customer
images and shipped ready to install out of the box, saving customers money in downstream deployment costs. The Company's information system allows En Pointe to identify which of the allied
distributors can supply the desired product at the best price when needed for JIT integration with any number of different products from multiple manufacturers or distributors.

Another
advantage of the Company's business model is the reduction of working capital requirements achieved by leveraging its virtual inventory model and utilizing the extensive
warehousing, purchasing,
distribution functions, marketing, and IT functions of its allied distributors. Since inception, the Company has been an innovator in using the drop shipping capabilities of its distributors when
inventory aggregation and integration is not needed to avoid many of the costs and risks associated with maintaining inventory, which also enables the Company to quickly adapt its product offerings to
changing market demands. As product proliferation has occurred, the Company's limited inventory position has given it a competitive advantage with respect to price and availability on a broad range of
products without the costs and risks associated with carrying large quantities of physical inventory. The Company believes its business model allows it to have the capacity to increase sales with
minimal capital investment in inventory. Likewise, En Pointe utilizes the infrastructure of its allied distributors for marketing efforts with existing clients through e-mail advertising
and specialized marketing campaigns targeted at total technology solutions.

THE BACK OFFICE BUSINESS SYSTEM

The development and function of the Company's information system and its ability to provide

detailed,
quality information via the web are crucial factors in En Pointe's success. The back office is built around the highly scalable SAP ERP system and, combined with the web
front end, provides a comprehensive e-commerce solution for clients. This information system provides access to real time inventory and pricing information of the allied distributors to
all of the virtual sales representatives and central support team, as well as numerous customers. It has versatility in application and can be installed both at the sales representative's home office,
as well as at a customer's facility. This has enabled the Company's sales representatives and customers to access the same product pricing and availability by manufacturer, part number or product
description, and provide detailed product specifications for most major manufacturers to minimize confusion when ordering. Customers can then directly enter orders online, check the status of their
orders (including those being integrated by En Pointe at its Ontario configuration facility), obtain serial numbers from purchase order numbers, check on back-ordered products and verify
FedEx and UPS tracking and shipping numbers.

The
Company's system can also provide the customer with customized reports showing invoice, purchase order, price, ship-to address, serial numbers, dates and totals of the
products purchased from the Company. The data resides in a secure and authenticated web site for access by En Pointe employees and customers who are registered users.

Current
system development plans for continued growth and expansion include:



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MANAGED AND PROFESSIONAL SERVICES

The company also provides complete Information Technology, (IT) managed services and professional service offerings. The gross profit margin on service is
significantly higher than the gross profit derived from the resale of information technology products. The company provides these services through contracts with defined, measurable, service level
results. Service revenue represented 8.5% of the fiscal year 2001 net sales. Service revenue has been developed from a combination of the existing customer base and new customers. These services are
an extension to the IT life cycle that delivers additional value and allows En Pointe to leverage their powerful customer relationship management system, Clarify, which is also available to customers
via the internet for real time information concerning their service needs.

En
Pointe continues to focus on providing low cost, aggressively priced, high quality service solutions to address client IT infrastructure needs, from the desk top to the wide area
network (WAN) through a best practices approach. This includes enterprise wide help desk services offered either onsite or through a centralized call center. Traditional managed services are provided
to accounts through dedicated onsite resources trained and certified to provide install, move, add, change service, desk-side
support, and break/fix services. The managed services business model is focused around requirements in a campus environment, which assures total utilization of technicians and maintains a low overhead
cost structure. To maintain competitive costs and to provide a timely response to unique customer geographic and skill set requirements, En Pointe utilizes an in house technical recruiting staff.

The
Professional Services organization supports the growing need for enterprise infrastructure support that include LAN/WAN design and integration, LAN/WAN optimization and
monitoring, application and operating system migration, security solutions, and storage offerings for Storage Area Network, (SAN) and Network Attached Storage (NAS) implementations. En Pointe provides
the customer with a total solution from planning and design, through delivery. Highly trained engineers assist customers with their IT planning and design needs through detailed assessment and
consulting to provide complete solutions to network management, transition management, and asset management. Through EnTrack, En Pointe's formalized project management methodology, the Professional
Services group, works with the client and En Pointe's Managed Service team in the actual technical delivery of the solution. En Pointe's numerous nationwide technical and sales certifications, partner
relationships and geographic coverage make it possible for customers to engage one company to service multiple facilities across the nation. En Pointe's certifications include: Microsoft Certified
Solution Provider and

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Large Account Reseller, Novell Gold Reseller, Compaq Authorized Service Provider and Compaq Authorized Enterprise Reseller, IBM PSE Certified, Dell Premier Access Partner, Epson Customer Care
Provider, Lexmark Authorized Service Provider. Fujitsu Authorized Service Provider, Gateway Authorized Service Provider, Apple Authorized Service Provider Premier Computer Associates Reseller, Check
Point Authorized Partner, Intel Premier Provider, Citrix Silver Reseller, Cisco Authorized and Hewlett Packard Advancenet Premier Partner.

PARTNER PROGRAMS AND PRODUCTS

The majority of En Pointe's sales to date have been attributable to the resale of information technology products. The Company currently makes available to its
customers an extensive selection of products at what it believes to be a competitive combination of price and availability. The Company currently offers over 250,000 information technology products
from over 700 manufacturers, including International Business Machines Corporation ("IBM"), Compaq Computer Corporation ("Compaq"), Hewlett Packard Company ("Hewlett Packard" or "HP"), Dell Computer
Corporation, ("Dell"), Cisco Corporation ("Cisco"), Apple Computer ("Apple"), 3Com Corp. ("3Com"), Microsoft Corp. ("Microsoft"), Toshiba Corp. ("Toshiba"), Novell, Inc. ("Novell"), Kingston
Technology Corporation ("Kingston"), Lexmark International Group, Inc. ("Lexmark"), Sony Corporation ("Sony") and Nortel, Inc. ("Nortel"). The Company is also certified as a Microsoft
Senior Partner and a Large Account Reseller partner. Products offered by the Company include desktop and laptop computers, monitors, servers, memory, peripherals and operating systems, IT accessories,
IT consumables and supplies, and application software. Products manufactured by IBM, Hewlett Packard and Compaq accounted for 19%, 19% and 14%, respectively, of the Company's net sales in fiscal 2001.

CUSTOMERS

The Company's business model has allowed it to capture the business of a number of large and medium sized corporate and government customers. En Pointe's
policy is to attract major customers by offering them a full service solution at competitive pricing. Typically, En Pointe handles specialized rollouts and projects for its customers. En Pointe has
been able to raise the level of customer service and reduce the cost of acquisition for many of its clients by combining full service offerings with "cost plus" pricing; consisting of the Company's
cost plus an additional percentage negotiated with the customer. Once the Company has been approved as a supplier of a customer, it seeks to capture a significant portion of their business, which is
typically spread over a number of resellers. En Pointe believes that maintaining high customer satisfaction will enable it to more effectively expand the range of value-added services it provides to
include sales of technical, consulting and customer information services.

The
entities listed below illustrate the wide range of customers that have purchased information technology products and/or services from the Company during fiscal 2001:

|Abbot Labs     |  | Hoffmann La Roche  |  | Novell                 |  | State of Washington
|-------------- |  | ------------------ |  | ---------------------- |  | -------------------
|Apple Computer |  | IBM                |  | Qwest                  |  | Taco Bell          
|Corning        |  | Los Angeles County |  | Regus Business Centers |  | Toyota Motor       
|Deutsche Bank  |  | MCI                |  | Salvation Army         |  | United Nations     
|Fulton County  |  | Motorola           |  | Stanford University    |  | US West            
|GE Appliance   |  | Nortel             |  | Starbucks              |  |                    
|GTE            |  | Northrop           |  | State of Minnesota     |  |                    

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A
substantial portion of the Company's net sales is derived from long-term contracts, typically of at least one to two year's duration. However, these contracts are
usually non-exclusive agreements that are terminable upon 30 day's notice by either party. Purchases by customers are made using individual purchase orders or an automated process
via AccessPointetm.

For
the fiscal year ended September 30, 2001, net sales under the IBM contract accounted for approximately 16.6% of total net sales. The loss of the IBM contract or a
significant, reduction or rescheduling of orders could have a material adverse effect on the Company's business, financial position, results of operations and cash flows.

SALES AND MARKETING

The Company's national sales force focuses on Fortune 1000 customers as well as state and local government and education markets, while certain large
commercial and public sector accounts are maintained by specialized teams at the Company's headquarters. As of September 30, 2001, En Pointe employed approximately 176 sales, marketing and
related support personnel and 254 service and support personnel, in 22 markets located throughout the United States (including its headquarters located in El Segundo, California). All of En Pointe's
sales personnel have access to the Company's information systems, which allows them to obtain administrative and order processing information as needed to keep their clients informed and maintain a
customer centric focus. Although the Company is highly reliant on its various automated systems, it believes in maintaining a high level of personal interaction with its customers to ensure their
complete satisfaction and loyalty. The Company's practice is to hire experienced industry sales representatives. Sales representatives are compensated based on the profitability of their sales and the
subsequent management of their accounts. En Pointe guarantees the salary of selected new sales representatives for a limited period, after which compensation is based solely on commission. This
compensation structure has been successful for the Company, as the most effective sales personnel enjoy a high level of compensation relative to the industry average.

As
of the September 30, 2001, En Pointe had sales or service representatives in the following locations:

|Phoenix, AZ    |  | Denver, CO        |  | Boston, MA        |  | Memphis, TN  |  | Salt Lake City, UT
|-------------- |  | ----------------- |  | ----------------- |  | ------------ |  | ------------------
|El Segundo, CA |  | Atlanta, GA       |  | Minneapolis, MN   |  | Nashville,TN |  | Kirkland, WA      
|Sacramento, CA |  | Chicago, IL       |  | Charlotte, NC     |  | Austin, TX   |  |                   
|San Jose, CA   |  | Louisville, KY    |  | Oklahoma City, OK |  | Dallas, TX   |  |                   
|Ontario, CA    |  | New York City, NY |  | Portland, OR      |  | Houston, TX  |  |                   

En Pointe is strategically positioned as a national service and sales organization registered and qualified to do business in all 50 states.
The Company has adopted an entrepreneurial approach with respect to its sales and marketing efforts. Local personnel are usually given a high degree of autonomy, including customer decision-making
authority and limited pricing authority.

DISTRIBUTION

Many resellers of information technology products have assumed some of the functions of distributors, including stocking inventory, developing and maintaining
inventory control systems and establishing distribution systems. By doing so, these resellers have incurred additional capital costs associated with the warehousing of products, including the costs of
leasing warehouse space, maintaining inventory and tracking systems and employing personnel for stocking and shipping duties. Furthermore, resellers that stock inventory risk obsolescence costs, which
the Company believes may be significant due to the frequent product innovation, and associated product obsolescence, that characterizes this market. These overhead and "touch" costs require many
resellers to incur expenses that En Pointe believes more than offset the advantages of the lower purchase prices that those resellers may realize through their direct purchasing relationships with
manufacturers.

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The Company's business model allows it to eliminate many overhead and "touch" costs and risks. It has sought to take advantage of the operational strengths of its allied distributors,
who have developed extensive warehousing, purchasing and distribution functions. As a result, the Company's continuing strategy is to limit its investment in product inventory and capital costs
associated with these "back office" functions, so as to be able to accept lower gross profit margins than many of its competitors.

En
Pointe's ability to fill and deliver customer orders with an extremely high degree of speed and accuracy is one key benefit of the Company's business model. Its information
systems, which include all order processing functions, enable the Company to place orders on a same-day basis. Most orders for in-stock product are picked, staged and drop
shipped to the customer from the allied distributor within 24 hours of receipt of order, and on the same business day for orders received by 2 p.m. Pacific Time. The standard delivery
time, based on product availability, is a two to three business day period. The integration process will usually add a maximum of three business days. After an order is entered, it is reviewed and
approved at the Company's purchasing center and transmitted electronically to the chosen distributor. Once the order is shipped by the distributor, delivery information is downloaded by the Company
usually the day after the order is placed into its information systems. It then uses that information to produce an invoice, which is sent to the customer. If a customer places an order that cannot be
filled by an individual distributor, En Pointe will split the order among multiple distributors.

En
Pointe's allied distributors currently fill most of its information technology product orders. By choosing to rely on the physical inventory strengths of its distributors, the
Company is able to maximize
its expertise and concentrate on its more customer oriented activities: researching, specifying, and recommending solutions to customers. After helping a customer select the most appropriate
technology, En Pointe's sales representatives use the Company's information systems to determine the best combination of pricing and availability for a wide variety of information technology products.

COORDINATING AND OPTIMIZING PRODUCT DISTRIBUTION

Because En Pointe's sales representatives have the ability to access the current inventory and availability records of its allied distributors, they are able
to determine which distributor can best supply the customer. Furthermore, if any one distributor is unable to supply all of a customer's needs, En Pointe is generally able to fill the order using
multiple allied distributors. To facilitate product distribution to its customers, En Pointe uses various carriers' (including FedEx and UPS) tracking software with tracking numbers furnished through
allied distributors to monitor shipments.

En
Pointe has been able to successfully implement its strategy due in large part to the close relationships it has developed with the allied distributors. The Company has been able to
maintain these relationships for several reasons, most importantly the volume of business that it generates. This volume enables En Pointe to negotiate with its allied distributors to receive
discounts on certain products, which the Company may pass along to its customers. With larger sales volume, En Pointe has been able to take advantage of these discounts as well as others provided by
product manufacturers. The Company seeks to participate in these discounts, either directly through agreements with the manufacturer, or indirectly as discounts are made available to distributors, who
in turn will pass a portion along to resellers. See "BusinessRisks Associated With Dependence on Distributors And Manufacturers."

COMPETITION

En Pointe operates in a segment of the information technology industry that is highly competitive. It competes with a large number and wide variety of
resellers of information technology products, including traditional personal computer retailers, computer superstores, consumer electronics and office supply superstores, mass merchandisers, corporate
resellers, value-added resellers, specialty retailers,

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distributors, franchisers, mail order and web order companies. Increasingly, the competition also includes hardware manufacturers and national computer retailers that have commenced marketing directly
to end users. Many of these companies compete principally on the basis of price and may have lower costs than En Pointe, allowing them to offer the same products and services for less. Many of En
Pointe's competitors are of equal size or smaller in regional markets, or larger on a National scope with substantially greater financial, technical, and marketing resources available. En Pointe has
continued to expand upon solution offerings with services wrapped around hardware and software
products. The competitive landscape continues to narrow as we build upon our Professional Services offerings and seek more strategic projects in the mid market space where total solutions define the
difference between En Pointe and a regional player and positions us just below the two remaining National players, CompuCom and Comark. The Company has traditionally competed with, among others,
CompuCom Systems, Inc. ("CMPC"), Sayers, Comark, Elcom International, Inc. ("ELCO"), Sarcom Corp. ("SarCom"), Pomeroy, Inc. ("PMRY"), CDW Computer Centers, Inc.("CDW"), and
Insight Enterprises, Inc. ("NSIT"), P.C. Connection (PCCC), PC Mall (MALL), Multiple Zones (ZONS), Government Technology Services ("GTSI"), and Buy.com ("BUYX"). There continues to be
consolidation within the channel and proposed mergers of players that combine direct selling with a web based model to achieve a blended profit margin and a more flexible offering. En Pointe's
business model already incorporates these two components, on a smaller scale, and allows us to address a wide spectrum of customer requirements with our existing web tool, virtual sales
infrastructure, and centralized support team in place, all managed as one organization.

Dell
and Gateway Computers ("Gateway") demonstrated the ability of a manufacturer direct model to profitably gain market share, which has lead other manufacturers (e.g. IBM, Compaq,
and HP) to also actively market directly to customers to reduce the role of distributors and resellers, particularly in enterprise accounts, which is a large percentage of the Company's traditional
target market. En Pointe faces additional competition from these manufacturers. The direct business model is evolving and is overlapping with traditional VAR capabilities in the areas of multi-vendor
solutions, integration and image loading, and web enabled procurement processes. The manufacturer direct model still is not capable, nor willing, to manage typical buying patterns of enterprise
organizations which usually request one system at a time or in small departmental orders. However, the direct model has managed to capture a significant portion of the large volume opportunities that
a year ago flowed through the reseller channel.

Competitive
factors include price, service and support, the variety of products and value-added services offered, and marketing and sales capabilities. While En Pointe believes that
it competes successfully with respect to most, if not all, of these factors, there can be no assurance that it will continue to do so in the future. The information technology industry has come to be
characterized by aggressive price-cutting and the Company expects pricing pressures will continue in the foreseeable future. In addition, the industry is characterized by abrupt changes in technology
and the associated inventory and product obsolescence, rapid changes in consumer preferences, short product life cycles and evolving industry standards. The Company will need to continue to provide
competitive prices, superior product selection and quick delivery response time in order to remain competitive. If it were to fail to compete favorably with respect to any of these factors, the
Company's business, financial position, results of operations and cash flows would be materially and adversely affected. See "Risks Associate with Competition."

INTELLECTUAL PROPERTY

The Company's ability to effectively compete in its market will depend significantly on its ability to protect its intellectual property. The Company does not
have patents on any technology, which the Company believes to be material to its future success. En Pointe relies primarily on trade secrets, proprietary knowledge and confidentiality agreements to
establish and protect its rights in its

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intellectual property, and to maintain its competitive position. There can be no assurance that others may not independently develop similar or superior intellectual property, gain access to the
Company's trade secrets or knowledge, or that any confidentiality agreements between the Company and its employees will provide meaningful protection for the Company in the event of any unauthorized
use or disclosure of its proprietary information.

In
November 1999, SupplyAccess, an affiliate of the Company, agreed to be an application support provider ("ASP") for SAP, Clarify, Microsoft, Gentran, and Vertex software as
well as certain other IT service needs. As a part of that agreement, the Company was granted a limited, non-assignable, nonexclusive license to use the affiliate's software, which is
marketed by the Company as AccessPointe. The software is used in conjunction with the Company's sourcing of product for customers and is considered a vital part of sales operations.

On
September 21, 2001, the Company in settlement of a dispute with SupplyAccess, agreed to pay SupplyAccess approximately $1.1 million for the assignment and transfer of
the En Pointe SAP application software and certain other assets. In so doing, the Company paid SupplyAccess $0.4 million, cancelled the balance of its note receivable from SupplyAccess of
$0.8 million, and agreed to assume the IT responsibilities previously assigned SupplyAccess effective October 1, 2001. Concurrent with the assumption of IT responsibilities, SupplyAccess
granted to En Pointe a limited, exclusive license to use its AccessPointe web site and content. There can be no assurances that the Company will continue to have access to the
AccessPointe software, nor that others may not independently develop similar or superior software nor that others may not be granted similar rights to the software.

The
Company conducts its business under the trademark and service mark "En Pointe Technologies" as well as its logo, "AccessPointe" and other marks. It has been issued
registrations for its "En Pointe" and "Building Blocks" marks in the United States and has pending registrations in Canada, Mexico and the European Community. En Pointe does not believe that its
operations are dependent upon any of its trademarks or service marks. It also sells products and provides services under various trademarks, service marks, and trade names that are the property of
owners other than the Company. These owners have reserved all rights with respect to their respective trademarks, service marks, and trade names. See "BusinessRisks Associated With
Dependence on Technology".

SEGMENT INFORMATION

See Note 14 to the Consolidated Financial Statements, "Segment Information", for financial information regarding the Company's operating segments.

EMPLOYEES

As of September 30, 2001, En Pointe employed approximately 512 individuals, including approximately 176 sales, marketing and related support personnel,
254 service and support personnel, 19 warehousing/manufacturing/test personnel and 63 employees in administration and finance. The Company believes that its ability to recruit and retain highly
skilled technical and other management personnel will be critical to its ability to execute its business model and growth strategy. None of the Company's employees are represented by a labor union or
are subject to a collective bargaining agreement. The Company believes that its relations with its employees are good.

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FORWARD LOOKING STATEMENTS

THIS ANNUAL REPORT ON FORM 10-K CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES EXCHANGE ACT OF 1933 AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. IN LIGHT OF THE IMPORTANT FACTORS THAT CAN MATERIALLY AFFECT RESULTS, INCLUDING THOSE SET FORTH IN THIS PARAGRAPH AND BELOW, THE INCLUSION OF
FORWARD-LOOKING INFORMATION HEREIN SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR ANY OTHER PERSON THAT THE OBJECTIVES OR PLANS FOR THE COMPANY WILL BE ACHIEVED. THE COMPANY MAY
ENCOUNTER COMPETITIVE, TECHNOLOGICAL, FINANCIAL, ECONOMIC AND BUSINESS CHALLENGES MAKING IT MORE DIFFICULT THAN EXPECTED TO CONTINUE TO RESELL INFORMATION TECHNOLOGY PRODUCTS AND SERVICES; THE COMPANY
MAY BE UNABLE TO RETAIN EXISTING KEY SALES, TECHNICAL AND MANAGEMENT PERSONNEL; THERE MAY BE OTHER MATERIAL ADVERSE CHANGES IN THE INFORMATION TECHNOLOGY INDUSTRY OR THE ECONOMY, OR IN THE COMPANY'S
OPERATIONS OR BUSINESS, AND ANY OR ALL OF THESE FACTORS MAY AFFECT THE COMPANY'S ABILITY TO CONTINUE ITS CURRENT SALES RATE OR MAY RESULT IN LOWER SALES VOLUME THAN CURRENTLY EXPERIENCED.

IN
ADDITION TO THE INFORMATION SET FORTH ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K, THE FOLLOWING FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING THE COMPANY AND
ITS BUSINESS CERTAIN IMPORTANT FACTORS AFFECTING THE FORWARD-LOOKING STATEMENTS MADE HEREIN INCLUDE, BUT ARE NOT LIMITED TO: (I) A SIGNIFICANT PORTION OF THE COMPANY'S SALES CONTINUING TO BE TO
CERTAIN LARGE CUSTOMERS, (II) CONTINUED DEPENDENCE BY THE COMPANY ON CERTAIN ALLIED DISTRIBUTORS, (III) CONTINUED DOWNWARD PRICING PRESSURES IN THE INFORMATION TECHNOLOGY MARKET,
(IV) THE LIMITED PRIOR EXPERIENCE OF THE COMPANY IN THE PROVISION OF VALUE-ADDED SERVICES, AND (V) THE DECISION BY THE COMPANY TO CONVERT ITS SALES FORCE TO VIRTUAL SALES OFFICES.
ASSUMPTIONS RELATING TO BUDGETING, MARKETING, AND OTHER MANAGEMENT DECISIONS ARE SUBJECTIVE IN MANY RESPECTS AND THUS SUSCEPTIBLE TO INTERPRETATIONS AND PERIODIC REVISIONS BASED ON ACTUAL EXPERIENCE
AND BUSINESS DEVELOPMENTS, THE IMPACT OF WHICH MAY CAUSE THE COMPANY TO ALTER ITS MARKETING, CAPITAL EXPENDITURE OR OTHER BUDGETS, WHICH MAY IN TURN AFFECT THE COMPANY'S BUSINESS, FINANCIAL POSITION,
RESULTS OF OPERATIONS AND CASH FLOWS. THE READER IS THEREFORE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS CONTAINED HEREIN, WHICH SPEAK AS OF THE DATE OF THIS ANNUAL REPORT ON
FORM 10-K.

RISKS ASSOCIATED WITH DEPENDENCE ON DISTRIBUTORS AND MANUFACTURERS

A key element of the Company's past success and future business strategy involves the maintaining of alliances with certain large distributors of information
technology products and services, including Ingram Micro, Synnex and Tech Data. These alliances enable the Company to make available to its customers a wide selection of products without subjecting
the Company to many of the costs and risks associated with maintaining large amounts of inventory. Products and services purchased from three allied distributors, Ingram Micro, Tech Data and Synnex
accounted for 63% of the Company's aggregate purchases in fiscal 2001. Certain allied distributors provide the Company with substantial incentives in the form of allowances passed through from
manufacturers, discounts, credits and cooperative advertising, which incentives directly affect the Company's operating income. There can be

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no assurance that the Company will continue to receive such incentives in the future and any reduction in the amount of these incentives could have a material adverse effect on the Company's business,
financial position, results of operations and cash flows. Furthermore, the Company directly competes with certain allied distributors for many of the same customers and therefore there can be no
assurance that any such allied distributor will not use its position as a key supplier to the Company to pressure the Company from directly competing with it. Substantially all of the Company's
contracts with its allied distributors are terminable by either party upon 30 days notice or less and several contain minimum purchase volume requirements as a condition to providing discounts
to the Company. The termination or interruption of the Company's relationships with any of the allied distributors, modification of the terms or discontinuance of agreements with any of the allied
distributors, failure to meet minimum purchase volume requirements, or the failure to maintain a good working relationship with any significant new distributor of information technology products could
materially adversely affect the Company's business, financial position, results of operations and cash flows. See "BusinessDistribution."

Certain
of the products offered by the Company are subject to manufacturer allocations, which limit the number of units of such products available to the allied distributors, which in
turn may limit the number of units available to the Company for resale to its customers. In addition, because certain products offered by the Company are subject to manufacturer or distributor
allocations, which limit the number of units of such products available to the Company for resale to its customers, there can be no assurance that the Company will be able to offer popular new
products or product enhancements to its customers in sufficient quantity or in a timely manner to meet demand. In order to offer the products of most manufacturers, the Company is required to obtain
authorizations from such manufacturers to act as a reseller of such products, which authorizations may be terminated at the discretion of the manufacturers. As well, certain manufacturers provide the
Company with substantial incentives in the form of allowances, financing, rebates, discounts, credits and cooperative advertising, which incentives directly affect the Company's operating income.

There
can be no assurance that the Company will continue to receive such incentives in the future and any reduction in these incentives could have a material adverse effect on the
Company's business, financial position, results of operations and cash flows. There can be no assurance that the Company
will be able to obtain or maintain authorizations to offer products, directly or indirectly, from new or existing manufacturers.

Termination
of the Company's rights to act as a reseller of the products of one or more significant manufacturers or the failure of the Company to gain sufficient access to such new
products or product enhancements could have a material adverse effect on the Company's business, financial position, results of operations and cash flows. See "BusinessPartner Program and
Products" and "Managed and Professional Services."

Evolution
of the distribution process in the information technology industry, has put pressure on gross profit margins, and has adversely affected a number of distributors of
information technology products, including certain allied distributors. There can be no assurance that the continuing evolution of the information technology industry will not further adversely affect
the Company's distributors. Because the Company's overall business strategy depends on the Company's relationships with the allied distributors, the Company's business, financial position, results of
operations and cash flows would be materially adversely affected in the event that distributors in general and allied distributors in particular continue to suffer adverse consequences due to ongoing
changes in the information technology industry. There has been a consolidation trend in the information technology industry, including consolidation among distributors of information technology
products. Because the Company's business model is dependent upon the availability of a number of information technology product distributors, any further consolidation would result in fewer
distributors available to supply products to

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the Company, which could have a material adverse impact on the Company's business, financial position, results of operations and cash flows.

RISKS ASSOCIATED WITH POTENTIAL VARIABILITY IN QUARTERLY OPERATING RESULTS

Fiscal 2001 quarterly net sales compared to the respective prior fiscal year quarters have shown a consistent negative trend throughout the fiscal year.
Percentage declines commencing with the first quarter of the fiscal year were 13.5%, 22.4%, 23.3%, and 46.0%, respectively. Sequentially net sales declined in every quarter of fiscal 2001 except for
the June quarter, which registered a modest 0.8% increase. The Company does not anticipate a reversal of the sales decline until later in fiscal 2002.

The
Company's quarterly net sales and operating results may vary significantly as a result of a variety of factors, including: the demand for information technology products and the
Company's value-added services; adoption of internet commerce models; introduction of new hardware and software technologies; introduction of new value-added services by the Company and its
competitors; changes in manufacturers' prices or price protection policies; changes in shipping rates; disruption of warehousing or shipping channels; changes in the level of operating expenses; the
timing of major marketing or
other service projects; product supply shortages; inventory adjustments; changes in product mix; entry into new geographic markets; the timing and integration of acquisitions or investments;
difficulty in managing margins; the loss of significant customer contracts; the necessity to write-off a significant amount of accounts receivable or inventory; and general competitive and
economic conditions. In addition, a substantial portion of the Company's net sales in each quarter results from orders booked in such quarter. Accordingly, the Company believes that
period-to-period comparisons of its operating results are not necessarily meaningful and should not be relied upon as an indication of future performance.

As
has occurred in the past it is possible that in future periods, the Company's operating results may be below the expectations of public market analysts and investors. In such
event, the market price of the Common Stock would likely be materially adversely affected. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."

RISKS ASSOCIATED WITH DEPENDENCE ON AVAILABILITY OF CREDIT; RISKS ASSOCIATED WITH DEPENDENCE ON ASSET BASED FINANCING

The Company's business requires significant capital to finance accounts receivable and, to a lesser extent, product inventories. In order to obtain necessary
working capital, the Company relies primarily on lines of credit that are collateralized by substantially all of the Company's assets. As a result, the amount of credit available to the Company may be
adversely affected by numerous factors beyond the Company's control, such as delays in collection or deterioration in the quality of the Company's accounts receivable, economic trends in the
information technology industry, interest rate fluctuations and the lending policies of the Company's creditors. Any decrease or material limitation on the amount of capital available to the Company
under its lines of credit and other financing arrangements will limit the ability of the Company to fill existing sales orders or expand its sales levels and, therefore, would have a material adverse
effect on the Company's business, financial position, results of operations and cash flows. In addition, any significant increases in interest rates will increase the cost of financing to the Company
and would have a material adverse effect on the Company's business, financial position, results of operations and cash flows. The Company is dependent on the availability of accounts receivable
financing on reasonable terms and at levels that are high relative to its equity base in order to maintain and increase its sales. There can be no assurance that such financing will continue to be
available to the Company in the future or available under terms acceptable to the Company. The inability of the Company to have continuous access to such financing at reasonable costs could materially
adversely impact the Company's business, financial position, results of operations and cash

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flows. As of September 30, 2001, the Company had outstanding borrowings under its credit facilities of $9.4 million out of a total availability under its credit facilities of
$35.0 million.

The
Company has primarily funded its working capital requirements through a $35.0 million Inventory and Working Capital Agreement (the "IBMCC Financing Agreement") with IBM
Credit Corporation ("IBMCC").

On
December 28, 2001, the Company entered into a $30 million line of credit agreement for three years with Foothill Capital Corporation ("Foothill"). As part of a
separate one year agreement entered into on the same date, IBMCC continues to provide the Company with a 30-day interest free inventory flooring financing for up to $20.0 million.
Borrowing availability on the Foothill credit facility will be directly reduced by any outstanding flooring financings. The financing agreement with Foothill includes a guarantee to IBMCC for the
amount outstanding on the flooring line up to a maximum of $20 million. In consideration for providing the guarantee, the Foothill agreement contains a 1% annual charge on the average
outstanding balances owing to IBMCC. Initially, the Foothill agreement will provide for an interest rate of one-half of one percent over the prime rate with the future interest rate to be
dependent upon the Company meeting certain earnings targets. The minimum variable interest rate is floored at 6% per annum and at the option of the Company could be based on prime or LIBOR rate. The
maximum range for the interest which is based on certain earnings targets is prime plus 1.50% or LIBOR plus 3.75%. Borrowings under the Foothill Financing Agreement are collateralized by substantially
all assets of the Company, including accounts receivable, inventory and equipment.

Foothill
may terminate the Financing Agreement at any time upon the occurrence of and subsequent failure to cure, an "Event of Default," as such term is defined in the Foothill
Financing Agreement. In the event of such termination, the outstanding borrowings under the Foothill Financing Agreement become immediately due and payable in their entirety and the Company may be
subject to early termination fees of up to 3% of the loan amount. The termination of the Foothill Financing Agreement and the subsequent inability of the Company to secure a replacement credit
facility on terms and conditions similar to those contained in the Foothill Financing Agreement could have a material adverse effect on the Company's business, financial position, results of
operations and cash flows. See "Management's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources."

RISKS ASSOCIATED WITH DEPENDENCE ON RELATIONSHIP WITH IBM AND OTHER LARGE CUSTOMERS.

For the years ended September 30, 2001, 2000 and 1999, net sales to IBM and certain IBM customers under the Company's current contract with IBM
accounted for approximately 17%, 13% and 19% respectively, of the Company's net sales. The Company's contracts for the provision of products or services, including its contract with IBM, are generally
non-exclusive agreements that are terminable by either party upon 30 days notice. The loss of IBM or any other large customer, the failure of IBM or any other large customer to pay
its accounts receivable on a timely basis, or a material reduction in the amount of purchases made by IBM or any other large customer could have a material adverse effect on the Company's business,
financial position, results of operations and cash flows. See "BusinessCustomers."

RISKS ASSOCIATED WITH COMPETITION

The segment of the information technology industry in which the Company operates is highly competitive. The Company competes with a large number and wide
variety of resellers and providers of information technology products and services, including traditional personal computer retailers, computer superstores, consumer electronics and office supply
superstores, mass merchandisers,

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corporate resellers, value-added resellers, specialty retailers, distributors, franchisers, mail-order and web-order companies, national computer retailers and manufacturers
which have commenced their own direct marketing operations to end-users. Many of these companies compete principally on the basis of price and may have lower costs than the Company, which
allow them to offer the same products and services at a lower price. Many of the Company's competitors are larger, have substantially greater financial, technical, marketing and other resources and
offer a broader range of value-added services than does the Company. The Company competes with, among others, CompuCom, Dell, Elcom, Gateway, Pomeroy, and CDW. The Company expects to face additional
competition from new market entrants in the future.

Competitive
factors include price, service and support, the variety of products and value-added services offered, and marketing and sales capabilities. While the Company believes that
it competes successfully with respect to most, if not all of these factors, there can be no assurance that it will continue to do so in the future. The information technology industry has come to be
characterized by aggressive price-cutting and the Company expects pricing pressures will continue in the foreseeable future. In addition, the information technology products industry is characterized
by abrupt changes in technology and associated inventory and product obsolescence, rapid changes in consumer preferences, short product life cycles and evolving industry standards. The Company will
need to continue to provide competitive prices, superior product selection and quick delivery response time in addition to acquiring a core competency in performing value-added services in order to
remain competitive. If the Company were to fail to compete favorably with respect to any of these factors, the Company's business, financial position, results of operations and cash flows would be
materially and adversely affected. See "BusinessCompetition."

RISKS ASSOCIATED WITH INDUSTRY EVOLUTION AND PRICE REDUCTIONS; CHANGING METHODS OF DISTRIBUTION

The information technology industry is undergoing significant change. The industry has become more accepting of large-volume, cost-effective
channels of distribution and accordingly such channels have proliferated. In addition, many traditional computer resellers are consolidating operations and acquiring or merging with other resellers in
an effort to increase efficiency and gain market share. This current industry reconfiguration has resulted in increased pricing pressures. Decreasing prices of information technology products requires
the Company to sell a greater number of products to achieve the same level of net sales and gross profit. Additionally, there has been continuing erosion in the "price-
protection" historically offered to offset the negative effects of decreasing prices. The exacerbation of such trends could make it more difficult for the Company to continue to increase its net sales
and earnings growth. In addition, the historically high rate of growth of the information technology industry has slowed dramatically recently and if the trend continues, it may have a material
adverse effect on the Company's business, financial position, results of operations and cash flows. Furthermore, new methods of distributing and selling information technology products, such as
on-line shopping services and catalogs published on CD-ROM, have evolved and may further develop in the future. Hardware and software manufacturers have sold, and may in the
future further 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 orders of
hardware and software to certain major corporate customers. These types of programs may continue to be developed and used by various vendors. While the Company attempts to anticipate and influence
current and future distribution trends, any of these distribution methods or competitive programs, if successful, could have a material adverse effect on the Company's business, financial position,
results of operations and cash flows.

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RISKS ASSOCIATED WITH DEPENDENCE ON TECHNOLOGY

In the past, the Company's ability to effectively compete in its market depended significantly on its ability to protect its proprietary technology. The
Company relied primarily on trade secrecy and confidentiality agreements in order to establish and protect its rights in its proprietary technology. There was no assurance that the existing methods
for protecting the Company's proprietary technology would be successful in defending either the confidentiality of, or the unauthorized use of, this technology, nor could any assurance be given that
the Company would have been able to achieve or maintain a meaningful technological advantage. However, the extent of the Company's reliance on proprietary technology has been significantly reduced by
the replacement of its legacy systems with a customized version of SAP (not proprietary), and a sophisticated open architecture web-commerce application based on Microsoft Site Server,
Commerce Edition. While some of the web application coding is proprietary, the ability to reverse-engineer that code exists. The Company would be required to incur substantial costs in seeking
enforcement of any such residual proprietary rights against infringers. Insofar as the Company relies on trade secrets and proprietary know-how to maintain its competitive position, there
can be no assurance that others may not independently develop similar or superior technologies or gain access to the Company's trade secrets or know-how. The Company's competitive position
now relies much more on its expert implementation of open standards, world-class customized applications which support the valuable e-commerce distribution experience gained in eight years
of successful fulfillment of large entity customer requirements. See "BusinessIntellectual Property."

RISKS ASSOCIATED WITH LOW MARGIN BUSINESS

The Company's gross profit percentages averaged between 8 to 9% through fiscal 1999 and since then have improved marginally by 1 to 2%. The Company's gross
profit margins are low compared to many
other resellers of information technology products. Given the significant levels of competition that characterize the reseller market, as well as the lower gross profit margins generated by the
Company as a result of its reliance on purchasing information technology products from its allied distributors, it is unlikely that the Company will be able to increase product gross profit margins
appreciably in its core business of reselling information technology products. Moreover, in order to attract and retain many of its larger customers, the Company frequently must agree to volume
discounts and maximum allowable mark-ups that serve to limit the profitability of product sales to such customers. Accordingly, to the extent that the Company's sales to such customers
increase, the Company's gross profit margins may be reduced, and therefore any future increases in net income will have to be derived from net sales growth, effective expansion into higher margin
business segments or a reduction in operating expenses as a percentage of net sales, none of which can be assured. Furthermore, low gross profit margins increase the sensitivity of the Company's
business to increases in costs of financing, because financing costs to carry a receivable can be relatively high compared to the low dollar amount of gross profit on the sale underlying the
receivable itself. Low gross profit margins also increase the sensitivity of the business to any increase in product returns and bad debt write-offs, as the impact resulting from the
inability to collect the full amount for products sold will be relatively high compared to the low amount of gross profit on the sale of such product. Any failure by the Company to maintain its gross
profit margins and sales levels could have a material adverse effect on the Company's business, financial position, results of operations and cash flows.

RISKS RELATED TO DEPENDENCE ON SENIOR MANAGEMENT AND OTHER KEY PERSONNEL

The Company believes that its success has been and will continue to be dependent on the services and efforts of its existing senior management and other key
personnel. The loss of the services of one or more of any of the Company's existing senior management and other key personnel would have a

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material adverse effect on the Company's business, financial position, results of operations and cash flows. It should be noted that as of December 31, 2001, the President of the Company and a
member of the Board of Directors, Michael R. Shabazian, announced his intention to retire. Thomas Scott, who joined the Company on August 1, 2001 as President and Chief Operating Officer of En
Pointe Technologies Sales, Inc., has assumed the responsibilities of Mr. Shabazian.

The
Company's success and its plans for future growth also depend on its ability to attract and retain highly skilled personnel in all areas of its business, including application
development, sales and technical services. Competition for qualified personnel in the information technology industry is intense, and although the Company believes that it has thus far been successful
in attracting and retaining qualified personnel for its business, the inability to attract and retain qualified personnel in the future could have a material adverse effect upon the Company's
business, financial position, results of operations and cash flows.

RISKS RELATED TO EXPANSION AND CONTRACTION OF BUSINESS

For its first six years since inception, the Company experienced rapid growth in net sales, the number of its employees and branch offices, the amount of
administrative overhead and the type of services offered. Since then, the Company has had net sales declines of approximately 26% in each of the past two fiscal years. The contraction and expansion of
net sales has and will continue to put strains on the Company's management, operational and financial resources. To execute the Company's recovery strategy, the Company expects to require the addition
of new management personnel, including sales and technical services personnel, and the development of additional expertise by existing personnel. The Company's ability to manage its recovery
effectively will require it to continue to implement and improve its operational, financial and sales systems at both the national and local level, to develop the skills of its managers and
supervisors and to hire, train, motivate, retain and effectively manage its employees. There can be no assurance that the Company will be successful in such recovery, and the failure to do so could
materially adversely affect the Company's business, financial position, results of operations and cash flows.

While
the Company recently completed an upgrade of its accounting software system, management believes that further improvements and upgrades will be necessary. Failure to implement
such improvements may adversely affect timely availability of financial information or the ability to deliver products and services to the Company's customers on a timely basis. The Company believes
that such improvements will utilize a considerable amount of the Company's management resources. Failure to hire and retain qualified personnel would have a material adverse effect upon the Company's
ability to implement such improvements. There can be no assurance that the Company will be able to successfully implement such improvements and such failure could have a material adverse impact on the
Company's business, financial position, results of operations and cash flows.

RISKS ASSOCIATED WITH EXPANDING SERVICES CAPABILITIES

The Company is expanding the nature and scope of its value-added services. There can be no assurance that the value-added services business will be
successfully integrated with the Company's information technology products reselling business or that the Company will be able to effectively compete in this market. If the Company is unable to
effectively provide value-added services, it may be unable to effectively compete for the business of certain large customers that require the provision of such services as a condition to purchasing
products from the Company. In addition, the Company will be subject to risks commonly associated with a value-added services business, including dependence on reputation, volatility of workload and
dependence on ability to recruit, retain and properly utilize qualified technical personnel. The expansion of the Company's value-added services required a significant capital investment, including a
large increase in the number of technical employees. If the Company is unable to attain sufficient customer orders for value-added services, it will then be unable

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to fully recover the costs of these investments. Also, a portion of the Company's value-added service revenue may be derived from the performance of services pursuant to fixed-price contracts. As a
result, cost overruns due to price increases, unanticipated problems, inefficient project management or inaccurate estimation of costs could have a material adverse effect on the Company's business,
financial position, results of operations and cash flows. See "BusinessPartner Program and Products" and "Managed and Professional Services."

RISKS RELATED TO VIRTUAL OFFICE MODEL

The Company's growth was driven, in part, by sales generated through expansion into new geographic markets. The Company opened sales offices in many of the
metropolitan markets that the Company believed offered the most potential for sales growth. As a part of the Company's recent restructuring, most of the Company's sales offices are being converted to
virtual offices. . Expansion in new markets will be through the virtual model utilizing the new SAP/Microsoft-based e-commerce integrated business system. Sales representatives will work
out of their homes utilizing these internet tools. These "remote" Account Executives will be supported by Customer Service Representatives located in Southern California. This model will enable En
Pointe to have face-to-face contact with customers without incurring the usual start up costs and further expenses associated with new branch offices. There are no assurances
that this model will experience the same success as the branch model has. Such failure could have a material adverse effect on the Company's business, financial position, results of operations and
cash flows.

RISKS ASSOCIATED WITH ACQUISITIONS OF AND INVESTMENTS IN COMPLEMENTARY BUSINESSES

One element of the Company's growth strategy may include expanding its business through strategic acquisitions and investments in complementary businesses. The
Company has not had significant acquisition or investment experience, and there can be no assurance that the Company will be able to successfully identify suitable acquisition or investment
candidates, complete acquisitions or investments, or integrate acquired businesses into its operations. Acquisitions and investments involve numerous risks, including difficulties in the assimilation
of the operations, services, products, vendor agreements, and personnel of the acquired company, the diversion of management's attention and other resources from other business concerns, entry into
markets in which the Company has little or no prior experience, and the potential loss of key employees, customers, or contracts of the acquired company. Acquisition and investments could also
conflict with restrictions in the Company's agreements with existing or future lenders, distributors or manufacturers. The Company is unable to predict whether or when any prospective acquisition or
investment candidate will become available or the likelihood that any acquisition or investment will be completed or successfully integrated. The Company's failure to successfully manage any potential
acquisitions or investments in complementary businesses could have a material adverse effect on the Company's business, financial position, results of operations and cash flows.

In
addition, the Company is unable to assure that any of its present investments will continue to be viable and successful in the future. One of the Company's investment affiliates,
SupplyAccess, is in the
very competitive business-to-business market, has not obtained profitability, and has limited capital for future operating expenses. Its success may depend upon obtaining
either additional financing or profitability, neither of which the Company can assure. The discontinuance of operations of SupplyAccess could have an adverse effect on the Company's business,
financial position, results of operations and cash flows.

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RISKS ASSOCIATED WITH PLANNED INTERNATIONAL OPERATIONS

Although the Company to date has not generated significant foreign sales, one of the elements of its growth strategy may be to expand internationally. There
can be no assurance that the Company will be able to successfully expand its international business. There are certain risks inherent in doing business on an international level, such as remote
management, unexpected changes in regulatory requirements, export restrictions, tariffs and other trade barriers, difficulties in staffing and managing foreign operations, longer payment cycles,
problems in collecting accounts receivable, political instability, fluctuations in currency exchange rates, and potentially adverse tax consequences, any of which could adversely impact the success of
the Company's international operations. There can be no assurance that one or more of such factors will not have a material adverse effect on the Company's future international operations and,
consequently, on the Company's business, financial position, results of operations and cash flows.

RISKS ASSOCIATED WITH BUSINESS INTERRUPTION; RISKS ASSOCIATED WITH DEPENDENCE ON CENTRALIZED FUNCTIONS

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. As a result, a substantial disruption of the Company's day-to-day operations could have a material adverse effect upon the Company's
business, financial position, results of operations and cash flows. In addition, the Company's success is largely dependent on the accuracy, quality and utilization of the information generated by its
information systems, which are primarily based in Ontario and El Segundo, California. Repairs, replacement, relocation or a substantial interruption in these systems or in the Company's telephone or
data communications systems, servers or power could have a material adverse effect on the Company's business, financial position, results of operations and cash flows. Although the Company has
business interruption insurance, an uninsurable loss could have a material adverse effect on the Company's business, financial position, results of operations and cash flows. The Company's current use
of a single configuration facility in Ontario, California also makes the Company more vulnerable to dramatic changes in freight rates than a competitor with multiple, geographically dispersed sites.
Losses in excess of insurance coverage, an uninsurable loss, or change in freight rates could have a material adverse effect on the Company's business, financial position, results of operations and
cash flows.

RISKS ASSOCIATED WITH DEPENDENCE ON THIRD-PARTY SHIPPERS

The Company presently ships products from Ontario, California, primarily by Federal Express Corporation ("FedEx") or United Parcel Service of
America, Inc. ("UPS"), and the vast majority of products that the Company sells are drop-shipped for the Company to its customers by the allied distributors via these carriers.
Changes in shipping terms, or the inability of these third-party shippers to perform effectively (whether as a result of mechanical failure, casualty loss, labor stoppage, other disruption, or any
other reason), could have a material adverse effect on the Company's business, financial position, results of operations and cash flows. There can be no assurance that the Company or others can
maintain favorable shipping terms or replace such shipping services on a timely or cost-effective basis. See "BusinessDistribution."

RISKS ASSOCIATED WITH PRODUCT RETURNS

As is typical of the information technology industry, the Company incurs expenses as a result of the return of products by customers. Such returns may result
from defective goods, inadequate performance relative to customer expectations, distributor-shipping errors and other causes that are outside the Company's control. Although the Company's distributors
and manufacturers have specific return policies that enable the Company to return certain products for credit, to the extent that the Company's customers return products which are not accepted for
return by the distributor or

18

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manufacturer of such products, the Company will be forced to bear the cost of such returns. Any significant increase in the rate of product returns, or the unwillingness by the Company's distributors
or manufacturers to accept goods for return, could have a material adverse effect on the Company's business, financial position, results of operations and cash flows.

RISKS ASSOCIATED WITH EXTENSIONS OF CREDIT

As a marketing enhancement, the Company offers unsecured and secured credit terms for qualified customers. Historically, the Company has not experienced losses
from write-offs in excess of established reserves. While the Company evaluates customers' qualifications for credit and closely monitors its extensions of credit, defaults by customers in
timely repayment of these extensions of credit could have a material adverse effect on the Company's business, financial position, results of operations and cash flows. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

RISKS ASSOCIATED WITH POTENTIAL INFLUENCE BY EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS

The directors, executive officers and principal stockholders of the Company and their affiliates beneficially own, in the aggregate, approximately 31% of the
outstanding Common Stock. As a result, these stockholders acting together will be able to exert considerable influence over the election of the Company's directors and the outcome of most corporate
actions requiring stockholder approval, such as certain amendments to the Company's Certificate of Incorporation. Additionally, the directors and executive officers have significant influence over the
policies and operations of the Company's management and the conduct of the Company's business. Such concentration of ownership may have the effect of delaying, deferring or preventing a change of
control of the Company and consequently could affect the market price of the Common Stock.

POTENTIAL VOLATILITY OF STOCK PRICE

Factors such as the announcement of acquisitions by the Company or its competitors, quarter to quarter variations in the Company's operating results, changes
in earnings estimates by analysts, governmental regulatory action, general trends and market conditions in the information technology industry, as well as other factors, may have a significant impact
on the market price of the Common Stock. Moreover, trading volumes in the Company's Common Stock have been low historically and could exacerbate price fluctuations in the Common Stock. Further, the
stock market has recently and in other periods experienced extreme price and volume fluctuations, which have particularly affected the market prices of the equity securities of many companies and
which have often been unrelated to the operating performance of such companies. These broad market fluctuations may materially and adversely affect the market price of the Common Stock. See "Market
for Registrant's Common Equity and Related Stockholder Matters."

POTENTIAL EFFECT OF ANTI-TAKEOVER PROVISIONS

The Company's Board of Directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the price, rights, preferences,
qualifications, limitations and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. The rights of the holders of Common Stock will be subject
to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could have the effect of delaying or preventing a third party from acquiring a majority of the outstanding voting stock of the
Company. Further, Section 203 of the General Corporation Law of Delaware prohibits the Company from engaging in certain business combinations with interested

19

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stockholders. These provisions may have the effect of delaying or preventing a change in control of the Company without action by the stockholders, and therefore could adversely affect the market
price of the Common Stock.

20

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ITEM 2.  PROPERTIES

The Company leases approximately 36,000 square feet of office space for its headquarters in El Segundo, California, under a lease expiring June 30,
2006. The Company also leases an approximately 126,000 square foot facility in Ontario, California, which is primarily used for configuration and maintenance services. This facility has been
operational since July 1, 1998. At the time the Ontario configuration facility was planned, the Company believed that there would be an emerging "channel assembly" market for resellers, such as
the Company, of computer products. However, instead, certain manufacturers began requiring distributors to "co-locate" their final assembly operations at the manufacturer's facility
instead of outsourcing final assembly at separate sites. In reaction to the change in this emerging market, in January 1999, En Pointe's Board of Directors authorized the Company to sell and
leaseback the Ontario Facility, while continuing the product configuration operation at that location. The sale-leaseback transaction was concluded in June 1999. As a result of
these shifts in the industry the Ontario facility has more capacity and space than usable for current configuration services. In consequence the Company incurred a non-recurring charge of
$6.2 million associated therewith. The charge was determined using the "held for use" model contained in SFAS No.121. The Company's intent then was to sublease approximately 45% of the facility
space to an unrelated company. However, no such sublease has been executed. The Company continues to evaluate its options with regard to the excess capacity at the Ontario Facility.

As
a part of the Company's June 2001 restructuring that included the conversion of leased sales offices to virtual sales offices, the Company is in the process of closing all
of its sales offices, except for its headquarters and New York office. For offices to be closed with long-term leases, subleasees are being sought. In addition to the two remaining sales
offices, the Company rents a limited amount of space to accommodate its service operations in various locations and from time to time may rent temporary shared executive office suite space as well as.
The following listing identifies the Company's major rental facilities that are intended to remain operational:

FACILITIES:

Sq. Footage:El Segundo, California, Corporate Headquarters and Sales Office

36,090Ontario, California, Configuration Facility

126,000New York, New York, Sales Office

4,895


Management
believes the Company's headquarters, sales offices and configuration facilities are adequate to support its current level of operations.

ITEM 3.  LEGAL PROCEEDINGS

In March of 1999, a jury verdict in the Los Angeles County (California) Superior Court relating to litigation brought by Novaquest Infosystems resulted in the
Company owing a total of $1,425,000. Under the court decree, $375,000 was awarded for intentional interference with plaintiffs' prospective economic advantage tort claim, $50,000 was awarded for
breach of contract, and $1 million was awarded for punitive damages. The Company has appealed the court decision.

In
addition, in April 2000 the court awarded the plaintiffs attorneys' fees and costs under the breach of contract claim of approximately $1,218,000. The Company objected to
the amount of the cost reimbursement allowed for attorneys' fees and appealed the court's ruling. After the appellate court remanded En Pointe's appeal to the trial court for a redetermination of the
prevailing party, the lower court subsequently ruled that no party prevailed in this matter. As a result of this ruling, En Pointe was not required to pay Novaquest's legal fees and costs and
consequently all such accrued costs of $1.3 million were reversed and are included as a component of non-recurring charges.

On
June 8, 2001, En Pointe filed a demand for arbitration against SupplyAccess, Inc. ("SupplyAccess") with the American Arbitration Association alleging that
SupplyAccess had to render

20

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certain services under an agreement between the parties. This was necessitated by SupplyAccess's threats to discontinue such contractually obligated services unless En Pointe increased its monthly
payments to SupplyAccess. In counterclaims brought on June 28, 2001, SupplyAccess has alleged that En Pointe violated certain provisions of both agreements, seeking more than $2,000,000 in
damages. En Pointe has subsequently filed several new claims against SupplyAccess.

Effective
September 21, 2001, En Pointe and SupplyAccess reached a settlement in this matter. Under the terms of the settlement, SupplyAccess sold to En Pointe all
enhancements, upgrades, modifications, customizations, and derivative works related to the SAP software used to run En Pointe's business, granted to En Pointe a limited exclusive license to the
AccessPointe Web Site (the vehicle through which En Pointe customers access the information provided by En Pointe) and agreed to provide various transition and support services to En Pointe in order
to educate En Pointe as to the information required to transition the services performed by SupplyAccess. In exchange, En Pointe agreed to pay SupplyAccess $1,125,000 (which included En Pointe
canceling a $750,000 note obligation owed by SupplyAccess) as consideration for the assignment and transfer of the En Pointe SAP
Application software all rights title and interest in several pieces of equipment, web servers, and other hardware assets, a $1.00 license fee, and monthly payments of $15,000.

On
November 28, 2001, an action was brought against the Company by Ameriserve Food Distribution, Inc. et al., Debtor and AFD Fund, on behalf of the substantively,
consolidated post-confirmation estate of Debtors Ameriserve Food Distribution, Inc., et al., Plaintiff in the United States Bankruptcy Court District of Delaware, Case
No. 00-358 (PJW). The plaintiff alleges that En Pointe received $574,069 in preferential transfer payments from Ameriserve Food Distribution, Inc. that the estate of the
debtors is entitled to recover. Management, after consulting with legal counsel, has determined that the potential for an adverse outcome in this litigation cannot be estimated as the case is in its
preliminary stage.

On
or about September 18, 2000, a claim for arbitration was submitted by First Union Securities to the New York Stock Exchange against, among others, En Pointe
Technologies Inc. and its President and Chief Executive Officer, Attiazaz Din (the "En Pointe defendants"). First Union alleges that En Pointe and Din violated federal and state securities laws
in connection with the promotion and sale of En Pointe stock in the last half of 1999 and the first half of 2000. The En Pointe defendants dispute jurisdiction and intend to vigorously defend the
allegations.

In
January of 2001, five of the Company's directors, one current officer, and certain former officers along with four unrelated parties were named in a shareholder's derivative
complaint alleging that such persons improperly benefited form the sales of shares of the Company's common stock and seeking a recovery by the Company of the damages it sustained as a result of such
activities (Fredrick V. Din, et a., Superior Court of California, County of Los Angeles Case No. YC 039456). The defendants intend to vigorously defend the allegations and believe the case is without
merit.

In
February of 2001, the Company and five of the Company's directors, one current officer, and certain former officers along with seven unrelated parties were named in a shareholder
class action complaint alleging that the defendants made misrepresentations regarding the Company and that the individual defendants improperly benefited from the sales of shares of the Company's
common stock and seeking a recovery by the Company's shareholders of the damages sustained as a result of such activities (In Re En Pointe Technologies Securities Litigation, United States District
Court, Southern District of California Case No. 01 CV0205L (CGA)). The En Pointe defendants have filed a Motion to Dismiss, which is set to be heard on February 19, 2002. The En Pointe
defendants intend to vigorously defend the allegations.

In
December, 2000 the Company and certain current and former directors and officers along with several unrelated parties were named in a complaint alleging that the defendants made
misrepresentations regarding the Company and that the individual defendants improperly benefited

21

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from the sales of shares of the Company's common stock and seeking a recovery by the Company's shareholders of the damages sustained as a result of such activities (Crosby V. En Pointe Technologies,
it al., Superior Court of California, County of San Diego, No. GIC 759905). The parties have stipulated to a stay of the case pending the class action. The En Pointe defendants intend to vigorously
defend the allegations.

On
October 5, 2001, an action was brought against the Company by Qamar Zaidi in the San Bernardino County Superior Court, Case No. RCV 058254. The plaintiff, a former employee,
alleges breach of contract, anticipatory breach and repudiation, breach of the implied covenant of good faith and fair dealing, and conversion. The claim asks for $710,000 in damages, $500,000 in
punitive damages, and penalties under the labor code of $150,000. Management, after consulting with legal counsel, has determined that the potential for an adverse outcome in this litigation cannot be
estimated as the case is in its preliminary stage.

In
March of 2000, an action was brought against the Company in the Orange County Superior Court contending fraud and breach of contract arising from the purchase by a former
subsidiary of the Company of certain assets from a company formerly known as First Source International ("FSI"). The lawsuit is filed on behalf of creditors of a defunct corporation, Paragon
Solutions, Inc, formerly known as FSI. It is contended that FSI was unable to obtain their contingent earn-out under the agreement because of faulty software provided by the Company.
Damages sought range between $0.8 to $3.5 million with the plaintiff seeking punitive damages of $10 million. The Company was successful in compelling the action to be moved to
arbitration, but since November 17, 2000 when the Court of Appeals rejected the request by the plaintiff to prohibit arbitration, no arbitration proceedings have commenced. The Company
vigorously denies the charges and contends that full disclosure was made as to any problems with the software and that the former subsidiary to this date has not produced net income. Legal counsel is
currently unable to predict the outcome of this litigation. During the past fiscal year, the case has remained dormant.

There
are various other claims and litigation proceedings in which the Company is involved in the ordinary course of business. While the outcome of these claims and proceedings cannot
be predicted with certainty, after consulting with legal counsel, management does not believe that the outcome of any of these matters will have a material adverse affect on the Company's business,
financial position and results of operations or cash flows.

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

Not applicable

22

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PART II

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

The Company's Common Stock, par value $.001 per share, is quoted on the NASDAQ National Market under the symbol "ENPT." The following table sets forth, for the
period indicated, the high and low sale prices for the Common Stock as reported by the NASDAQ National Market.

HIGH

LOWFiscal 2000First quarter

$
30.000

$
7.688Second quarter


55.000


26.750Third quarter


41.875


8.500Fourth quarter


10.500


5.750Fiscal 2001First quarter

$
9.500

$
2.813Second quarter


5.125


1.000Third quarter


2.800


1.030Fourth quarter


3.500


1.170Fiscal 2002First quarter (through 12/21/01)

$
2.990

$
1.220


On
December 21, 2001, the closing sale price for the Common Stock on the NASDAQ National Market was $2.00 per share. As of December 21, 2001, there were 53 stockholders
of record of the Common Stock.

The
Company has never declared or paid any cash dividends on its Common Stock. The Company currently anticipates that it will retain all available funds for use in the operation of
its business, and does not intend to pay any cash dividends in the foreseeable future. The payment of any future dividends will be at the discretion of the Company's Board of Directors and will depend
upon, among other factors, future earnings, operations, capital requirements, the general financial condition of the Company and general business conditions. The Company's ability to pay cash
dividends is currently restricted by certain of the Company's credit facilities, and the terms of future credit facilities or other agreements may contain similar restrictions.

ITEM 6.  SELECTED FINANCIAL DATA

The selected financial data set forth has been derived from the Company's Consolidated Financial Statements and the related notes thereto that have been
audited by PricewaterhouseCoopers LLP, independent accountants, which financial statements and report thereon are included elsewhere in this Annual Report on Form 10-K.

The
data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial
Statements of the Company and the Notes thereto included elsewhere in this Annual Report on Form 10-K.

23

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During the June quarter of 2000, the Company deconsolidated Firstsouce and SupplyAccess (see Note 1 to the Consolidated Financial Statements).

|                                                               |                                                                            | Fiscal Year Ended September 30, |                        
|-------------------------------------------------------------- | -------------------------------------------------------------------------- | ------------------------------- | -----------------------
|
|
|Statement of Operations Data:                                  |                                                                            |                                 |                        
|Net sales                                                      |                                                                            | $                               | 365,280                
|Cost of sales                                                  |                                                                            |                                 | 325,792                
|                                                               |                                                                            |                                 |                        
|                                                               | Gross profit                                                               |                                 |                        
|Operating expenses:                                            |                                                                            |                                 |                        
|                                                               | Selling and marketing expenses                                             |                                 |                        
|                                                               | General and administrative expenses                                        |                                 |                        
|                                                               | Non-recurring charges                                                      |                                 |                        
|                                                               |                                                                            |                                 |                        
|                                                               |                                                                            |                                 | Operating (loss) income
|Interest expense                                               |                                                                            |                                 | 970                    
|Gain on sale of investment                                     |                                                                            |                                 | (95                    
|Other income, net                                              |                                                                            |                                 | (269                   
|Minority interests                                             |                                                                            |                                 |                       
|                                                               |                                                                            |                                 |                        
|                                                               | (Loss) income before taxes and loss reversal income (loss) from affiliates |                                 |                        
|Provision (benefit) for income taxes                           |                                                                            |                                 | 86                     
|Loss reversal income (losses) from affiliates                  |                                                                            |                                 | 8,392                  
|                                                               |                                                                            |                                 |                        
|                                                               |                                                                            |                                 | Net income (loss)      
|                                                               |                                                                            |                                 |                        
|Net income (loss) per share:                                   |                                                                            |                                 |                        
|                                                               | Basic                                                                      |                                 | $                      
|                                                               |                                                                            |                                 |                        
|                                                               | Diluted                                                                    |                                 | $                      
|                                                               |                                                                            |                                 |                        
|Weighted average shares and share equivalents outstanding (1): |                                                                            |                                 |                        
|                                                               | Basic                                                                      |                                 |                        
|                                                               |                                                                            |                                 |                        
|Diluted                                                        |                                                                            |                                 | 6,685                  
|                                                               |                                                                            |                                 |                        

|                                                                      |  | As of September 30,
|--------------------------------------------------------------------- |  | -------------------
|
|
|Balance Sheet Data:                                                   |  |                    
|Working capital                                                       |  | $                  
|Total assets                                                          |  | $                  
|Borrowings under lines of credit and current portion of notes payable |  | $                  
|Long term liabilities and notes payable                               |  | $                  
|Stockholders' equity                                                  |  | $                  

24

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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 FINANCIAL
STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K.

OVERVIEW

The Company began operations in March 1993 as a reseller of information technology products. In fiscal 1999, the Company started emphasizing value-added
services to its customers. Value-added services accounted for 8.5% and 6.1% of the Company's net sales in fiscal years 2001 and 2000 respectively. The gross profit margins on the value-added services
that the Company currently offers are four to five times higher than the gross profit margins on the Company's information technology products reselling business.

firstsource
corp. ("Firstsource", formerly firstsource.com and Purchase Pointe, Inc.), an Internet and call center based business-to-business provider
of products, services and information necessary to operate small to medium sized businesses, began operations in June of 1998 as a wholly-owned subsidiary. In July of 1999, a private placement reduced
the Company's ownership percentage to 71.4%. Subsequent private placements in fiscal 2000 reduced the Company's ownership further. By May 16, 2000 the voting interest percentage had decreased
to 43.5%. Because the Company's voting interest dropped below 50% effective May 16, 2000 and the Company does not otherwise have control, the Company began to account for its investment in
Firstsource under the equity method of accounting. Effective April 10, 2001, Firstsource operations ceased and all of the assets of Firstsource were assigned to Sherwood Partners, Inc.,
(unaffiliated with the Company), as an assignee for the benefit of creditors.

In
November 1999, the Company formed a new subsidiary, SupplyAccess, Inc. ("SupplyAccess"), to address the larger corporate customers' needs to find product via the
internet at the most favorable prices. SupplyAccess was designed as an internet portal charging transaction fees to the seller. The
Company transferred its IT department and related computer equipment and software to SupplyAccess in exchange for a $5.5 million note receivable. No gain or loss was recognized on the
transaction. Concurrently it was agreed that SupplyAccess would provide the Company with IT services and would allow Company customers access to its fulfillment engine for the initial year for a flat
quarterly fee of $500,000.

In
February 2000, SupplyAccess completed an initial private placement of 12,000,000 shares of convertible preferred stock at $1.50 a share, which reduced the Company's voting
interest to 54%. On April 4, 2000, SupplyAccess completed a supplemental private placement of stock of 5,088,318 shares of convertible preferred stock at $1.50 a share that reduced the
Company's voting interest to 45.10%. Subsequent private placements of convertible preferred stock hare reduced the Company's voting interest to 38.69%. Because the Company's voting interest dropped
below 50% effective April 4, 2000 and the Company does not otherwise have control, the Company began to account for its investment in SupplyAccess under the equity method of accounting.

On
September 21, 2001, the Company in settlement of a dispute with SupplyAccess, agreed to pay SupplyAccess $1.1 million for the assignment and transfer of the En Pointe
SAP application software and certain other listed assets. In so doing, the Company cancelled the balance of the note receivable from SupplyAccess of $750,000 and agreed to assume the IT
responsibilities previously assigned to SupplyAccess effective October 1, 2001. As a result of the agreement and the assumption of IT responsibilities, the Company will no longer pay
SupplyAccess a flat $500,000 quarterly fee for services.

25

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However, the Company has agreed to make monthly payments to SupplyAccess of $15,000 for the rights to the AccessPointe web site and content therein.

The
Company's net sales increased from $110.0 million in fiscal 1994 (the Company's first full year of operations) to $668.3 million in fiscal 1999, representing a
compound annual growth rate of 35.1%. The past growth in net sales was principally driven by sales to new customers and increased sales to existing customers as well as geographic expansion through
the opening of additional sales offices. However, in fiscal 2000 the Company experienced its first annual decline of $173.8 million in sales due to a softer PC market and difficulties in
transitioning to a new business ERP system. Fiscal year 2001 has continued the negative trend with a decline of $129.1 million in net sales. Fiscal 2001 quarterly net sales compared to the
respective prior fiscal year quarters have shown a consistent negative trend throughout the fiscal year. Percentage declines commencing with the first quarter of the fiscal year were 13.5%, 22.4%,
23.3%, and 46.0%, respectively. Sequentially net sales declined in every quarter of fiscal 2001 except for the June quarter, which registered a modest 0.8% increase. The Company does not anticipate a
reversal of the sales decline until later in fiscal 2002.

To
counter the sales decline, the Company conducted two restructurings of its sales and administrative force in fiscal years 2001 and 2000. Leased sales offices were converted into
virtual offices in which employees work from home based offices. Home offices were equipped with DSL lines and the latest in
information technology equipment. Full technical and administrative support were committed by corporate headquarters to assist field personnel in improving customer support.

Also
moderating the impact of the sales decline was an overall improvement in gross profit margins rising to 10.8% in fiscal 2001 from 9.8% a year ago, principally from a lessening of
competitive pricing and higher margins from the Company's expanding service business. Nevertheless the increase in gross profit margins was insufficient to offset the loss of margins from the sales
volume decline and total gross profits declined $9.1 million.

Operating
expenses, exclusive of non-recurring charges, were $41.0 million, a notable reduction from prior year core operating expenses of $50.7 million,
which excludes $17.4 million of operating expenses from subsidiaries that were subsequently deconsolidated. Non-recurring charges declined $1.9 million, which combined with
the $9.7 decline in other core operating expenses helped to compensate for the $9.1 million gross profits decline and narrowed the operating loss to $2.3 million, a substantial
improvement from the $22.3 million operating loss of the prior year, that was burdened with substantial operating losses from its former subsidiaries prior to their deconsolidation.

Because
the Company's business model involves the resale of information technology products held in inventory by certain distributors, the Company does not maintain significant
amounts of inventory on hand for resale. The Company typically does not place an order for product purchases from distributors until it has received a customer purchase order. Inventory is then
drop-shipped by the distributor to either the customer or shipped to the Company's configuration center in Ontario, California. The distributor typically ships products within
24 hours following receipt of a purchase order and, consequently, substantially all of the Company's net sales in any quarter result from orders received in that quarter. Although the Company
maintains a relatively small amount of inventory in stock for resale, it records as inventory the merchandise being configured and products purchased from distributors, but not yet shipped to
customers.

Product
revenues are generally recognized upon shipment. Service revenues are recognized based on contractual hourly rates as services are rendered or upon completion of specified
contract services. Net sales consist of product and service revenues, less discounts. Cost of sales includes product and service costs and current and estimated allowances for returns of products that
are not accepted by the Company's distributors or manufacturers, less any incentive credits.

26

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RESULTS OF OPERATIONS

The following table sets forth certain financial data as a percentage of net sales for the periods indicated.

|                                              |                                                                            | Fiscal Year Ended September 30, |     
|--------------------------------------------- | -------------------------------------------------------------------------- | ------------------------------- | ----
|
|Net sales                                     |                                                                            | 100.0                           | %   
|Cost of sales                                 |                                                                            | 89.2                            |     
|                                              |                                                                            |                                 |     
|                                              | Gross profit                                                               |                                 | 10.8
|Selling and marketing expenses                |                                                                            | 8.2                             |     
|General and administrative expenses           |                                                                            | 3.0                             |     
|Non-recurring charges                         |                                                                            | 0.2                             |     
|                                              |                                                                            |                                 |     
|                                              | Operating loss                                                             |                                 | (0.6
|Interest expense                              |                                                                            | 0.3                             |     
|Other income, net                             |                                                                            | (0.1                            | )   
|Gain on sale of assets                        |                                                                            |                                |     
|Minority interest                             |                                                                            |                                |     
|                                              |                                                                            |                                 |     
|                                              | Loss before income taxes and loss reversal income (losses) from affiliates |                                 | (0.8
|Benefit for income taxes                      |                                                                            |                                |     
|Loss reversal income (losses) from affiliates |                                                                            | 2.3                             |     
|                                              |                                                                            |                                 |     
|                                              | Net income (loss)                                                          |                                 | 1.5 
|                                              |                                                                            |                                 |     

COMPARISON OF FISCAL YEARS ENDED SEPTEMBER 30, 2001 AND 2000

NET SALES.Net sales decreased $129.1 million, or 26.1%, to $365.3 million in fiscal 2001 from
$494.4 million in fiscal 2000. Approximately a quarter of the $129.1 million decrease results from the fiscal 2000 deconsolidation of former subsidiaries that contributed
$34.2 million of the $494.4 million in prior year net sales. The remaining $94.8 million decrease in sales, or 20.6% was attributable to softness in the marketplace and an erosion
of customer base. Services revenues increased $0.9 million, or 3.1%, to $31.2 million in fiscal 2001 from $30.2 million in fiscal 2000 and were 8.5% of total net sales versus 6.1%
in the prior year. Net sales under the IBM contract accounted for 16.6% of total net sales and 14.7% of total accounts receivable for the 2001 fiscal year compared with 12.8% and 21.4%, respectively,
for the prior fiscal year. In absolute dollars IBM net sales decreased $2.7 million to $60.8 million in fiscal 2001 from $63.4 million in fiscal 2000, reflecting the same
conditions noted above.

Fiscal
2001 quarterly net sales compared to the respective prior fiscal year quarters have shown a consistent negative trend throughout the fiscal year. Percentage declines commencing
with the first quarter of the fiscal year were 13.5%, 22.4%, 23.3%, and 46.0%, respectively. Sequentially net sales declined in every quarter of fiscal 2001 except for the June quarter, which
registered a modest 0.8% increase. The Company does not anticipate a reversal of the sales decline until later in fiscal 2002.

GROSS PROFIT.As a result of the decline in net sales, gross profits decreased $9.1 million, or 18.7% to
$39.5 million in fiscal 2001 from $48.6 million for 2000. However, gross profits expressed as a percentage of net sales actually increased by one full percentage point to 10.8% in 2001
from 9.8% in 2000. The increase in gross margin percentage is attributable to some lessening of pricing pressures in the industry on information technology products as well as increased margins from
the rising service revenues.

27

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SELLING AND MARKETING EXPENSES.Selling and marketing expenses decreased $15.4 million, or 33.9% to
$30.0 million in fiscal 2001, from $45.3 million in fiscal 2000. Of the $15.4 million decrease, $6.7 million of selling and marketing expenses was attributable to former
subsidiaries that were reported on a consolidated basis during the first nine months of prior fiscal year but which were subsequently deconsolidated. Another $5.4 million of the decrease was
wage related, in part due to restructuring, including $1.8 million from lower wage cost and $3.6 million from a decrease in sales commissions paid as a result of the decline in net sales
volume. As a percentage of net sales, selling and marketing expenses decreased one full percentage point to 8.2% in 2001 from 9.2% in 2000. Most of the one percent decrease represents former
subsidiaries expenses that were included in the financial results for the first nine months of the prior fiscal year before deconsolidation.

GENERAL AND ADMINISTRATIVE EXPENSES.General and administrative expenses decreased $11.8 million, or 51.7% to
$11.0 million in fiscal 2001, from $22.8 million in fiscal 2000. Most of the decrease, $10.7 million, is due to the deconsolidation of former subsidiaries, as noted above. As a
percentage of net sales, general and administrative expenses declined from 4.6% to 3.0% in fiscal 2001, all of which was attributable to the deconsolidation.

NON-RECURRING CHARGES.Non-recurring charges of $0.8 million consist of
$1.9 million for restructuring charges, a $0.2 million charge relating to settlement of a law suit, and income of $1.3 million related to a legal suit in which plaintiff attorney
fees and costs previously awarded by the court were reversed. Restructuring charges occurred in the June quarter when the workforce was reduced by 64 and nine rental locations were identified for
closure or reduced in size. Sales personnel working in the location of the closures were converted to a virtual sales environment under a carefully monitored program of the Company (see Note 4
to the Consolidated Financial Statements). The Company believes that its restructuring will result in lower selling and marketing costs in future quarters. Non-recurring charges declined
$1.9 million, or 68.9% to $0.8 million from the $2.7 million reported in fiscal 2000, when a $1.5 million restructuring charge and $1.2 million charge related for
plaintiff attorney fees and costs that were awarded by the court (and subsequently on appeal reversed in 2001) were recognized.

OPERATING LOSS.Operating loss decreased $20.0 million, or 89.5%, to a loss of $2.3 million in fiscal
2001 from a $22.3 million operating loss in fiscal 2000. Although total operating expenses decreased $29.1 million in fiscal 2001 to $41.8 million from $70.9 million in
fiscal 2000, the decrease was insufficient to compensate for the $9.1 million decline in gross profits. Most of the decrease, $17.4 million, can be accounted for by the deconsolidation
of former subsidiaries, as noted above. Operating loss, as a percent of net sales, decreased to 0.6% in fiscal 2001 from 4.5% in fiscal 2000.

INTEREST EXPENSE.Interest expense decreased $0.7 million, or 43.5% to $1.0 million in fiscal 2001 from
$1.7 million in fiscal 2000. Included in interest expense are portions of the lease payments related to the Ontario configuration center that is treated as a financing lease. Such lease
payments amounted to $0.6 million in fiscal 2001 and fiscal 2000. The decrease in interest expense was due mainly to the decline in borrowing under the credit lines, due to declining sales
volumes. While interest charged under the Company's lines of credit increased in April of 2000 from .25% under prime to 2% over prime, or 2.25%, the prime rate declined 3% during the fiscal year to
compensate in large part for the increase in rates. As a result, the Company's weighted average borrowing rate increased only slightly to 9.1% from 8.5% in the prior year.

GAIN ON SALE OF ASSETS.Gain on sale of assets decreased $3.8 million to $0.1 from $3.9 million in the
prior fiscal year. The prior year $3.9 million gain was attributed to the sale of marketable securities that were acquired in connection with the private placement of a former subsidiary.

28

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INCOME (LOSSES) FROM AFFILIATES.As a result of the deconsolidation of two previously consolidated subsidiaries (see
Note 1 to the Consolidated Financial Statements), in the June quarter of 2000 the Company began using the equity method of accounting to record its interest in the losses related to the two
affiliates. Because the Company had guaranteed certain debt of its affiliates and was responsible under certain other obligations, losses in excess of the Company's investment in its affiliates were
recorded. Such losses were in large part reversed in fiscal 2001 and taken to income as the guarantees and obligations were removed or discharged.

PROVISION FOR INCOME TAXES.Because the loss reversal income from affiliates of $8.3 million is not subject to
tax, and tax adjustments for other differences between book and tax are inconsequential, the Company anticipates a $2.6 tax net operating loss ("NOL") for the 2001 fiscal year. Since
there are no longer any open prior years with taxable income to which the NOL may be carried back, no benefit has been recognized for the current year tax loss. The current provision for income taxes
relates to certain minimum state income and franchise taxes.

NET INCOME (LOSS).Net income was $5.4 million as compared to a net loss of $19.4 million in the prior
fiscal year. The improvement in earnings is due to the $8.4 million loss reversal income from affiliates and the $29.1 million decrease in operating expenses. As a percentage of net
sales, net income was 1.5%, as compared with a net loss of 3.9% in fiscal 2000.

COMPARISON OF FISCAL YEARS ENDED SEPTEMBER 30, 2000 AND 1999

NET SALES.Net sales decreased $173.9 million, or 26.0%, to $494.4 million in fiscal 2000 from
$668.3 million in fiscal 1999. The decrease in sales was attributable to softness in the marketplace and a loss of customer base during implementation of the SAP business system. Net sales
under the IBM contract accounted for 12.8% of total net sales and 21.4% of total accounts receivable for the 2000 fiscal year compared with 18.8% and 18.5%, respectively, for the prior fiscal year. In
absolute dollars IBM net sales decreased $62.3 million to $63.4 million in fiscal 2000 from $125.7 million in fiscal 1999, reflecting the same conditions noted above. Services
revenues increased $7.2 million, or 31.3%, to
$30.2 million in fiscal 2000 from $23.0 million in fiscal 1999 and were 6.6% of total net sales versus 3.6% in the prior year.

Firstsource,
an Internet and call center based business-to-business provider of products, services and information for small to medium sized businesses,
contributed $34.2 million in net sales for the seven and a half month period in which the former subsidiary was consolidated with the Company. Net sales for Firstsource in the seven and
one-half month period prior to deconsolidation ("the consolidation period") exceeded the prior full fiscal year 1999 net sales of $30.0 million. SupplyAccess, a start-up
internet portal business-to-business provider, did not record any net sales for the approximate six month period in which the former subsidiary was consolidated with the
Company.

GROSS PROFIT.Gross profit decreased $5.2 million, or 9.6% to $48.6 million in fiscal 2000 from
$53.7 million for 1999, but increased as a percentage of net sales to 9.8% in 2000 as compared to 8.0% in 1999. The increase in gross profit percentage is attributable to a lessening of pricing
pressures throughout the industry on information technology products as well as increased margins from the rising service revenues.

Gross
profits from Firstsource were $3.1 million during the consolidation period, as compared with $2.1 million for twelve months of fiscal year 1999. Gross margins
improved to 9.0% from 6.9% in fiscal 1999.

SELLING AND MARKETING EXPENSES.Selling and marketing expenses increased $7.4 million, or 19.4% to
$45.3 million in fiscal 2000, from $37.9 million in fiscal 1999. Of the $7.4 million increase, $2.5 million was from increased marketing efforts of Firstsource during the
consolidation period with the remainder primarily attributed to hiring additional sales personnel. As a

29

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percentage of net sales, selling and marketing expenses increased 3.5% to 9.2% in 2000 from 5.7% in 1999, 2.4% of which was attributed to the decline in the volume of net sales, 0.9% was from
increased Firstsource expenses, with the remainder from the cost of additional sales personnel hired.

GENERAL AND ADMINISTRATIVE EXPENSES.General and administrative expenses decreased $7.9 million, or 25.8% to
$22.8 million in fiscal 2000, from $30.7 million in fiscal 1999. Most of the $7.9 million decline is due to less general and administrative expenses incurred by Firstsource during
the 2000 partial fiscal year that the former subsidiary was consolidated, and is the result of an abnormally high prior year expense from the acceleration of the vesting of Firstsource stock options
in the fourth quarter of fiscal 1999. Because of declining sales volume, general and administrative expenses as a percentage of net sales remained constant at 4.6% in fiscal 2000.

NON-RECURRING CHARGES.Non-recurring charges consist of a $1.5 million for restructuring
charges and $1.2 million related to a legal suit in which attorney fees and costs were awarded by the court. Restructuring charges occurred in the June quarter when the workforce was reduced by
105 and five sales offices were converted to virtual sales locations (see Note 4 to the Consolidated Financial Statements). Non-recurring charges declined $5.2 million to
$2.7 million from the $7.9 million in fiscal 1999, when a $6.2 million impairment charge for the write down of the Ontario configuration facility comprised most of the charge.

OPERATING LOSS.Operating loss decreased $0.6 million, or 2.8%, to a loss of $22.3 million in fiscal 2000
from a $22.9 million operating loss in fiscal 1999. Although total operating expenses decreased $5.7 million in fiscal 2000 to $70.9 million from $76.6 million in fiscal
1999, the decrease did not compensate for the $5.2 million decline in gross profits. The decline in total operating expenses was from the $5.2 million decrease in
non-recurring charges explained above. Operating loss, as a percent of net sales, increased to 4.5% in fiscal 2000 from 3.4% in fiscal 1999, due to declining sales volume.

INTEREST EXPENSE.Interest expense decreased $1.5 million, or 45.9% to $1.7 million in fiscal 2000 from
$3.2 million in fiscal 1999. Of the $1.5 million decrease, $0.6 million related to interest income that was netted in interest expense. The remaining $0.9 million decrease
in interest expense was due to the decline in borrowing under the lines of credit

GAIN ON SALE OF INVESTMENTS.In conjunction with a SupplyAccess private placement, marketable securities were acquired
that produced a gain of $3.9 million upon sale. The securities were acquired on February 23, 2000 with a cost basis of $6.8 million.

MINORITY INTEREST.Minority interest represents losses allocated to the minority shareholders as of December 31,
1999, when Firstsource was still a majority owned subsidiary and was eligible to be consolidated with the Company.

INCOME (LOSSES) FROM AFFILIATES.As a result of the deconsolidation of two previously consolidated subsidiaries (see
Note 1 to the Consolidated Financial Statements), in the June quarter of 2000 the Company began using the equity method of accounting to record its interest in the losses related to the two
affiliates. The Company does not anticipate recognizing further losses from its affiliates since no additional financial support, that would be considered additional investment, is planned for the
future.

BENEFIT FOR INCOME TAXES.Benefit for income taxes decreased $0.7 million, or 55.9% to a benefit of
$0.5 million in fiscal 2000 from a $1.2 million benefit in fiscal 1999. The reduction of the benefit in fiscal 2000 was due to the limitation of the available loss carry back as well as
to the non-recognition of deferred tax assets due to uncertainty of future realization.

30

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NET (LOSS) INCOME.Net loss increased $2.8 million, or 16.8%, to a $19.4 million net loss in fiscal 2000
from $16.6 million net loss in fiscal 1999. As a percentage of net sales, net loss increased to 3.9% from 2.9% in fiscal 1999.

PRO FORMA COMPARISON OF FISCAL YEARS ENDED SEPTEMBER 30, 2000 AND 1999

In order to meaningfully assess underlying operating trends, management believes that the results of operations for fiscal 2000 should be analyzed after
excluding the effects of the subsidiaries that were deconsolidated in the June 2000 quarter. As such, the following discussion and analysis focuses on amounts and trends adjusted to exclude the
impact of the deconsolidated subsidiaries from normal operations.

NET SALES.Net sales decreased $178.1 million, or 27.9%, to $460.2 million in fiscal 2000 from
$638.3 million in fiscal 1999. The decrease in sales was attributable to softness in the marketplace and a loss of customer base during implementation of the SAP business system.

Net
sales under the IBM contract accounted for 13.8% of total net sales for the 2000 fiscal year compared with 19.7% for the prior fiscal year. In absolute dollars IBM net sales
decreased $62.3 million to $63.4 million in fiscal 2000 from $125.7 million in fiscal 1999, reflecting the same conditions noted above. Services revenues increased
$7.2 million, or 31.3%, to $30.2 million in fiscal 2000 from $23.0 million in fiscal 1999 and were 6.1% of total net sales versus 3.6% in the prior year.

GROSS PROFIT.Gross profit decreased $5.8 million, or 11.2% to $45.8 million in fiscal 2000 from
$51.6 million for 1999, but increased as a percentage of net sales to 10.0% in 2000 as compared to 8.1% in 1999. The increase in gross margin percentage is attributable to a lessening of
pricing pressures throughout the industry on information technology products as well as increased margins from the rising service revenues.

SELLING AND MARKETING EXPENSES.Selling and marketing expenses increased $4.9 million, or 14.6% to
$38.6 million in fiscal 2000, from $33.7 million in fiscal 1999, primarily as a result of hiring additional sales personnel. As a percentage of net sales, selling and marketing expense
increased 3.2% to 8.5% in 2000 from 5.3% in 1999, 2.4% of which was attributed to the decline in the volume of net sales with the remainder from the cost of additional sales personnel hired.

GENERAL AND ADMINISTRATIVE EXPENSES.General and administrative expenses decreased $3.6 million, or 23.0% to
$12.1 million in fiscal 2000, from $15.7 million in fiscal 1999. As a percentage of net sales, general and administrative expenses increased to 2.6% in fiscal 2000 from 2.5% in fiscal
1999 due to the decline in sales volume.

OPERATING LOSS.Operating loss increased $1.9 million, or 33.1%, to a loss of $7.6 million in fiscal 2000
from a $5.7 million operating loss in fiscal 1999. Although total operating expenses decreased $3.9 million in fiscal 2000 to $53.4 million from $57.3 million in fiscal
1999, the decrease did not compensate for the $5.8 decline in gross profits. Operating loss, as a percent of net sales, increased to 1.7% in fiscal 2000 from 0.9% in fiscal 1999, due mainly to
declining sales volume.

INTEREST EXPENSE.Interest expense decreased $1.3 million, or 45.1% to $1.6 million in fiscal 2000 from
$2.9 million in fiscal 1999. Of the $1.3 million decrease, $0.6 million related to interest income that was netted in interest expense. The remaining $0.7 million decrease
in interest expense was due to the decline in borrowing under the lines, due to declining sales volumes.

31

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LIQUIDITY AND CAPITAL RESOURCES

During fiscal 2001 operating activities provided cash totaling $31.8 million compared with $9.3 million in the prior fiscal year. A decline of
$42.0 million in accounts receivable represented the largest single cash producing reconciling item.

In
fiscal 2001, accounts receivable, before allowances for returns and doubtful accounts declined 52.3% mainly due to the 46.0% decline in fourth quarter net sales from those in the
prior fiscal year's quarter as well as to improved collection activity. The Company's accounts receivable balance, net of allowances for returns and doubtful accounts, at September 30, 2001 and
2000, was $36.8 million and $79.0 million, respectively. The number of days' sales outstanding in accounts receivable decreased to 37 days from 58 days, as of
September 30, 2001 and 2000, respectively. However, when computing the DSO on fourth quarter fiscal 2001 net sales, the number of days' sales outstanding in accounts receivable decreases to
only 51 days, compared to 58 days in the prior year.

Investing
activities used cash totaling $0.9 million for fiscal 2001 compared with using $22.1 million cash in the prior year. The cash used from investing activities in
fiscal 2001 was for the acquisition of property and equipment.

Financing
activities used net cash totaling $31.9 million in fiscal 2001, while providing cash of $8.6 million in fiscal 2000. Most of the financing cash used was for
the repayments of the lines of credit, which was consistent with the 52.3% decline in accounts receivable upon which the financing is based. In the prior fiscal year financing activities provided cash
of $8.6 million. Most of the cash provided came from $22.7 million raised from private placement sales of stock by two former subsidiaries.

As
of September 30, 2001, the Company had approximately $1.6 million in cash and working capital of $20.2 million. The Company has a revolving credit facility
with IBM Credit Corporation ("IBMCC") that is collateralized by accounts receivable and all other assets of the Company. As of September 30, 2001, such lines of credit provided for maximum
aggregate borrowings of approximately $35.0 million, of which approximately $9.4 million was outstanding.

Interest
on outstanding borrowings under the IBMCC line of credit was increased to prime plus 2% effective April 15, 2001 from prime less .25% that was in effect prior to that.
Borrowings are collateralized by substantially all of the Company's assets. In addition, the line of credit contains certain financing and operating covenants relating to net worth, liquidity,
profitability, repurchase of indebtedness and prohibition on payment of dividends, as well as restrictions on the use of proceeds obtained under the line. At September 30, 2001 the Company was
in compliance with all of the loan covenants.

The
IBMCC financing agreement expired on September 30, 2001, but was extended to January 31, 2002. On December 28, 2001, the Company entered into a
$30 million line of credit agreement for three years with Foothill Capital Corporation ("Foothill"). As part of a separate one year agreement entered into on the same date, IBMCC continues to
provide the Company with a 30 day interest free inventory flooring financing for up to $20.0 million. Borrowing availability on the Foothill credit facility will be directly reduced by
any outstanding flooring financings. The financing agreement with Foothill includes a guarantee to IBMCC for the amount outstanding on the flooring line up to a maximum of $20 million. In
consideration for providing the guarantee, the Foothill agreement contains a 1% annual charge on the average outstanding balances owing to IBMCC. Initially, the Foothill agreement will provide for an
interest rate of one-half of one percent over the prime rate with the future interest rate to be dependent upon the Company meeting certain earnings targets. The minimum variable interest
rate is floored at 6% per annum and at the option of the Company could be based on prime or LIBOR rate. The maximum range for the interest which is based on certain earnings targets is prime plus
1.50% or LIBOR plus 3.75%.

32

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The Company brought in a new management team that in June of 2000, committed to two restructuring plans (see Note 4 to the Consolidated Financial Statements) that reduced the
workforce and replaced brick and mortar offices with virtual offices. While the Company has greatly reduced its former operating losses by the restructuring actions taken, the Company has not yet been
able to return to operating profitability and can not assure that it will be successful in doing so in the future. However, management believes that the amount available from borrowings under the new
line of credit
facility with Foothill and IBMCC will provide sufficient working capital to support the company's operations for the year ending September 30, 2002.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting
for Derivative Instruments and Hedging Activities". The statement requires the recognition of all derivatives as either assets, or liabilities in the balance sheet and the measurement of those
instruments at fair value. The accounting for changes in the fair value of a derivative depends on the planned use of the derivative and the resulting designation. SFAS No. 133 was effective
for fiscal quarters of fiscal years beginning after June 15, 2000. Because the Company does not hold any derivative instruments or engage in hedging activities, the impact of the adoption of
SFAS No. 133 did not have an impact on results of operations or financial position.

In
December 1999, the Securities and Exchange Commission released Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements ("SAB 101"), providing
the SEC's view with respect to the application of generally accepted accounting principles to selected revenue recognition issues. The Company adopted SAB 101, as required, in the fourth quarter of
fiscal 2001. The impact from the adoption of SAB 101 on the Company's consolidated financial statements was not material to the Company's operating results or financial position.

In
July 2000, the Emerging Issues Task Force ("EITF") reached a final consensus on Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs"
("EITF No. 00-10"). When adopted, EITF No. 00-10 requires that all amounts billed to customers in sale transactions related to shipping and handling be classified
as revenue. In addition, EITF No. 00-10 requires that shipping and handling fees and costs in financial statements for prior periods presented for comparative purposes be
reclassified. EITF No. 00-10 must be adopted prior to, or concurrent with, the adoption of SAB No. 101. The adoption of EITF No. 00-10 did not have a
material impact on the Company's results of operations or its financial position.

In
June 2001, the FASB issued SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets (SFAS No. 142). SFAS
No. 141 addresses financial accounting and reporting for business combinations and requires that the purchase method of accounting be used for all business combinations initiated after
June 30, 2001. Under SFAS No. 142, goodwill and certain other intangible assets will no longer be systematically amortized but instead will be reviewed for impairment and written down
and charged to results of operations when their recorded value exceeds their estimated fair value. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001, with
early adoption permitted for entities with fiscal years beginning after March 15, 2001. The Company expects to adopt SFAS No. 141 and No. 142 effective October 1, 2002. The
Company does not anticipate any impact on future financial results as a result of adopting this standard.

In
August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supercedes SFAS No. 121 and Accounting
Principles Board Opinion No. 30, "Reporting the Results of OperationsReporting the Effect of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions." The Company is required to adopt SFAS No. 144 effective October 1, 2002. The Company does not anticipate any impact resulting from the
adoption of SFAS No. 144.

33

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ITEM 7A.  QUANTATIVE AND QUALITIVE DISCLOSURES ABOUT MARKET RISK.

The Company is exposed to market risk from changes in interest rates, primarily as a result of its borrowings under lines of credit. The Company's line of
credit with IBMCC bore interest at the prime rate less 0.25% and was increased to prime plus 2% effective April 15, 2001. Assuming an increase of one-half a percentage point in the
lenders' prime rate on October 1, 2001 and the same average borrowings under the lines of credit as during fiscal 2001, interest expense would increase by approximately $15,000 for fiscal year
2002 as compared to fiscal year 2001.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements are listed in the Index to Financial Statements on page F-1.

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

There is hereby incorporated by reference the information appearing under the captions "ELECTION OF DIRECTORS AND EXECUTIVE OFFICERS" and "COMPLIANCE WITH
SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934" from the Company's definitive proxy statement for the 2002 Annual Meeting of the Stockholders to be filed with the Commission on or before
January 28, 2002.

ITEM 11.  EXECUTIVE COMPENSATION

There is hereby incorporated by reference information appearing under the caption "EXECUTIVE COMPENSATION" from the Company's definitive proxy statement for
the 2002 Annual Meeting of Stockholders to be filed with the Commission on or before January 28, 2002.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

There is hereby incorporated by reference the information appearing under the caption "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" from the
Company's definitive proxy statement for the 2002 Annual Meeting of Stockholders to be filed with the Commission on or before January 28, 2002.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There is hereby incorporated by reference the information appearing under the caption "EXECUTIVE COMPENSATION" and "CERTAIN TRANSACTIONS" from the Company's
definitive proxy statement for the 2002 Annual Meeting of Stockholders to be filed with the Commission on or before January 28, 2002.

PART IV

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

34

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All
other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.





The
Company filed no Current Reports on Form 8-K during the last quarter of the period covered by this Report.

35

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En Pointe Technologies, Inc.        INDEX TO FINANCIAL STATEMENTS

|                                                                                                                  |  | Page
|----------------------------------------------------------------------------------------------------------------- |  | ----
|Report of Independent Accountants                                                                                 |  | F-2 
|Consolidated Balance Sheets as of September 30, 2001 and 2000                                                     |  | F-3 
|Consolidated Statements of Operations for each of the Three Years in the Period Ended September 30, 2001          |  | F-4 
|Consolidated Statement of Stockholders' Equity for each of the Three Years in the Period Ended September 30, 2001 |  | F-5 
|Statements of Cash Flows for each of the Three Years in the Period Ended September 30, 2001                       |  | F-6 
|Notes to Consolidated Financial Statements                                                                        |  | F-8 
|Schedule IIValuation and Qualifying Accounts                                                                     |  | F-27

F1

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REPORT OF INDEPENDENT ACCOUNTANTS

Board
of Directors and Stockholders
En Pointe Technologies, Inc.

In
our opinion, the consolidated financial statements listed in the accompanying index on page F-1 present fairly, in all material respects, the consolidated financial
position of En Pointe Technologies, Inc. and its subsidiaries at September 30, 2001 and 2000, and the consolidated results of their operations and their cash flows for each of the three
years in the period ended September 30, 2001, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the consolidated
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 consolidated financial statements and consolidated financial statement schedule are the responsibility of the Company's management; our responsibility is to express an
opinion on these consolidated financial statements and consolidated 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 consolidated 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.

/s/PRICEWATERHOUSECOOPERS LLP

Los
Angeles, California
November 29, 2001, except for Notes 1 and 3
as to which the date is December 28, 2001

F2

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En Pointe Technologies, Inc.        Consolidated Balance Sheets        (In Thousands Except Share and Per Share Amounts)

|                                                                         |                                                                                                                                                                             | September 30, |                                           
|------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | ------------------------------------------
|
|ASSETS:                                                                  |                                                                                                                                                                             |               |                                           
|Current assets:                                                          |                                                                                                                                                                             |               |                                           
|                                                                         | Cash                                                                                                                                                                        |               | $                                         
|                                                                         | Restricted cash                                                                                                                                                             |               |                                           
|                                                                         | Accounts receivable, net of allowance for returns and doubtful accounts of $2,602 and $3,317, respectively                                                                  |               |                                           
|                                                                         | Inventories, net of allowances of $1,069 and $647, respectively                                                                                                             |               |                                           
|                                                                         | Recoverable taxes                                                                                                                                                           |               |                                           
|                                                                         | Prepaid expenses and other current assets                                                                                                                                   |               |                                           
|                                                                         |                                                                                                                                                                             |               |                                           
|                                                                         |                                                                                                                                                                             |               | Total current assets                      
|Property and equipment, net of accumulated depreciation and amortization |                                                                                                                                                                             |               | 7,843                                     
|Other assets                                                             |                                                                                                                                                                             |               | 213                                       
|                                                                         |                                                                                                                                                                             |               |                                           
|                                                                         |                                                                                                                                                                             |               | Total assets                              
|                                                                         |                                                                                                                                                                             |               |                                           
|LIABILITIES AND STOCKHOLDERS' EQUITY:                                    |                                                                                                                                                                             |               |                                           
|Current liabilities:                                                     |                                                                                                                                                                             |               |                                           
|                                                                         | Borrowings under lines of credit                                                                                                                                            |               | $                                         
|                                                                         | Accounts payable                                                                                                                                                            |               |                                           
|                                                                         | Accrued legal                                                                                                                                                               |               |                                           
|                                                                         | Accrued employee compensation and benefits                                                                                                                                  |               |                                           
|                                                                         | Other accrued liabilities                                                                                                                                                   |               |                                           
|                                                                         | Deferred revenues                                                                                                                                                           |               |                                           
|                                                                         | Other current liabilities                                                                                                                                                   |               |                                           
|                                                                         | Current portion of notes payable                                                                                                                                            |               |                                           
|                                                                         |                                                                                                                                                                             |               |                                           
|                                                                         |                                                                                                                                                                             |               | Total current liabilities                 
|Long term liability                                                      |                                                                                                                                                                             |               | 5,431                                     
|Losses in excess of investment in unconsolidated affilitates             |                                                                                                                                                                             |               | 817                                       
|                                                                         |                                                                                                                                                                             |               |                                           
|                                                                         |                                                                                                                                                                             |               | Total liabilities                         
|Commitments and contingencies (Note 9)                                   |                                                                                                                                                                             |               |                                           
|Stockholders' equity:                                                    |                                                                                                                                                                             |               |                                           
|                                                                         | Preferred stock, $.001 par value: Shares authorized5,000,000 No shares issued or outstanding                                                                               |               |                                           
|                                                                         | Common stock, $.001 par value: Shares authorized40,000,0002001; 6,656,708 shares issued and 6,554,708 outstanding; 2000; 6,529,354 shares issued and 6,483,737outstanding |               |                                           
|                                                                         | Additional paid-in capital                                                                                                                                                  |               |                                           
|                                                                         | Unearned compensation                                                                                                                                                       |               |                                           
|                                                                         | Treasury stock, at cost; 102,000 shares and 45,617 shares in 2001 and 2000, respectively                                                                                    |               |                                           
|                                                                         | Accumulated deficit                                                                                                                                                         |               |                                           
|                                                                         |                                                                                                                                                                             |               |                                           
|                                                                         |                                                                                                                                                                             |               | Total stockholders' equity                
|                                                                         |                                                                                                                                                                             |               |                                           
|                                                                         |                                                                                                                                                                             |               | Total liabilities and stockholders' equity
|                                                                         |                                                                                                                                                                             |               |                                           

See
Notes to Consolidated Financial Statements.

F3

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En Pointe Technologies, Inc.        Consolidated Statements of Operations        (In Thousands Except Per Share Amounts)

|                                                                           |                                                            | Year Ended September 30, |        
|-------------------------------------------------------------------------- | ---------------------------------------------------------- | ------------------------ | -------
|
|Net sales                                                                  |                                                            | $                        | 365,280
|Cost of sales                                                              |                                                            |                          | 325,792
|                                                                           |                                                            |                          |        
|                                                                           | Gross profit                                               |                          |        
|Selling and marketing expenses                                             |                                                            |                          | 29,957 
|General and administrative expenses                                        |                                                            |                          | 11,026 
|Non-recurring charges                                                      |                                                            |                          | 846    
|                                                                           |                                                            |                          |        
|                                                                           | Operating loss                                             |                          |        
|Interest expense, net                                                      |                                                            |                          | 970    
|Other income, net                                                          |                                                            |                          | (269   
|Gain on sale of assets                                                     |                                                            |                          | (95    
|Minority interest                                                          |                                                            |                          |       
|                                                                           |                                                            |                          |        
|Loss before income taxes and loss reversal income (losses) from affiliates |                                                            |                          | (2,947 
|Provision (benefit) for income taxes                                       |                                                            |                          | 86     
|Loss reversal income (losses) from affiliates                              |                                                            |                          | 8,392  
|                                                                           |                                                            |                          |        
|                                                                           | Net income (loss)                                          |                          | $      
|                                                                           |                                                            |                          |        
|                                                                           | Net income (loss) per share:                               |                          |        
|                                                                           |                                                            | Basic                    |        
|                                                                           |                                                            |                          |        
|                                                                           |                                                            | Diluted                  |        
|                                                                           |                                                            |                          |        
|                                                                           | Weighted average shares and share equivalents outstanding: |                          |        
|                                                                           |                                                            | Basic                    |        
|                                                                           |                                                            |                          |        
|                                                                           |                                                            | Diluted                  |        
|                                                                           |                                                            |                          |        

F4

---



En Pointe Technologies, Inc.        Consolidated Statements of Stockholders' Equity        (In Thousands)

|                              |                                                                      | Common Stock |     |   |   |   |   |        |        | (Accumulated
Deficit)
Retained
Earnings |      |        |  
|----------------------------- | -------------------------------------------------------------------- | ------------ | --- | - | - | - | - | ------ | ------ | --------------------------------------- | ---- | ------ | -
|
|
|Balance at September 30, 1998 |                                                                      | 5,900        |     | $ | 6 |   | $ | 18,757 |        | $                                       | (6   | )      | $
|                              | Issuance of common stock under stock option and stock purchase plans |              | 163 |   |   |  |   |        | 873    |                                         |      |       |  
|                              | Issuance of common stock on exercise of warrants                     |              | 13  |   |   |  |   |        |       |                                         |      |       |  
|                              | Warrants issued for services performed                               |              |    |   |   |  |   |        | 300    |                                         |      |       |  
|                              | Deferred compensation related to issuance of stock options           |              |    |   |   |  |   |        | 11,875 |                                         |      |       |  
|                              | Amortization of deferred compensation                                |              |    |   |   |  |   |        |       |                                         |      |       |  
|                              | Income tax benefits related to stock options                         |              |    |   |   |  |   |        | 284    |                                         |      |       |  
|                              | Treasury stock issued to stock purchase plan                         |              |    |   |   |  |   |        | (6     | )                                       |      | 6      |  
|                              | Effect of equity transactions of subsidiary                          |              |    |   |   |  |   |        | 4,813  |                                         |      |       |  
|                              | Net loss                                                             |              |    |   |   |  |   |        |       |                                         |      |       |  
|                              |                                                                      |              |     |   |   |   |   |        |        |                                         |      |        |  
|Balance at September 30, 1999 |                                                                      | 6,076        |     |   | 6 |   |   | 36,896 |        |                                         |     |        |  
|                              | Issuance of common stock under stock option and stock purchase plans |              | 404 |   |   | 1 |   |        | 3,375  |                                         |      |       |  
|                              | Issuance of common stock on exercise of warrants                     |              | 49  |   |   |  |   |        |       |                                         |      |       |  
|                              | Treasury stock purchased                                             |              |    |   |   |  |   |        |       |                                         |      | (1,000 | )
|                              | Treasury stock issued under stock plans                              |              |    |   |   |  |   |        | (312   | )                                       |      | 482    |  
|                              | Income tax benefits related to stock options                         |              |    |   |   |  |   |        | 883    |                                         |      |       |  
|                              | Effect of deconsolidation                                            |              |    |   |   |  |   |        | 63     |                                         |      |       |  
|                              | Net loss                                                             |              |    |   |   |  |   |        |       |                                         |      |       |  
|                              |                                                                      |              |     |   |   |   |   |        |        |                                         |      |        |  
|Balance at September 30, 2000 |                                                                      | 6,529        |     |   | 7 |   |   | 40,905 |        |                                         | (518 | )      |  
|                              | Issuance of common stock under stock option and stock purchase plans |              | 127 |   |   |  |   |        | 225    |                                         |      |       |  
|                              | Deferred compensation                                                |              |    |   |   |  |   |        | 52     |                                         |      |       |  
|                              | Amortization of deferred compensation                                |              |    |   |   |  |   |        |       |                                         |      |       |  
|                              | Treasury stock purchased                                             |              |    |   |   |  |   |        |       |                                         |      | (253   | )
|                              | Treasury stock issued under stock plans                              |              |    |   |   |  |   |        |       |                                         |      | 557    |  
|                              | Net income                                                           |              |    |   |   |  |   |        |       |                                         |      |       |  
|                              |                                                                      |              |     |   |   |   |   |        |        |                                         |      |        |  
|Balance at September 30, 2001 |                                                                      | 6,656        |     | $ | 7 |   | $ | 41,182 |        | $                                       | (214 | )      | $
|                              |                                                                      |              |     |   |   |   |   |        |        |                                         |      |        |  

See Notes to Consolidated Financial Statements.

F5

---



En Pointe Technologies, Inc.        Consolidated Statements of Cash Flows        (In Thousands)

|                                                                               |                                                              | Year Ended September 30, |                                                 
|------------------------------------------------------------------------------ | ------------------------------------------------------------ | ------------------------ | ------------------------------------------------
|
|Net income (loss )                                                             |                                                              | $                        | 5,359                                           
|Adjustments to reconcile net income (loss) to net cash provided by operations: |                                                              |                          |                                                 
|                                                                               | Depreciation and amortization                                |                          |                                                 
|                                                                               | Gain on disposal of assets                                   |                          |                                                 
|                                                                               | Loss on disposal of assets related to restructuring          |                          |                                                 
|                                                                               | Impairment lossOntario facility                             |                          |                                                 
|                                                                               | Allowance for doubtful accounts                              |                          |                                                 
|                                                                               | (Reversal) allowance for returns and other allowances        |                          |                                                 
|                                                                               | Allowance for inventory obsolescense                         |                          |                                                 
|                                                                               | Deferred taxes                                               |                          |                                                 
|                                                                               | Amortization of deferred compensation                        |                          |                                                 
|                                                                               | Warrants issued for services performed                       |                          |                                                 
|                                                                               | Minority interest in loss of subsidiary                      |                          |                                                 
|                                                                               | Loss reversal income from affiliates                         |                          |                                                 
|Changes in operating assets and liabilities:                                   |                                                              |                          |                                                 
|                                                                               | Restricted cash                                              |                          |                                                 
|                                                                               | Marketable securities                                        |                          |                                                 
|                                                                               | Accounts receivable                                          |                          |                                                 
|                                                                               | Inventories                                                  |                          |                                                 
|                                                                               | Refundable taxes                                             |                          |                                                 
|                                                                               | Prepaid expenses and other current assets                    |                          |                                                 
|                                                                               | Other assets                                                 |                          |                                                 
|                                                                               | Accounts payable                                             |                          |                                                 
|                                                                               | Accrued expenses                                             |                          |                                                 
|                                                                               | Other current liabilities and deferred revenues              |                          |                                                 
|                                                                               | Losses in excess of investments in unconsolidated affiliates |                          |                                                 
|                                                                               |                                                              |                          |                                                 
|                                                                               |                                                              |                          | Net cash provided by operating activities       
|Proceeds from sale of property                                                 |                                                              |                          | 28                                              
|Proceeds from sale of investment                                               |                                                              |                          |                                                
|Proceeds from notes receivable from affiliates                                 |                                                              |                          | 368                                             
|Purchase of property and equipment                                             |                                                              |                          | (1,261                                          
|Net equity in deconsolidated subsidiaries                                      |                                                              |                          |                                                
|Reduction in cash due to deconsolidation                                       |                                                              |                          |                                                
|                                                                               |                                                              |                          |                                                 
|                                                                               |                                                              |                          | Net cash (used) provided by investing activities
|Net repayments under lines of credit                                           |                                                              |                          | (31,758                                         
|Net proceeds from sale of shares in subsidiary                                 |                                                              |                          |                                                
|Payment on notes payable                                                       |                                                              |                          | (86                                             
|Net proceeds from sale of common stock under employee plans                    |                                                              |                          | 163                                             
|Treasury stock                                                                 |                                                              |                          | (253                                            
|                                                                               |                                                              |                          |                                                 
|                                                                               |                                                              |                          | Net cash (used) provided by financing activities
|                                                                               |                                                              |                          |                                                 
|(Decrease) increase in cash                                                    |                                                              |                          | (1,032                                          
|Cash at beginning of year                                                      |                                                              |                          | 2,616                                           
|                                                                               |                                                              |                          |                                                 
|Cash at end of year                                                            |                                                              | $                        | 1,584                                           
|                                                                               |                                                              |                          |                                                 

See
Notes to Consolidated Financial Statements.

F6

---



En Pointe Technologies, Inc.        Consolidated Statements of Cash Flows        (In Thousands)

|                                                                      |                                                                       | Year Ended September 30,
|--------------------------------------------------------------------- | --------------------------------------------------------------------- | ------------------------
|
|Supplemental disclosures of cash flow information:                    |                                                                       |                         
|                                                                      | Interest paid                                                         |                         
|                                                                      |                                                                       |                         
|                                                                      | Income taxes paid (refunded)                                          |                         
|                                                                      |                                                                       |                         
|Supplemental schedule of non-cash financing and investing activities: |                                                                       |                         
|                                                                      | Cancellation of note receivable from affiliate in exchange for assets |                         
|                                                                      |                                                                       |                         
|                                                                      | Tax benefit related to stock options                                  |                         
|                                                                      |                                                                       |                         
|                                                                      | Unrealized gain on equity holdings by former subsidiary               |                         
|                                                                      |                                                                       |                         
|                                                                      | Securities received in exchange for stock by former subsidiary        |                         
|                                                                      |                                                                       |                         
|                                                                      | Warrants issued for services performed                                |                         
|                                                                      |                                                                       |                         
|                                                                      | Credit to reflect capitalization of Ontario lease                     |                         
|                                                                      |                                                                       |                         

See
Notes to Consolidated Financial Statements.

F7

---



En Pointe Technologies, Inc.        Notes to Consolidated Financial Statements

1   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

The
Company is a reseller of information technology products and value-added services to large and medium sized companies and government entities with sales and service personnel in
22 markets located throughout the United States. The Company is headquartered in El Segundo, California and was originally incorporated in Texas in 1993 and reincorporated in Delaware in 1996.

LIQUIDITY AND MANAGEMENT PLANS

As reflected in the accompanying financial statements, the Company has experienced declining sales in the last two fiscal years and has incurred losses from
operations during the fiscal years ended September 30, 2001, 2000, and 1999.

To
counter the sales decline, the Company conducted two restructurings of its sales and administrative force in fiscal years 2001 and 2000. Leased sales offices were converted into
virtual offices in which employees work from home based offices. Home offices were equipped with DSL lines and the latest in information technology equipment. Corporate headquarters committed their
full technical and administrative support in assisting field personnel to improving customer support. The Company focused its efforts on increasing the sale of services, which yield a higher gross
margin than product sales.

Losses
of $10.0 million and $13.7 million incurred in fiscal 2000 and 1999, respectively, were attributable to losses from former subsidiaries. As a result of the
Company's voting interest in its former subsidiaries falling under 50%, the Company's former subsidiaries were deconsolidated. The Company began to account for its investments in these former
subsidiaries under the equity method of accounting (see Note 1 "Investment in Affiliates"). At September 30, 2001 the Company has no future obligations to provide financial support to
these affiliates.

To
meet its future financing needs, on December 28, 2001, the Company entered into a $30 million line of credit agreement for three years with Foothill Capital
Corporation ("Foothill") and IBMCC. As part of the agreement, IBMCC continues to provide the Company with a 30-day interest free inventory flooring financing for up to
$20.0 million. Borrowing availability on the Foothill credit facility will be directly reduced by any outstanding flooring financings. The financing agreement with Foothill includes a guarantee
to IBMCC for the $20 million flooring line. In consideration for providing the guarantee, the Foothill agreement contains a 1% annual charge on the average outstanding balances owing to IBMCC.
Initially, the Foothill agreement will provide for an interest rate of one-half of one percent over the prime rate with the future interest rate to be dependent upon the Company meeting
certain earnings targets. The minimum variable interest rate is at 6% per annum and at the option of the Company could be based on prime or LIBOR rate. The maximum range for the interest which is
based on certain earnings targets is prime plus 1.50% or LIBOR plus 3.75%.

In
spite of the efforts made by the Company's management team to improve operations, there can be no assurance that management's plans will be successful in improving profitability.
However, management believes that the amount available under the new line of credit facility with both Foothill and IBMCC will provide sufficient working capital for the year ending
September 30, 2002.

F8

---

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its wholly and majority-owned subsidiaries. All intercompany accounts and
transactions have been eliminated in the consolidated financial statements.

DECONSOLIDATION

During the fiscal year 2000, Firstsource, a previously wholly owned subsidiary, completed a series of private placements that aggregated 8,630,197 shares of
convertible preferred stock (ranging in prices from $3.50 per share to $4.19 per share). With the increase in shares outstanding, as of May 16, 2000, the Company's 6,645,000 shares of common
stock in Firstsource represented a 43.5% voting interest. Effective May 16, 2000, because the Company did not otherwise have control of Firstsource, the Company began to account for its
investment in Firstsource under the equity method of accounting.

In
November 1999, the Company formed a new subsidiary, SupplyAccess, Inc. ("SupplyAccess"), to address the larger corporate customers' needs to find product on the
internet at the most favorable prices. SupplyAccess was designed as an internet portal charging transaction fees to the seller. The Company transferred its Information Technology (IT) department and
related computer equipment and software to SupplyAccess in exchange for a $5.5 million note receivable. There was no gain or loss recognized on this transaction. Concurrently it was agreed that
for a flat quarterly fee of $500,000 SupplyAccess would provide the Company with IT services and would allow Company customers access to its fulfillment engine. During the years ended
September 30, 2001 and 2000, the Company paid SupplyAccess $1,977,341 and $2,000,000, respectively, for such IT services.

In
February 2000, SupplyAccess completed an initial private placement of 12,000,000 shares of convertible preferred stock at $1.50 per share, which reduced the Company's voting
interest to 54%. In addition, in April 2000, SupplyAccess completed a supplemental private placement of 5,088,318 shares of convertible preferred stock at $1.50 per share that reduced the
Company's voting interest to 45.10%. Two subsequent private placements of 5,196,000 shares of convertible preferred stock at $1.50 per share reduced the Company's voting interest even further to
38.65%. Effective April 4, 2000, because the Company's voting interest in SupplyAccess dropped below 50% and the Company does not otherwise have control over SupplyAccess, the Company began to
account for its investment in SupplyAccess under the equity method of accounting.

During
the periods prior to the reduction in the Company's voting interest to below 50%, the Company consolidated the operating results and assets and liabilities of Firstsource and
SupplyAccess. At the dates of deconsolidation, the Company did not recognize the gain of approximately $10.0 million resulting from the accumulated losses recognized in excess of the Company's
ownership interest in the former subsidiaries. The gain was deferred due primarily to the Company's continued guarantee of certain debt obligations and other commitments, which are considered to be an
increase in the Company's investment basis ("adjusted basis") under the equity method of accounting

INVESTMENT IN UNCONSOLIDATED AFFILIATES

The Company had recognized accumulated losses in excess of the Company's ownership interest in the former subsidiaries during the periods in which the former
subsidiaries were consolidated. As of September 30, 2001 and 2000, the Company's adjusted basis under the equity method of accounting had been reduced to zero. In accordance with the equity
method of accounting, the Company has suspended recognition of equity method losses after its adjusted basis was reduced to zero. Any future losses generated are monitored but not reported. Equity
method income is recognized in future periods

F9

---

only after the Company's share of equity method income equals previously unreported equity method losses accumulated during periods in which recognition of equity method losses were suspended. During
the years ended September 30, 2001 and 2000, En Pointe recognized income from affiliates of $8,392,000 and losses from affiliates of $702,000, respectively.

The
following summarizes the most recent combined financial information available of the unconsolidated affiliates (in thousands):

September 30, 2001
and for the Year then Ended SupplyAccess

September 30, 2000
and for the Year then Ended Firstsource and SupplyAccess(Unaudited)

(Unaudited)Current assets

$
3,806

$
38,591Non-current assets

$
6,912

$
11,257Current liabilities

$
3,927

$
17,376Non-current liabilities

$
1,123

$
3,776Shareholders' equity

$
5,668

$
28,696Net revenue

$
3,549

$
67,603Net loss

$
(17,976
)
$
(28,391
)


Effective
April 10, 2001, all of the assets of Firstsource were assigned to Sherwood Partners, Inc., as an assignee for the benefit of creditors of Firstsource and
operations ceased. Therefore, only operations for SupplyAccess have been reported for fiscal 2001.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America 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 reporting period. Actual results could differ from those estimates.

REVENUE RECOGNITION

Product revenues are recognized upon transfer of title and risk of loss and satisfaction of significant obligations, if any. Service revenues are recognized
based on contracted hourly rates, as services are rendered, or upon completion of specified contracted services. Net sales consist of product and service revenues, less discounts and estimated
allowances for sales returns. Cost of sales include the cost of product and services sold and current and estimated allowances for product returns that will not be accepted by the Company's suppliers,
less estimated volume purchase incentives and other purchase rebates received by the Company from its vendors.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all time deposits and highly liquid investments with original maturities of three months or
less to be cash equivalents. The Company has bank balances, including cash equivalents, which at times may exceed federally insured limits.

F10

---

RESTRICTED CASH

Restricted cash at September 30, 2001 and 2000 represents deposits maintained for certain government tax agencies.

INVENTORIES

Inventories consist principally of merchandise being configured for customer orders and merchandise paid for by the Company but not yet shipped by its vendors
to the Company's customers, and are stated at the lower of cost (specific identification method) or market.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful
lives of three to seven years. Leasehold improvements are amortized over the lesser of the remaining lease term or their estimated useful lives. Upon sale, any gain or loss is included in the
statement of operations. Maintenance and minor replacements are charged to operations as incurred.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of financial instruments including cash and cash equivalents, restricted cash, accounts receivable and payable, accrued and other current
liabilities and current maturities of long-term debt approximate fair value due to their short maturity. The carrying amount of long-term liabilities and debt also approximates
fair value.

LONG-LIVED ASSETS

The carrying value of long-term assets is periodically reviewed by management and impairment losses, if any, are recognized when the expected
non-discounted future operating cash flows derived from such assets are less than their carrying value. During 1999, the Company recorded an impairment charge of $6.2 million for
its Ontario facility (see Note 6), which is included in non-recurring charges in the consolidated statements of operations.

ADVERTISING

The Company reports the costs of all advertising in the periods in which those costs are incurred. For the fiscal years ended September 30, 2001, 2000,
and 1999 advertising expense was approximately $299,000, $3,343,000, $1,955,000, respectively.

INCOME TAXES

The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws which will be in effect when the differences are expected to reverse.
Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Income tax expense represents the tax payable for the period and the change
during the period in deferred tax assets and liabilities.

F11

---

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS AND VENDORS

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash deposits and trade accounts
receivable. The Company's cash deposits are placed with various financial institutions; at times such balances with any one financial institution may be in excess of the FDIC insurance limits.

For
the years ended September 30, 2001, 2000 and 1999, one of the Company's customers accounted for approximately 17%, 13% and 19% of net sales, respectively. At
September 30, 2001 and 2000 that customer accounted for 15% and 21% of accounts receivable, respectively. No other single customer accounted for 10% or more of net sales.

The
Company performs ongoing credit evaluations of its customers' financial condition and generally does not require collateral. Estimated credit losses and returns, if any, have been
provided for in the financial statements and have, to date, generally been within management's expectations.

For
the year ended September 30, 2001 and 2000, purchases from three vendors accounted for 63% and 48% of total purchases, respectively.

TREASURY STOCK

The Company uses the specific identification method for accounting for treasury stock. During the fiscal year, the Company purchased 120,000 shares for
approximately $253,000, and subsequently, issued approximately 64,000 shares for employee stock benefit plans for approximately $163,000. At September 30, 2001, there remained approximately
102,000 treasury shares with a cost of approximately $214,000.

STOCK BASED COMPENSATION

The Company accounts for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion ("APB")
No. 25, "Accounting for Stock Issued to Employees," and complies with the disclosure provisions of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation." Under APB 25, compensation expense is recognized over the vesting period based on the difference, if any, on the date of grant between the deemed fair value of the Company's
stock for accounting purposes and the exercise price. The Company accounts for stock issued to non-employees in accordance with the provisions of SFAS No. 123 and Emerging Issues
Task Force Issue No. 96-18.

VENDOR PROGRAMS

The Company receives volume incentives and purchase rebates from certain manufacturers related to sales of certain products, which are recorded as a reduction
of cost of goods sold when earned. The Company also receives manufacturer reimbursement for certain training, promotional and marketing activities that offset the expenses incurred by the Company.

EARNINGS PER SHARE

Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding
during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares and common share equivalents
outstanding during the period. Common

F12

---

share equivalents, consisting of stock options and warrants, are not included in the calculation to the extent they are antidilutive.

COMPREHENSIVE INCOME

SFAS No. 130, "Reporting Comprehensive Income." establishes standards for reporting and displaying comprehensive income and its components in financial
statements. SFAS No. 130 requires that all items that are required to be reported under accounting standards as components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. The Company does not have any components of comprehensive income for fiscal years ended September 30, 2001, 2000 and 1999.

SEGMENT REPORTING

The Company discloses segment information in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS
No. 131 emphasizes a "management" approach. The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as
the source of the Company's reportable segments. SFAS No. 131 also requires disclosures about products and services, geographic areas and major customers. See Note 14, "Segment
Information".

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting
for Derivative Instruments and Hedging Activities". The statement requires the recognition of all derivatives as either assets, or liabilities in the balance sheet and the measurement of those
instruments at fair value. The accounting for changes in the fair value of a derivative depends on the planned use of the derivative and the resulting designation. SFAS No. 133 was effective
for fiscal quarters of fiscal years beginning after June 15, 2000. Because the Company does not hold any derivative instruments or engage in hedging activities, the impact of the adoption of
SFAS No. 133 did not have an impact on results of operations or financial position.

In
December 1999, the Securities and Exchange Commission released Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements ("SAB 101"), providing
the SEC's view with respect to the application of generally accepted accounting principles to selected revenue recognition issues. The Company adopted SAB 101, as required, in the fourth quarter of
fiscal 2001. The impact from the adoption of SAB 101 on the Company's consolidated financial statements was not material to the Company's operating results or financial position.

In
July 2000, the Emerging Issues Task Force ("EITF") reached a final consensus on Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs"
("EITF No. 00-10"). When adopted, EITF No. 00-10 requires that all amounts billed to customers in sale transactions related to shipping and handling be classified
as revenue. In addition, EITF No. 00-10 requires that shipping and handling fees and costs in financial statements for prior periods presented for comparative purposes be
reclassified. EITF No. 00-10 must be adopted prior to, or concurrent with, the adoption of SAB No. 101. The adoption of EITF No. 00-10 did not have a
material impact on the Company's results of operations or its financial position.

F13

---

In June 2001, the FASB issued SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 addresses financial
accounting and reporting for business combinations and requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Under SFAS
No. 142, goodwill and certain other intangible assets will no longer be systematically amortized but instead will be reviewed for impairment and written down and charged to results of
operations when their recorded value exceeds their estimated fair value. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001, with early adoption permitted for
entities with fiscal years beginning after March 15, 2001. The Company expects to adopt SFAS No. 141 and No. 142 effective October 1, 2002. The Company does not anticipate
any impact on future financial results as a result of adopting this standard.

In
August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supercedes SFAS No. 121 and Accounting
Principles Board Opinion No. 30, "Reporting the Results of OperationsReporting the Effect of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions." The Company is required to adopt SFAS No. 144 effective October 1, 2002. The Company does not anticipate any impact resulting from the adoption of
SFAS No. 144.

2   PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

September 30,2001

2000Computer equipment and software

$
8,072

$
6,112Office equipment and other


1,306


1,195Leasehold improvements


474


436Capitalized lease (see Note 6)


5,073


5,44214,925


13,185Less: Accumulated depreciation and amortization


(7,082
)

(5,698
)$
7,843

$
7,487


Depreciation
expense was $1,414,000, $2,278,000 and $2,296,000 for the years ended September 30, 2001, 2000, and 1999 respectively.

3   LINES OF CREDIT

At September 30, 2001 and 2000, the Company had outstanding borrowings of $9,440,000 and $41,198,000, respectively, under lines of credit with various
financial institutions.

At
September 30, 2001 and 2000, the line of credit agreements provides financing for cash advances and flooring of up to $35 million and $83 million,
respectively. Under the flooring agreement, there is an interest free period of approximately 30 days, depending on the product sold. Thereafter, and for all cash advances made, the annual
interest rates for borrowings are prime plus 2% (beginning April 1, 2001) and prime less .25% prior.

Total
borrowings under the line of credit agreements are collateralized by eligible accounts receivable (as defined in the agreements) and substantially all of the Company's assets.
Borrowings are limited to specific percentages of the Company's accounts receivable and inventory balances. The line

F14

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of credit agreements contain various covenants, which provide, among other things, a restriction on dividend payments and the requirement for the maintenance of certain financial ratios. At
September 30, 2001 the Company was in compliance with the various debt covenants contained in financing agreement.

The
Company's $35 million dollar line of credit is with IBM Credit Corporation ("IBMCC") and expired on September 30, 2001. IBMCC has extended the line until
January 30, 2002. On December 28, 2001, the Company entered into a $30 million line of credit agreement for three years with Foothill. As part of a separate one year agreement
entered into on the same date, IBMCC continues to provide the Company with a 30-day interest free inventory flooring financing for up to $20.0 million. Borrowing availability on the
Foothill credit facility will be directly reduced by any outstanding flooring financings. The financing agreement with Foothill includes a guarantee to IBMCC for the amount outstanding on the flooring
line up to a maximum of $20 million. In consideration for providing the guarantee, the Foothill agreement contains a 1% annual charge on the average outstanding balances owing to IBMCC.
Initially, the Foothill agreement will provide for an interest rate of one-half of one percent over the prime rate with the future interest rate to be dependent upon the Company meeting
certain earnings targets. The minimum variable interest rate is at 6% per annum and at the option of the Company could be based on prime or LIBOR rate. The maximum range for the interest which is
based on certain earnings targets is prime plus 1.50% or LIBOR plus 3.75%.

The
prime rate of interest was 6.50%, and 9.50% at September 30, 2001 and 2000, respectively, and the weighted average interest rates for the years ended September 30,
2001, 2000 and 1999 were 9.11%, 8.49%, and 7.63%, respectively. Interest expense for the years ended September 30, 2001, 2000 and 1999 was $1,002,000, $2,308,000, and $3,172,000 respectively.

4   NON-RECURRING CHARGES

Non-recurring charges of $846,000 for the fiscal year ended September 30, 2001 include restructuring charges of $1,876,000, a legal
settlement of $225,000, less reversal of plaintiff legal fees that were recorded in the prior year as a result of an adverse judgment of $1,255,000 (See Note 13). Non-recurring
charges for the fiscal year ended September 30, 2000 include a provision for litigation of $1,173,000 related to an adverse judgment received on a legal matter (see Note 13), and
restructuring charges of $1,544,000.

In
June 2001, the Company underwent its second restructuring, part of its plan to convert from fixed sales offices to virtual sales offices. In executing the restructure, the
workforce was reduced by sixty-four employees and nine rental locations were either identified for closure and will be converted to virtual sales locations or will be reduced in size.

In
June 2000, the Company underwent its initial restructuring charge as a result of reorganizing certain aspects of its business. Elements of the restructuring plan included
streamlining the organization, reducing costs and expenses, and aligning resources to accelerate the growth potential in the Company's core business. In executing the restructure, the workforce was
reduced by one hundred and five employees and independent contractors at various levels. Five offices were also closed and converted to virtual sales locations.

F15

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The following table summarizes the restructuring charges and the remaining reserves associated with the two restructurings:

|                                          |  | Beginning
Accrual
October 1, 2000 |     | Expensed
Through
September 30, 2001 |   | Cash
Payments |  | Remaining
Accrual
September 30, 2001
|----------------------------------------- |  | --------------------------------- | --- | ----------------------------------- | - | ------------- |  | ------------------------------------
|
|Separation costs for terminated employees |  | $                                 | 19  |                                     | $ | 175           |  | $                                   
|Facilities closing and downsizing         |  |                                   | 165 |                                     |   | 1,701         |  |                                     
|                                          |  |                                   |     |                                     |   |               |  |                                     
|                                          |  | $                                 | 184 |                                     | $ | 1,876         |  | $                                   
|                                          |  |                                   |     |                                     |   |               |  |                                     

|                                          |  | Beginning
Accrual
October 1, 1999 |   | Expensed
Through
September 30, 2000 |   | Cash
Payments |  | Remaining
Accrual
September 30, 2000
|----------------------------------------- |  | --------------------------------- | - | ----------------------------------- | - | ------------- |  | ------------------------------------
|
|Separation costs for terminated employees |  | $                                 |  |                                     | $ | 928           |  | $                                   
|Facilities closing and downsizing         |  |                                   |  |                                     |   | 616           |  |                                     
|                                          |  |                                   |   |                                     |   |               |  |                                     
|                                          |  | $                                 |  |                                     | $ | 1,544         |  | $                                   
|                                          |  |                                   |   |                                     |   |               |  |                                     

The
results of operations for the year ended September 30, 1999 included non-recurring charges of $7,917,000. The charges consist of a provision for litigation of
$1,725,000 related to an adverse judgment received on a legal matter (see Note 13), and an impairment loss of $6,192,000 related to the Company's Ontario facility (See Note 6)

5   GAIN ON SALE OF ASSETS

In fiscal 2000, in conjunction with a former subsidiary's private placement, marketable securities were acquired that produced a gain of $3,938,000 upon sale.
The securities were acquired on February 23, 2000 with a cost basis of $6,800,000.

For
fiscal 1999, the gain on sale of assets resulted from the sale of shares held by the Company in Shopping.com. Net proceeds received were $4,990,000 on an adjusted carrying value
of the shares of $562,000.

6   SALE-LEASEBACK OF ONTARIO FACILITY

On June 24 1999, the Company entered into a sale-leaseback arrangement. Under the arrangement, the Company sold its Ontario facility for
$5.5 million and leased it back under a triple net lease term of 15 years. The base rent is $544,000 the first year with 3% increases in each of the following 15 years. The terms
of the lease permit the Company to terminate the lease, at no cost nor penalty, at the end of the seventh and tenth year.

The
Company currently occupies approximately 55% of the facility and originally planned to sublease the remaining space. However, under SFAS No. 98 "Accounting for Leases",
subleasing space in excess of 10% is considered retaining a financial interest in the property and requires that the property remain on the financial statements. The balance sheet therefore reflects
the property and equipment at its estimated fair value and related liability until the lease qualifies as a "normal leaseback" under SFAS No. 98.

F16

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The aggregate non-cancellable and annual future minimum lease payments for the term up to which the Company may terminate the lease for the Ontario facility are as follows
(in thousands):

2002

$
5832003


6012004


6182005


6352006


6562007 and thereafter


566$
3,659


During
the three months ended March 31, 1999, the Company, in accordance with SFAS No. 121, recognized a charge for impairment relating to the Ontario facility of
approximately $6.2 million. The
$6.2 million impairment loss was based on a $5.5 million estimated sale price less $11.1 million of carrying costs, less estimated selling expenses of $0.2 million, less
capitalized interest and loan fees of $0.4 million. Approximately 73% of the impairment loss related to the property decline related to the special purpose improvements, with the balance
applicable to personal property, including warehouse and computer equipment.

For
the year ended September 30, 2001, 2000 and 1999, Ontario facility rent expense, which is characterized as financing lease under SFAS No. 98, was approximately
$568,000, $551,000 and $148,000, respectively.

7   EMPLOYEE BENEFIT PLAN

The Company has an employee savings plan (the "401(k) Plan") that covers substantially all full-time employees who are twenty-one years
of age or older. Company contributions to the 401(k) Plan are at the discretion of the Board of Directors and vest over seven years of service. To date the Company has made no contributions to the
401(k) Plan.

8   INCOME TAXES

The components of the income tax provision (benefit) are as follows (in thousands):

|          |         | Year Ended September 30, |   
|--------- | ------- | ------------------------ | --
|
|Current:  |         |                          |   
|          | Federal |                          | $ 
|          | State   |                          |   
|          |         |                          |   
|          |         |                          | 86
|          |         |                          |   
|Deferred: |         |                          |   
|          | Federal |                          |   
|          | State   |                          |   
|          |         |                          |   
|          |         |                          |  
|          |         |                          |   
|          |         | $                        | 86
|          |         |                          |   

F17

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The
provision (benefit) for income taxes differs from the amount computed by applying the federal statutory rate to income (loss) before provision (benefit) for income taxes as
follows:

|                                     |  | Year Ended September 30, |  
|------------------------------------ |  | ------------------------ | -
|
|Federal statutory rate               |  | 34                       | %
|State taxes, net of federal benefits |  | 2                        |  
|Expenses not currently deductible    |  |                         |  
|Losses providing no tax benefits     |  |                         |  
|Minority interest                    |  |                         |  
|Net operating loss carryback         |  |                         |  
|Affilate income not subject to tax   |  | (52                      | )
|Valuation allowances                 |  | 18                       |  
|                                     |  |                          |  
|                                     |  | 2                        | %
|                                     |  |                          |  

Deferred
income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes. Due to the uncertainty surrounding the realization of the net deferred tax asset of $5.9 million, management has provided a full valuation allowance. Significant components
of deferred taxes are as follows (in thousands).

|                                   |                                               | September 30, |       
|---------------------------------- | --------------------------------------------- | ------------- | ------
|
|Deferred tax assets:               |                                               |               |       
|                                   | Accounts receivable and allowance for returns |               | $     
|                                   | Expenses not currently deductible             |               |       
|                                   | Depreciation                                  |               |       
|                                   | Net operating loss                            |               |       
|                                   | Affiliate losses not currently deductible     |               |       
|                                   | State income taxes                            |               |       
|                                   |                                               |               |       
|                                   |                                               |               | 6,153 
|Deferred tax liabilities:          |                                               |               |       
|                                   | Discount on receivables                       |               |       
|                                   | Depreciation                                  |               |       
|                                   |                                               |               |       
|                                   |                                               |               | (303  
|Net deferred tax asset (liability) |                                               |               | 5,850 
|Valuation allowance                |                                               |               | (5,850
|                                   |                                               |               |      
|                                   |                                               |               |       
|Deferred tax liability             |                                               | $             |      
|                                   |                                               |               |       

F18

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The
Company has the following Federal net operating loss ("NOL") available:

Year NOL Incurred

NOL Amount

Expiration Date2000

$
4,713

20202001


2,615

2021$
7,328


Since
the fiscal 2000 NOL is attributable to the exercise of stock options by employees, any realization of income tax benefits from the $4,713 NOL will be considered an adjustment to
additional paid-in capital and will not benefit future earnings.

9   COMMITMENTS AND CONTINGENCIES

The Company leases office facilities and various types of office equipment. These leases extend over a period of up to five years, many of which contain
renewal options and/or escalation clauses. These are accounted for as operating leases.

Estimated
future minimum lease payments under operating leases having initial or remaining non-cancelable lease terms in excess of one year at September 30, 2001
were approximately as follows (in thousands):

2002

$
2,4592003


1,8822004


1,3422005


1,1442006


8462007 and thereafter


$
7,673


Rent
expense for the years ended September 30, 2001, 2000, and 1999 under all operating leases was approximately $1,794,000, $2,273,000 and $2,296,000 respectively.

F19

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10  EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share amounts):

|                                                          |                                            | Year Ended September 30, |      
|--------------------------------------------------------- | ------------------------------------------ | ------------------------ | -----
|
|Net income (loss)                                         |                                            | $                        | 5,359
|                                                          |                                            |                          |      
|Denominator:                                              |                                            |                          |      
|                                                          | Weighted-average shares outstanding        |                          |      
|Effect of dilutive securities:                            |                                            |                          |      
|                                                          | Dilutive potential of options and warrants |                          |      
|                                                          |                                            |                          |      
|Weighted-average shares and share equivalents outstanding |                                            |                          | 6,685
|                                                          |                                            |                          |      
|Basic income (loss) per share                             |                                            | $                        | 0.81 
|                                                          |                                            |                          |      
|Diluted income (loss) per share                           |                                            | $                        | 0.80 
|                                                          |                                            |                          |      

The
dilutive potential of stock options and warrants, which include 324,004 shares and 69,090 shares respectively for the years ended September 30, 2000 and 1999, has been
excluded from the calculation of diluted loss per share because the effect of their inclusion would have been anti-dilutive.

11  STOCK OPTIONS AND WARRANTS

In March 1996, the Company instituted a qualified (Incentive Stock Option Plan) and non-qualified stock option plan which provides currently
that options for a maximum of 2,760,000 shares of common stock may be granted to directors, officers, and key employees with an exercise period not to exceed ten years. The stock options are generally
exercisable at fair market value at the date of grant and generally vest on a pro-rata basis ending on the third, ninth and twenty-seventh months following the grant date or 25% in six
months with the remaining 75% vesting quarterly over three and one half years. As of September 30, 2001 and 2000, the shares available for grant under the plan were 512,985 and 88,604,
respectively.

F20

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The following is a summary of stock option activity:

|                                  |           | Non
Qualified |         | Incentive |          | Total
Exercise Value
(In Thousands) |        | Price Range
Per Share
|--------------------------------- | --------- | ------------- | ------- | --------- | -------- | ----------------------------------- | ------ | ---------------------
|Outstanding at September 30, 1998 |           | 153,668       |         | 940,587   |          | $                                   | 10,720 |                      
|                                  | Granted   |               | 10,000  |           | 334,000  |                                     |        | 2,062                
|                                  | Exercised |               | (87,167 | )         | (41,775  | )                                   |        | (916                 
|                                  | Cancelled |               |        |           | (413,505 | )                                   |        | (5,125               
|                                  |           |               |         |           |          |                                     |        |                      
|Outstanding at September 30, 1999 |           | 76,501        |         | 819,307   |          |                                     | 6,741  |                      
|                                  | Granted   |               | 10,000  |           | 100,250  |                                     |        | 1,589                
|                                  | Exercised |               | (69,834 | )         | (298,909 | )                                   |        | (2,872               
|                                  | Cancelled |               |        |           | (57,136  | )                                   |        | (434                 
|                                  |           |               |         |           |          |                                     |        |                      
|Outstanding at September 30, 2000 |           | 16,667        |         | 563,512   |          |                                     | 5,024  |                      
|                                  | Granted   |               | 880,000 |           | 377,250  |                                     |        | 2,430                
|                                  | Exercised |               | (9,000  | )         | (161     | )                                   |        | (15                  
|                                  | Cancelled |               |        |           | (181,541 | )                                   |        | (1,350               
|                                  |           |               |         |           |          |                                     |        |                      
|Outstanding at September 30, 2001 |           | 887,667       |         | 759,060   |          | $                                   | 6,089  |                      
|                                  |           |               |         |           |          |                                     |        |                      

|                   |  | Weighted
Options
Exercisable |  | Average
Exercise Price |      | Remaining
Contractual
Life
|------------------ |  | ---------------------------- |  | ---------------------- | ---- | --------------------------
|September 30, 1999 |  | 294,332                      |  | $                      | 7.60 |                           
|September 30, 2000 |  | 301,588                      |  | $                      | 8.24 |                           
|September 30, 2001 |  | 523,099                      |  | $                      | 5.64 |                           

The
Company has adopted the disclosure only provisions of SFAS No. 123, "Accounting for Stock Based Compensation." If compensation expense for the stock options had been
determined using "fair value" at the grant date for awards in 2001, 2000 and 1999, consistent with the provisions of SFAS No. 123, the Company's net income (loss) and net income (loss) per
share would have been reduced to the pro forma amounts indicated below (in thousands, except per share amounts):

|                                              |  | Year Ended September 30, |      
|--------------------------------------------- |  | ------------------------ | -----
|
|Net income (loss) as reported                 |  | $                        | 5,359
|Net income (loss) pro forma                   |  | $                        | 4,257
|Basic earnings (loss) per share as reported   |  | $                        | 0.81 
|Diluted earnings (loss) per share as reported |  | $                        | 0.80 
|Basic income (loss) per share pro forma       |  | $                        | 0.65 
|Diluted income (loss) per share pro forma     |  | $                        | 0.64 

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The
fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in
2001, 2000 and 1999:

|                              |  | Expected
Dividend
Yield |   | Expected
Volatility |   | Risk Free
Interest
Rate |   | Expected
Lives
|----------------------------- |  | ----------------------- | - | ------------------- | - | ----------------------- | - | --------------
|Year ended September 30, 1999 |  | 0                       | % | 75                  | % | 5.12                    | % | 5.0           
|Year ended September 30, 2000 |  | 0                       | % | 99                  | % | 6.28                    | % | 5.0           
|Year ended September 30, 2001 |  | 0                       | % | 99                  | % | 3.70                    | % | 5.0           

In
May 1999 Firstsource, a former subsidiary, adopted a stock option plan. During the year ended September 30, 1999, Firstsource issued options to purchase 4,196,500
shares of its common stock at exercise prices of $0.13 to $7.00 per share. Of those options granted, options to purchase 3,233,061 shares of common stock were exercisable at September 30, 1999.

In
connection with the stock options granted by Firstsource, the Company recorded unearned deferred compensation of $11,801,000. In September 1999 Firstsource modified the
vesting schedule of stock options outstanding to accelerate vesting. During the fiscal year ended September 30, 1999 $10,315,000 was expensed, of which approximately $9,600,000 was due to the
accelerated vesting.

12  EMPLOYEE STOCK PLAN

The Company has an Employee Stock Purchase Plan (the "Plan") under which there remains authorized and available for sale to employees an aggregate of 172,145
shares of the Company's common stock at September 30, 2001. The Plan, which is intended to qualify under Section 423 of the Internal Revenue Code, permits eligible employees to purchase
common stock, subject to certain limitations, up to 20% of their compensation. Purchases of stock under the Plan are made twice
annually from amounts withheld from payroll at 85% of the lower of the fair market value of the common stock at the beginning or end of the six month offering period.

13  LITIGATION

In March of 1999, a jury verdict in the Los Angeles County (California) Superior Court relating to litigation brought by Novaquest Infosystems resulted in the
Company owing a total of $1,425,000. Under the court decree, $375,000 was awarded for intentional interference with plaintiffs' prospective economic advantage tort claim, $50,000 was awarded for
breach of contract, and $1 million was awarded for punitive damages. The Company has appealed the court decision.

In
addition, in April 2000 the court awarded the plaintiffs attorneys' fees and costs under the breach of contract claim of approximately $1,218,000. The Company objected to
the amount of the cost reimbursement allowed for attorneys' fees and appealed the court's ruling. After the appellate court remanded En Pointe's appeal to the trial court for a redetermination of the
prevailing party, the lower court subsequently ruled that no party prevailed in this matter. As a result of this ruling, En Pointe was not required to pay Novaquest's legal fees and costs and
consequently all such accrued costs of $1.3 million were reversed and are included as a component of non-recurring charges.

On
June 8, 2001, En Pointe filed a demand for arbitration against SupplyAccess, Inc. ("SupplyAccess") with the American Arbitration Association alleging that
SupplyAccess had to render certain services under an agreement between the parties. This was necessitated by SupplyAccess's threats to discontinue such contractually obligated services unless En
Pointe increased its monthly

F22

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payments to SupplyAccess. In counterclaims brought on June 28, 2001, SupplyAccess has alleged that En Pointe violated certain provisions of both agreements, seeking more than $2,000,000 in
damages. En Pointe has subsequently filed several new claims against SupplyAccess.

Effective
September 21, 2001, En Pointe and SupplyAccess reached a settlement in this matter. Under the terms of the settlement, SupplyAccess sold to En Pointe all
enhancements, upgrades, modifications, customizations, and derivative works related to the SAP software used to run En Pointe's business, granted to En Pointe a limited exclusive license to the
AccessPointe Web Site (the vehicle through which En Pointe customers access the information provided by En Pointe) and agreed to provide various transition and support services to En Pointe in order
to educate En Pointe as to the information required to transition the services performed by SupplyAccess. In exchange, En Pointe agreed to pay SupplyAccess $1,125,000 (which included En Pointe
canceling a $750,000 note obligation owed by SupplyAccess) as consideration for the assignment and transfer of the En Pointe SAP Application software all rights title and interest in several pieces of
equipment, web servers, and other hardware assets, a $1.00 license fee, and monthly payments of $15,000.

On
November 28, 2001, an action was brought against the Company by Ameriserve Food Distribution, Inc. et al., Debtor and AFD Fund, on behalf of the substantively,
consolidated post-confirmation estate of Debtors Ameriserve Food Distribution, Inc., et al., Plaintiff in the United States Bankruptcy Court District of Delaware, Case
No. 00-358 (PJW). The plaintiff alleges that En Pointe received $574,069 in preferential transfer payments from Ameriserve Food Distribution, Inc. that the estate of the
debtors is entitled to recover. Management, after consulting with legal counsel, has determined that the potential for an adverse outcome in this litigation cannot be estimated as the case is in its
preliminary stage.

On
or about September 18, 2000, a claim for arbitration was submitted by First Union Securities to the New York Stock Exchange against, among others, En Pointe
Technologies Inc. and its President and Chief Executive Officer, Attiazaz Din (the "En Pointe defendants"). First Union alleges that En Pointe and Din violated federal and state securities laws
in connection with the promotion and sale of En Pointe stock in the last half of 1999 and the first half of 2000. The En Pointe defendants dispute jurisdiction and intend to vigorously defend the
allegations.

In
January of 2001, five of the Company's directors, one current officer, and certain former officers along with four unrelated parties were named in a shareholder's derivative
complaint alleging that such persons improperly benefited form the sales of shares of the Company's common stock and seeking a recovery by the Company of the damages it sustained as a result of such
activities (Fredrick V. Din, et a., Superior Court of California, County of Los Angeles Case No. YC 039456). The defendants intend to vigorously defend the allegations and believe the case is without
merit.

In
February of 2001, the Company and five of the Company's directors, one current officer, and certain former officers along with seven unrelated parties were named in a shareholder
class action complaint alleging that the defendants made misrepresentations regarding the Company and that the individual defendants improperly benefited from the sales of shares of the Company's
common stock and seeking a recovery by the Company's shareholders of the damages sustained as a result of such activities (In Re En Pointe Technologies Securities Litigation, United States District
Court, Southern District of California Case No. 01 CV0205L (CGA)). The En Pointe defendants have filed a Motion to Dismiss, which is set to be heard on February 19, 2002. The En Pointe
defendants intend to vigorously defend the allegations.

In
December, 2000 the Company and certain current and former directors and officers along with several unrelated parties were named in a complaint alleging that the defendants made

F23

---

misrepresentations regarding the Company and that the individual defendants improperly benefited from the sales of shares of the Company's common stock and seeking a recovery by the Company's
shareholders of the damages sustained as a result of such activities (Crosby V. En Pointe Technologies,
it al., Superior Court of California, County of San Diego, No. GIC 759905). The parties have stipulated to a stay of the case pending the class action. The En Pointe defendants intend to vigorously
defend the allegations.

On
October 5, 2001, an action was brought against the Company by Qamar Zaidi in the San Bernardino County Superior Court, Case No. RCV 058254. The plaintiff, a former employee,
alleges breach of contract, anticipatory breach and repudiation, breach of the implied covenant of good faith and fair dealing, and conversion. The claim asks for $710,000 in damages, $500,000 in
punitive damages, and penalties under the labor code of $150,000. Management, after consulting with legal counsel, has determined that the potential for an adverse outcome in this litigation cannot be
estimated as the case is in its preliminary stage.

In
March of 2000, an action was brought against the Company in the Orange County Superior Court contending fraud and breach of contract arising from the purchase by a former
subsidiary of the Company of certain assets from a company formerly known as First Source International ("FSI"). The lawsuit is filed on behalf of creditors of a defunct corporation, Paragon
Solutions, Inc, formerly known as FSI. It is contended that FSI was unable to obtain their contingent earn-out under the agreement because of faulty software provided by the Company.
Damages sought range between $0.8 to $3.5 million with the plaintiff seeking punitive damages of $10 million. The Company was successful in compelling the action to be moved to
arbitration, but since November 17, 2000 when the Court of Appeals rejected the request by the plaintiff to prohibit arbitration, no arbitration proceedings have commenced. The Company
vigorously denies the charges and contends that full disclosure was made as to any problems with the software and that the former subsidiary to this date has not produced net income. Legal counsel is
currently unable to predict the outcome of this litigation. During the past fiscal year, the case has remained dormant.

There
are various other claims and litigation proceedings in which the Company is involved in the ordinary course of business. While the outcome of these claims and proceedings cannot
be predicted with certainty, after consulting with legal counsel, management does not believe that the outcome of any of these matters will have a material adverse affect on the Company's business,
financial position and results of operations or cash flows.

14  Segment Information

Before deconsolidation, the Company consisted primarily of three business units (companies), En Pointe Technologies, Firstsource and SupplyAccess. Each of the
companies had separate management teams, infrastructures and facilities.

En
Pointe Technologies focuses its efforts on sales of technology products and services to Fortune 1000 and government customers. En Pointe Technologies utilizes both a traditional
national sales force with sales representatives in major metropolitan areas as well as available electronic interfaces between En Pointe and its customers and vendors.

Firstsource
focused its efforts on the sale of technology products and other services primarily via the Internet to consumers and small to medium sized businesses.

SupplyAccess
offers a hosted business-to-business web application integrated with a customized SAP-based enterprise fulfillment engine.

F24

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The accounting policies of the segments are the same as those described in Note 1 "Organization and Summary of Significant Accounting Policies" included in this report on
Form 10-K for the year ended September 30, 2001. The Company evaluates the performances (Segment Profit) of its segments and allocates resources to them based on earnings
after income taxes. During the quarter ended June 30, 2000, the Company began to account for its investments in Firstsource and SupplyAccess under the equity method of accounting (see
Note 1).

The
tables below present information about reported segments for the years ended September 30, 2000 and 1999. For the year ended September 30, 2001 the Company only
operated in one segment.

|Year Ended September 30, 2000 (in thousands): |  | En Pointe
Technologies, Inc. |         | Firstsource |   | SupplyAccess |   | Total |      
|--------------------------------------------- |  | ---------------------------- | ------- | ----------- | - | ------------ | - | ----- | -----
|Net sales                                     |  | $                            | 460,237 |             | $ | 34,184       |   | $     |     
|Gross profit                                  |  | $                            | 45,473  |             | $ | 3,083        |   | $     |     
|Other income                                  |  | $                            | 439     |             | $ | (106         | ) | $     | 16   
|Interest expense                              |  | $                            | 1,727   |             | $ | (49          | ) | $     | 40   
|Depreciation and amortization                 |  | $                            | 1,592   |             | $ | 214          |   | $     | 472  
|Other noncash items                           |  | $                            | 2,040   |             | $ | 865          |   | $     |     
|Gain on sale of investment                    |  | $                            |        |             | $ |             |   | $     | 3,938
|Nonrecurring charges                          |  | $                            | 2,717   |             | $ |             |   | $     |     
|Income tax benefit                            |  | $                            | 540     |             | $ | (5           | ) | $     |     
|Segment (loss) profit                         |  | $                            | (9,409  | )           | $ | (10,368      | ) | $     | 392  
|Segment assets                                |  | $                            | 101,688 |             | $ |             |   | $     |     
|Additions to long-lived assets                |  | $                            | 1,043   |             | $ |             |   | $     |     

|Year Ended September 30, 1999 (in thousands): |  | En Pointe
Technologies, Inc. |         | Firstsource |   | SupplyAccess |   | Total |  
|--------------------------------------------- |  | ---------------------------- | ------- | ----------- | - | ------------ | - | ----- | -
|Net sales                                     |  | $                            | 638,270 |             | $ | 30,000       |   | $     | 
|Gross profit                                  |  | $                            | 51,633  |             | $ | 2,073        |   | $     | 
|Other income                                  |  | $                            | 46      |             | $ | 71           |   | $     | 
|Interest expense                              |  | $                            | 2,914   |             | $ | 258          |   | $     | 
|Depreciation and amortization                 |  | $                            | 2,142   |             | $ | 305          |   | $     | 
|Other noncash items                           |  | $                            | 3,789   |             | $ | 10,668       |   | $     | 
|Gain on sale of investment                    |  | $                            | 4,428   |             | $ |             |   | $     | 
|Nonrecurring charges                          |  | $                            | 7,917   |             | $ |             |   | $     | 
|Income tax benefit                            |  | $                            | 1,214   |             | $ |             |   | $     | 
|Segment (loss) profit                         |  | $                            | (2,930  | )           | $ | (13,664      | ) | $     | 
|Segment assets                                |  | $                            | 122,777 |             | $ | 10,832       |   | $     | 
|Additions to long-lived assets                |  | $                            | 4,640   |             | $ | 801          |   | $     | 

The
Company operates in only one geographic segment.

F25

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15  QUARTERLY FINANCIAL DATA (UNAUDITED)

Selected financial information for the quarterly periods in the fiscal years ended September 30, 2001 and 2000 is presented below (in thousands, except
per share amounts):

|                             |  | Fiscal 2001 Quarter Ended
|---------------------------- |  | -------------------------
|
|Net sales                    |  | $                        
|Gross profit                 |  |                          
|Net income                   |  |                          
|Diluted net income per share |  |                          

|                                    |  | Fiscal 2000 Quarter Ended |        
|----------------------------------- |  | ------------------------- | -------
|
|Net sales                           |  | $                         | 123,680
|Gross profit                        |  |                           | 12,962 
|Net income (loss)                   |  |                           | 2,434  
|Diluted net income (loss) per share |  |                           | 0.37   

F26

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VALUATION AND QUALIFYING ACCOUNTS

|                                              |                                   | Balance At
Beginning of
Period |       | Charges (Reversals)
to Cost and
Expenses |   | Deductions |       | Balance At
End of
Period
|--------------------------------------------- | --------------------------------- | ------------------------------ | ----- | ---------------------------------------- | - | ---------- | ----- | ------------------------
|Year Ended September 30, 2001 (in thousands): |                                   |                                |       |                                          |   |            |       |                         
|                                              | Allowance for doubtful accounts   |                                | $     | 2,395                                    |   | $          | 437   |                         
|                                              | Allowance for returns             |                                | $     | 484                                      |   | $          | (316  | )                       
|                                              | Allowance for price discrepancy   |                                | $     | 438                                      |   | $          | 66    |                         
|                                              | Allowance for inventory valuation |                                | $     | 647                                      |   | $          | 450   |                         
|                                              |                                   |                                |       |                                          |   |            |       |                         
|                                              |                                   | $                              | 3,964 |                                          | $ | 637        |       | $                       
|                                              |                                   |                                |       |                                          |   |            |       |                         
|Year Ended September 30, 2000 (in thousands): |                                   |                                |       |                                          |   |            |       |                         
|                                              | Allowance for doubtful accounts   |                                | $     | 1,642                                    |   | $          | 2,377 |                         
|                                              | Allowance for returns             |                                | $     | 567                                      |   | $          |      |                         
|                                              | Allowance for price discrepancy   |                                | $     | 82                                       |   | $          | 357   |                         
|                                              | Allowance for inventory valuation |                                | $     | 423                                      |   | $          | 224   |                         
|                                              |                                   |                                |       |                                          |   |            |       |                         
|                                              |                                   | $                              | 2,714 |                                          | $ | 2,958      |       | $                       
|                                              |                                   |                                |       |                                          |   |            |       |                         
|Year Ended September 30, 1999 (in thousands): |                                   |                                |       |                                          |   |            |       |                         
|                                              | Allowance for doubtful accounts   |                                | $     | 1,191                                    |   | $          | 944   |                         
|                                              | Allowance for returns             |                                | $     | 489                                      |   | $          | 78    |                         
|                                              | Allowance for price discrepancy   |                                | $     | 295                                      |   | $          |      |                         
|                                              | Allowance for inventory valuation |                                | $     | 100                                      |   | $          | 323   |                         
|                                              |                                   |                                |       |                                          |   |            |       |                         
|                                              |                                   | $                              | 2,075 |                                          | $ | 1,345      |       | $                       
|                                              |                                   |                                |       |                                          |   |            |       |                         

F27

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be
signed on its behalf by the undersigned, thereunto duly authorized.

| |  | EN POINTE TECHNOLOGIES, INC.
| |  | ----------------------------
| |  | BY:                         

Dated:
December 28, 2001

POWER OF ATTORNEY

We, the undersigned directors and officers of En Pointe Technologies, Inc. do hereby constitute and appoint Michael R. Shabazian and Kevin D. Ayers, or
either of them, with full power of substitution and resubstitution, our true and lawful attorneys and agents, to do any and all acts and things in our name and behalf in our capacities as directors
and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, or their substitutes, may deem
necessary or advisable to enable said corporation to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission
in connection with this Annual Report on Form 10-K, including specifically, but without limitation, power and authority to sign for us or any of us in our names and in the
capacities indicated below, any and all amendments; and we do hereby ratify and confirm all that the said attorneys and agents, or either of them, shall do or cause to be done by virtue hereof.

Pursuant
to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons in the
capacities and on the dates indicated.

|Signature                                   |  | Title                                                                                    |  | Date             
|------------------------------------------- |  | ---------------------------------------------------------------------------------------- |  | -----------------
|                                            |  |                                                                                          |  |                  
|/s/ATTIAZAZ `BOB' DINAttiazaz `Bob' Din     |  | Chairman of the Board
Chief Executive Officer and Director
(Principal Executive Officer) |  | December 28, 2001
|/s/MICHAEL R. SHABAZIANMichael R. Shabazian |  | Director
President and Chief Operating Officer                                           |  | December 28, 2001
|/s/KEVIN D. AYERSKevin D. Ayers             |  | Chief Financial Officer
(Principal Financial and Principal Accounting Officer)           |  | December 28, 2001
|/s/NAUREEN DINNaureen Din                   |  | Director                                                                                 |  | December 28, 2001

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|/s/ZUBAIR AHMEDZubair Ahmed           |  | Director |  | December 28, 2001
|------------------------------------- |  | -------- |  | -----------------
|/s/MARK BRIGGSMark Briggs             |  | Director |  | December 28, 2001
|/s/VERDELL GARROUTTEVerdell Garroutte |  | Director |  | December 28, 2001
|/s/BARRY M. ABELSONBarry M. Abelson   |  | Director |  | December 28, 2001

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Index to Exhibits

|Exhibit Number |  | Description                                                                                                                                                                                                                                                                          
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            |  | Agreement and Plan of Merger between the Registrant and En Pointe Technologies, Inc., a Texas corporation, effective February 29, 1996 (incorporated by reference to the same numbered Exhibit to the Registrant's
Registration Statement on Form S-1 filed May 8, 1996).            
|3.1            |  | Certificate of Incorporation of Registrant (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                                                        
|3.2            |  | Bylaws of Registrant (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                                                                              
|3.3            |  | Certificate of Amendment to Certificate of Incorporation of Registrant filed May 16, 2000. (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form 10-K filed January 18,
2001).                                                  
|4.3            |  | Form of Common Stock Certificate (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                                                                  
|10.1           |  | En Pointe Technologies, Inc. 1996 Stock Incentive Plan (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                                            
|10.2           |  | En Pointe Technologies, Inc. Employee Stock Purchase Plan (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                                         
|10.3           |  | Form of Directors' and Officers' Indemnity Agreement (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                                              
|10.5           |  | Employment Agreement between the Registrant and Attiazaz "Bob" Din, dated, 1996 (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                   
|10.10          |  | Inventory and Working Capital Financing Agreement between the Registrant and IBM Credit Corporation dated April 13, 1997 (incorporated by reference to the same numbered Exhibit to the Registrant's Form 10-K filed December 29,
1997).                                             
|10.11          |  | Sublease dated August 1996 between NCR International, Inc. and the Registrant for the property located at 100 N. Sepulveda Blvd., 19th Floor, El Segundo, California, (incorporated by reference to Exhibit 28 to the
Registrant's Form 10-Q filed February 14, 1997).               
|10.18          |  | Lease dated May 1999 between U.S. Real Estate Consortium and the Registrant for property located at 1040 Vintage Avenue, Ontario, (incorporated by reference to the same numbered Exhibit to the Registrant's Form 10-K filed January 13,
2000).                                     
|10.19          |  | Lease dated April 2001 between Pacific Corporate Towers LLC and the Registrant for the property located at 100 N. Sepulveda Blvd., 19the Floor, El Segundo, California. (Incorporated by reference to the same numbered Exhibit to the Registrant's
Form 10-Q filed August 14, 2001).
|10.20          |  | Employment Agreement between the Registrant and Michael R. Shabazian, dated, July 1, 2001.                                                                                                                                                                                           
|10.21          |  | Separation Agreement between the Registrant and Michael R. Shabazian, dated, December 2001.                                                                                                                                                                                          
|10.22          |  | Employment Agreement between the Registrant and Thomas Scott, dated, August 1, 2001.                                                                                                                                                                                                 
|10.23          |  | Employment Agreement between the Registrant and Kevin Elliott, dated, September 19, 2001.                                                                                                                                                                                            

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|10.24 |  | Assignment and license agreement between the Registrant and SupplyAccess, Inc., dated September 21, 2001.                                                                                           
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.25 |  | Loan and Security Agreement by and among En Pointe Technologies Sales, Inc., the lenders named therein and Foothill Capital Corporation, dated December 28, 2001, naming the Company as a guarantor.
|10.26 |  | Inventory Financing Agreement between En Pointe Technologies Sales, Inc. and IBM Credit Corporation dated December 28, 2001.                                                                        
|21.1  |  | Subsidiaries of the Company                                                                                                                                                                         
|23.1  |  | Consent of PricewaterhouseCoopers LLP.                                                                                                                                                              

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