**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**





**FORM
      10-K**




þ
            **Annual
                Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934****For
                the Fiscal Year Ended September 30,
                2007**


**OR**


o
            **Transition
                Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934**




**COMMISSION
      FILE NUMBER: 000-28052**


_________________________________





**EN
      POINTE TECHNOLOGIES, INC.**


(EXACT
      NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)




DELAWARE
            
            75-2467002(State
                or other jurisdiction of incorporation or
            
            (I.R.S.
                Employer Identification No.)organization)




**18701
      S. FIGUEROA STREET, GARDENA, CALIFORNIA 90248**


**(310)
      337-5200**


_________________________________




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


Common
      Stock, par value $0.001 per share Nasdaq Capital Market


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


None


__________________________________




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.


Yes
o
      No þ


Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act.


Yes
o
      No þ




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 þ No o




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. þ




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):


Large
      accelerated
      filer o  Accelerated
      Filer o  Non-accelerated
      filer
þ




Indicate
      by check mark whether the Registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No þ




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 March
      31, 2007, was approximately $14,825,671.  Th e
      number
      of outstanding shares of the Registrant’s Common Stock as of December 14, 2007
      was 7,159,193




DOCUMENTS
      INCORPORATED BY REFERENCE




PORTIONS
      OF REGISTRANT’S PROXY STATEMENT FOR THE 2008 ANNUAL MEETING OF STOCKHOLDERS (TO
      BE


FILED
      WITH THE COMMISSION ON OR BEFORE JANUARY 28, 2008): PART III, ITEMS
      10-14.



















**EN
      POINTE TECHNOLOGIES, INC.**


**FORM
      10-K**


**YEAR
      ENDED SEPTEMBER 30, 2007**




**Table of Contents**


**PART
                I**
            
            
            
            
            2ITEM
                1.
            
            BUSINESS
            
            
            2ITEM
                1A.
            
            RISK
                FACTORS
            
            
            10ITEM
                1B.
            
            UNRESOLVED
                STAFF
                COMMENTS
            
            
            16ITEM
                2.
            
            PROPERTIES
            
            
            16ITEM
                3.
            
            LEGAL
                PROCEEDINGS
            
            
            17ITEM
                4.
            
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY
                HOLDERS
            
            
            18**PART
                II**
            
            
            
            
            18ITEM
                5.
            
            MARKET
                FOR REGISTRANT’S COMMON EQUITY,
                RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
                SECURITIES
            
            
            18ITEM
                6.
            
            SELECTED
                CONSOLIDATED FINANCIAL
                DATA
            
            
            19ITEM
                7.
            
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS
            
            
            21ITEM
                7A.
            
            QUANTITATIVE
                AND QUALITATIVE
                DISCLOSURES ABOUT MARKET RISK
            
            
            31ITEM
                8.
            
            FINANCIAL
                STATEMENTS AND SUPPLEMENTARY
                DATA
            
            
            31ITEM
                9.
            
            CHANGES
                IN AND DISAGREEMENTS WITH
                ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
            
            
            31ITEM
                9A
            
            CONTROLS
                AND PROCEDURES
            
            
            31ITEM
                9B
            
            OTHER
                INFORMATION
            
            
            32**PART
                III**
            
            
            
            
            32ITEM
                10.
            
            DIRECTORS, EXECUTIVE
                OFFICERS AND CORPORATE GOVERNANCE
            
            
            32ITEM
                11.
            
            EXECUTIVE
                COMPENSATION
            
            
            32ITEM
                12.
            
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL
                OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
            
            
            32ITEM
                13.
            
            CERTAIN
                RELATIONSHIPS AND RELATED
                TRANSACTIONS, AND DIRECTOR INDEPENDENCE
            
            
            33ITEM
                14.
            
            PRINCIPAL
                ACCOUNTANT FEES AND
                SERVICES
            
            
            33**PART
                IV**
            
            
            
            
            33ITEM
                15
            
            EXHIBITS
                AND FINANCIAL STATEMENT
                SCHEDULES
            
            
            33**SIGNATURES**CHIEF
                EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER, AND DIRECTORSEXHIBIT
                21.1EXHIBIT
                23.1EXHIBIT
                23.2EXHIBIT
                31.1EXHIBIT
                31.2EXHIBIT
                32.1








1





**PART
      I**





**THIS
      ANNUAL REPORT ON FORM 10-K CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE
      MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE
      SECURITIES EXCHANGE ACT OF 1934 AND THE COMPANY INTENDS THAT SUCH
      FORWARD-LOOKING STATEMENTS BE SUBJECT TO THE SAFE HARBORS CREATED
      THEREBY.  THE FORWARD-LOOKING STATEMENTS RELATE TO FUTURE EVENTS OR
      THE FUTURE FINANCIAL PERFORMANCE OF THE COMPANY INCLUDING, BUT NOT LIMITED
      TO,
      STATEMENTS CONTAINED IN: ‘‘ITEM 1. BUSINESS,” “ITEM 1A. RISK FACTORS’’ AND
‘‘ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
      RESULTS OF OPERATIONS.” 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
‘‘ITEM 1A. RISK FACTORS,’’ WHICH COULD CAUSE ACTUAL EVENTS, PERFORMANCE OR
      RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH STATEMENTS. IN
      LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE FORWARD-LOOKING
      INFORMATION INCLUDED HEREIN, THE INCLUSION OF SUCH INFORMATION SHOULD NOT BE
      REGARDED AS REPRESENTATION BY THE COMPANY OR ANY OTHER PERSON THAT ITS
      OBJECTIVES OR PLANS WILL BE ACHIEVED.  THE COMPANY DOES NOT UNDERTAKE
      AND SPECIFICALLY DECLINES ANY OBLIGATION TO UPDATE ANY FORWARD-LOOKING
      STATEMENTS OR TO PUBLICLY ANNOUNCE THE RESULTS OF ANY REVISIONS TO ANY
      STATEMENTS TO REFLECT NEW INFORMATION OR FUTURE EVENTS OR
      DEVELOPMENTS.**





References
      made in this Annual Report on Form 10-K to ‘‘En Pointe Technologies,’’ ‘‘En
      Pointe,’’ the ‘‘Company,’’ “we,” “us,” or “our” refer to En Pointe
      Technologies, Inc. and its subsidiaries, En Pointe Technologies Sales, Inc.,
      En
      Pointe Gov, Inc. (formerly En Pointe Technologies Ventures, Inc.,), The Xyphen
      Corporation (dba ContentWare),  En Pointe Technologies Canada, Inc.,
      Ovex Technologies (Private) Limited, En Pointe Technologies India Pvt. Ltd.,
      and
      its affiliate, Premier BPO, Inc., a variable interest entity and its
      wholly-owned Chinese subsidiary, Premier BPO Tianjin Co., LTD.  En
      Pointe Technologies and the Building Blocks design are registered trademarks
      of
      the Company and are mentioned or referred to in this Annual Report.




**ITEM
      1. BUSINESS**





GENERAL





En
      Pointe
      Technologies, Inc. was originally incorporated in Texas on January 25, 1993
      and
      reincorporated in Delaware on February 6, 1996 and serves as a holding company
      and a provider of administrative services to its subsidiaries.  We are a
      national provider of information technology products (hardware and software)
      and
      value-added services with a customer base consisting primarily of large and
      medium sized companies and government entities.  We use proprietary and
      non-proprietary software and systems to drop-ship information technology
      products to our customers through an electronically linked network of suppliers
      that include distributors and certain manufacturers in the United States. 
This software allows us to serve as an electronic clearinghouse of computers
      and
      computer related products without many of the risks and costs associated with
      maintaining significant inventory. In addition to seeking efficiencies and
      growth in our traditional large-enterprise focused core business, we continue
      to
      devote resources to the development of our managed and professional services
      infrastructure.  En Pointe is represented in approximately 17 sales and
      service markets throughout the United States.  In addition, we
      maintain a value-added integration center that we recently moved to in
      October 2006 in Rancho Cucamonga, California that is ISO
      9001:2000 certified.




We
      provide our customers with cost effective electronic commerce tools that help
      them to maximize their purchasing power when searching for and acquiring
      computer equipment and other technology products.  One of our available
      tools, AccessPointetm, is a uniquely
      powerful and flexible Internet procurement system that is electronically linked
      to the extensive warehousing, purchasing and distribution functions of our
      suppliers.  AccessPointetm 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.  The direct links to our suppliers enhance our capacity to
      provide our customers with automated direct access to an extensive range of
      products at competitive prices.





2







**BUSINESS
      MODEL**




Our
      business model covers hardware and software fulfillment and value-added
      services.  Hardware fulfillment extends beyond efficient delivery to
      include pre-deployment services that we perform prior to shipment, including
      imaging and image management, configurations, asset tagging, inventory
      management and master packing.  The procurement process is vital to
      hardware fulfillment and we try to make this process as efficient as possible
      for our customers.  Value-added services include ongoing managed services
      such as management of information technology infrastructure as well as
      professional services that provide specific information technology solutions
      for
      our customers. Software fulfillment includes presales consulting, monitoring
      license compliance and managing software publishers’ relationships.




The
      hardware fulfillment business relies on our virtual inventory model that has
      been developed and enhanced over time, but since our inception in 1993, our
      core
      concepts have remained the same.  The virtual inventory 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 limited
      amount of physical inventory that we hold and our allied distributor
      relationships. Our sophisticated and customized enterprise resource planning
      system, referred to as SAP, allows us to monitor sales, product returns,
      inventories, profitability and accounts receivable at the sales representative
      and customer level.  Additionally, we have integrated product purchasing
      and customer invoicing into our information systems to expedite procurement
      and
      billing. AccessPointeTM, an eBusiness
      platform, provides us and our customers with up-to-date product
      information and streamlines the procurement process.  The
      completely integrated eBusiness information technology architecture helps us
      maintain effective online communication links with our sales representatives,
      selected suppliers, and many of our customers.  AccessPointetm is provided
      free of charge to our customers to better enable them to execute transactions
      and research their orders online with us.




We
      continue to focus on cost control and strive to maintain a low-cost overhead
      structure through the automation of many of our management and operating
      functions. In fiscal 2003, we introduced another low-cost overhead element
      to
      our business model by relocating many of our “back-office” functions to a
      service provider in Islamabad, Pakistan.  Effective October 1, 2006, we
      continued our cost control focus by acquiring a 70% ownership interest of that
      service provider in Pakistan, Ovex Technologies (Private) Limited, or
      Ovex.




The
      day-to-day customer support function is shared between a centralized staff
      at
      headquarters, back-office contract workers in Pakistan, and local account
      management.  This helps us improve field response yet maintains
      direct access to all back-office functions and senior management. Increased
      local coverage has fueled efforts to identify new opportunities. We believe
      that
      time in front of customers is the top priority for all account managers, account
      executives, and senior management to build long lasting relationships and
      identify business solutions for existing and new customers.




Our
      product sales are conducted principally from both traditional branch offices
      as
      well as from virtual offices which are located in approximately 15 metropolitan
      markets in 11 states. Our service business is offered nationally and is managed
      and staffed by our in-house technicians using, when necessary, limited
      engagements of contracted third party service providers. We believe in seeking
      out new markets wherever there is a business case to support the incurring
      of
      additional personnel expense or whenever specific account opportunities
      arise.




We
      have
      been and continue to be, since May, 2002, certified as a minority-controlled
      company by the National Minority Supplier Development Council. The certification
      is considered valuable because many large buying organizations, private
      enterprise accounts and state and local government agencies have supplier
      diversity initiatives that may require certain purchases to be made from
      certified minority controlled companies.




An
      integral component of our business model is our ability to access an extensive
      inventory of information technology products stocked by our suppliers through
      our integrated supply chain information systems that are key features of
      AccessPointeTM. 
Additionally,
      the intelligent purchasing feature of our software allows our
      purchasing department to place multiple line item orders automatically from
      multiple sources at the lowest possible price, maximizing the fill rate and
      increasing the potential profitability on each order.







3








The
      data
      provided by our customized information system allows our sales representatives
      to design each customer’s orders according to their particular needs. Product
      can be delivered directly from suppliers to the customer or processed through
      our configuration facility located in Rancho Cucamonga, California.  We
      simplify the ordering, staging, and delivery process through supply chain
      management for any size order.  Our configuration facility is located close
      to our major suppliers’ warehouse locations for convenient same day pick-up of
      orders. This provides the configuration facility with the flexibility to meet
      stringent service level agreements and still function economically by limiting
      inventory to customer ordered product.  Once our configuration facility
      tests and loads systems with predefined customer images, systems are then
      shipped ready-to-install, saving customers money in downstream deployment
      costs.  Just-in-time configuration is well supported by our information
      system that identifies which of our suppliers can supply the desired product
      at
      the best price when needed from different products offered from multiple
      suppliers.




A
      distinct advantage of our business model is the economy achieved by the
      conservation of working capital through leveraging our virtual inventory model
      that engages the extensive warehousing, purchasing, distribution, marketing
      and
      information-technology functions of our suppliers.  Since inception, we
      have been an innovator in using the drop shipping capabilities of our
      suppliers whenever product configuration is not required.  Drop shipping
      avoids the costs and risks associated with maintaining inventory, enabling
      us to
      quickly adapt our product offerings to changing market demands.  As product
      proliferation has occurred, we believe that our limited inventory position
      has
      given us a competitive advantage with respect to price and availability on
      a
      broad range of products.  We do, however, still maintain and stage
      inventory for our customers, as necessary, whenever it’s economical and fulfills
      a business purpose.  We believe our business model allows us to have the
      capacity to increase sales with minimal additional capital
      investment.




Our
      value-added services business, by offering certain essential and highly
      individualized services, principally the optimization and management of
      customer’s information technology infrastructure, caters to multi-year service
      contracts, which constitutes the majority of our service business.  Our
      service agreements are designed exclusively for the Windows/Intel/Cisco
      operating environment, which is the dominant industry platform.  Our
      services include life cycle management which encompasses hardware configuration,
      customer customization, deployment, install/move/add/change, maintenance, asset
      management and help desk.  Our customer base is broad and encompasses both
      large national accounts as well as small to medium businesses and governmental
      agencies.  Various service fee arrangements are available from which
      customers are supported by certified technical engineers that are trained on
      each customer’s specific requirements.  The fee arrangements range
      from fixed-price in which our personnel may be shared to cost-plus for dedicated
      on-site personnel, or a combination of both, depending on the customer’s
      needs.




We
      also
      offer an array of value-added professional services that include needs
      assessment, design solutions, deployment and post deployment support, and help
      desk for our customers.  In addition, we provide at our ISO 9001:2000
      certified integration facility configuration services, including hardware
      configuration, software installation and custom imaging services, testing,
      aggregation, and asset tagging.




Whether
      customers buy their products from us or others, we can provide them with
      extensive logistics support. In support of that growing part of our business,
      during the later half of fiscal 2005, we completed the development of the
      Logistics Management System, or LMS, software program.  The LMS program is
      integrated with SAP and allows us to more efficiently work with our customers
      and common carriers. The LMS program’s single system environment has the
      capability to manage and track logistic activities, providing customers with
      detailed asset reporting as well as asset life cycle management.  The LMS
      program has the following benefits:




**•**
            overall
                customer project planning;**•**
            detailed
                planning and scheduling of customer assets to be
                serviced;**•**
            receipt
                confirmation of customer assets and subsequent tracking
                ability;**•**
            periodic
                detailed customer asset reporting by serial number; and**•**
            management
                of customer life cycle process to include:– 
                reconditioning and packaging,– 
                redeployment, and–  liquidation, identification of leased assets and compliance with
                lease terms, and work order history by serial number of each customer
                asset.





The
      software licensing business employs highly skilled personnel to provide
      comprehensive solutions to customers needing software solutions.  This
      specialized group provides value to customers in their presales consulting,
      monitoring license compliance and managing software publishers’
relationships.







4








Although
      we have been for several years an authorized Microsoft Large Account Reseller
      as
      well as an authorized agent for many other software publishers, we had not
      fully
      developed the operational and system capabilities to expand sales
      opportunities. In early fiscal year 2005, recognizing that need, we began
      the process of enhancing the capabilities of SAP and AccessPointeTM to improve
      upon
      presales consulting, monitoring license compliance and managing software
      publishers’ relationships.  Upon completion of the software upgrades in
      June 2005, we now believe that we have a more efficient software selling process
      that has produced and will continue to produce noticed improvements for our
      customers’ ordering and maintenance needs.  The program provides the
      following benefits:




**•**
            maintains
                software agreements for all major software publishers;**•**
            incorporates
                a dynamic data model that simplifies reporting processes to allow
                improved
                identification of customer trends, sales opportunities, and customer
                milestones;**•**
            provides
                real-time product configuration that reduces time for sales
                representatives to identify customer requested software
                products;**•**
            restricts
                the data entry to a structured format that ensures adherence to vendor
                and
                publisher rules, thereby avoiding the costly retroactive correction
                of
                errors in processing;**•**
            manages
                software agreements to offer customers the ability to purchase software
                more efficiently by increasing their awareness of software agreement
                terms, purchasing history, and needs;**•**
            identifies
                software products for compliance with customer software
                agreements;**•**
            allows
                stricter service level agreements to be met by reducing turnaround
                time
                for quotes and orders; and**•**
            manages
                licensing agreements assuring customers are quoted and sold products
                in
                accordance with their existing
                agreements.




**EBUSINESS**




We
      offer
      competitive advantages for our customers through use of modern information
      technologies, and inventive business processes.  By use of our virtual
      inventories and online procurement and service solutions we leverage technology
      to enable our business model.





We
      begin
      by employing Enterprise Resource Planning, or ERP, technology via an SAP-based
      system that maintains our operational and financial processes within a structure
      that provides for flexibility with full executive control and accountability.
      This system forms the core of our organization and maintains control over every
      transaction whether with vendors or customers.  Reporting, decision making
      support, inventory control, and logistic management are some of the key
      functions of our ERP system that have been customized to offer a broad range
      of
      services including; order processing from our virtual inventory, customized
      configuration orders, customer logistic and disposal management, software
      license management as well as back-office accounting for our professional
      services.




To
      make
      business transactions with us easy and intuitive, we have created our online
      Internet-based application AccessPointeTM dedicated toward advancing our
      e-business by using solutions that provide for integration with each customer’s
      applications and unique procurement processes.  AccessPointeTM provides
      customers with a complete life cycle procurement solution that helps put
      customers in control of their organization’s spending practices and standardizes
      their information technology selections.  AccessPointeTM does this by
      providing customer-based approval workflow as well as allowing customers to
      encourage or enforce ordering for certain products over others.
 AccessPointeTM provides the capability for customers to have highly
      customized views of our product catalog by restricting products they don’t want
      to order.  With AccessPointeTM, customers can do real-time searches for all
      products available from En Pointe’s vendors or, in the case of software
      inquiries, customers can confine their searches to those software products
      that
      apply to their specific software license contracts.  Transaction history is
      also available from AccessPointeTM in customizable reports that can be programmed
      to generate whenever desired.  AccessPointeTM provides confidence that
      our customers’ transactions will be secure and private, and can integrate with
      other information technology online marketplaces.




Our
      professional and managed service teams employ tools that allow customers to
      monitor the progress of our service engagements, and to have service dispatch
      and reports available to other customer systems to ensure the services we
      provide are coordinated with all other customer processes and departments.
       These tools can provide online status of open or scheduled service work,
      report outstanding items, integrate with customer systems, and allow our
      customers to partner with us.




In
      addition to our main systems, we have ancillary systems that automate our
      internal processing of transactions.  These tools and application solutions
      allow us to create custom information technology product and service catalogs
      for our customers and also provide capabilities to integrate with customer
      order
      and payment processes within our distributor network.  These solutions are
      flexible enough to allow us to not only manage content from any number of
      vendors but to also be able to provide data management services
      daily to select customers and support custom order integration with customers
      with complex and unique ordering needs.





5







**MANAGED
      AND PROFESSIONAL SERVICES**




We
      provide a full range of information technology life-cycle services, including
      the following:




**•**
            needs
                assessment,**•**
            solution
                design,**•**
            image
                development,**•**
            configuration,**•**
            deployment
                and implementation,**•**
            install/move/add/change,**•**
            system
                refresh and disposal services,**•**
            post
                deployment support and training,**•**
            help
                desk,**•**
            maintenance,
                and**•**
            asset
                management




We
      employ
      best practices to provide high quality, low cost service solutions that address
      client information technology infrastructure needs, from the desktop to the
      wide
      area network. We do our own technical recruiting for these positions, to better
      control the quality of our staff and to provide timely and cost competitive
      alternatives suitable for the varying skill and/or geographic requirements
      of
      our customers.  A team dedicated to sales of services complements the
      larger general sales staff to uncover opportunities within existing accounts
      and
      to seek new business.  For the three fiscal years ended in 2007, net sales
      from services provided 13.8%, 14.5% and 14.9%, respectively, of our total
      net sales.  Seven large customers accounted for approximately 55.4% of our
      total service revenues for the 2007 fiscal year as compared to approximately
      57.1% and 48.3% for the respective 2006 and 2005 fiscal years.





We
      have
      historically focused more on our managed services business than our professional
      services opportunities because managed services usually involve multi-year
      desktop and server support contracts for specified periods of time.  These
      engagements typically result in relatively consistent revenue streams that
      enable us to make strategic long-term investments to expand our service
      offerings and organizational infrastructure.  Professional services, on the
      other hand, tend to require higher levels of investment without the relative
      predictability of managed services engagements.  Nonetheless, they play a
      critical role in providing engineering services and skilled resources necessary
      to fully support the requirements and expectations of a managed service
      program.




Our
      enterprise help desk services are offered either on-site at the customer
      location or through our centralized call center.  We maintain a technically
      trained staff that resolves problems during the initial phone call, thereby
      decreasing customer down time and increasing end user productivity.  This
      also reduces the need to dispatch technicians for on-site visits, which reduces
      the overall costs of customer support.




Included
      in our professional service offerings are: desktop and server design; messaging;
      storage; wireless, broadband and other network support; and security.  With
      system security being of such concern, we require our engineers and consultants
      to become security certified.  We plan that service engagements offered by
      us will include a security focus that will differentiate our professional
      services offerings from those of our competitors.  While we have not
      invested significantly in this area relative to our managed services, customer
      demand for these services appears to be increasing and we will respond to
      opportunities when we can leverage our existing infrastructure or when it
      complements an existing customer support agreement.




One
      area
      in which we continue to expand is in offerings to customers of “return on
      investment” consulting.  We assist customers to maximize the return on
      their information technology investment dollars by moving to new hardware
      platforms, consolidating servers and storage, and efficiently managing human
      resources with our expertise in Active Directory, a Microsoft program that
      allows organizations to manage information about network resources and users.
       We also have helped customers implement technologies that allow them to
      fix end-users’ computers remotely, without having to dispatch an onsite
      engineer, and compute for our customers the savings they realize by minimizing
      their down time.




We
      use
      Clarify, an industry-leading customer relationship management system, to create
      and track our service calls and to manage service parts.  This system
      measures and reports initial response times, on-site arrival times, and call
      closure or resolution times. From voluminous call ticket data, this system
      compiles and calculates the corresponding service levels so that we can be
      measured against industry standards, our company objectives, and customer
      commitments.  This enables us to improve our processes to achieve greater
      levels of customer satisfaction.





6







**PRODUCTS**




The
      majority of our sales are information technology products. We currently make
      available to our customers an extensive selection of products at what we believe
      to be a competitive combination of price and availability.  We currently
      offer over 300,000 information technology products from hundreds of
      manufacturers, including, without limitation, International Business Machines
      Corporation, or IBM, Hewlett-Packard Company, or HP, Dell Computer Corporation,
      or Dell, Lenovo, Cisco Systems, Inc., Fujitsu Limited, Apple Inc., 3Com
      Corporation, Microsoft Corporation, or Microsoft, Toshiba Corporation, Kingston
      Technology Corporation, Lexmark International, Inc., Sony Corporation, Symantec
      Corporation, McAfee, Inc., BEA Systems, Inc., Avaya, Inc. and Altiris, Inc.
       We are also one of a limited number of Microsoft Certified Large Account
      Resellers.  We have different levels of certifications on many of these
      product lines.  Products that we offer include desktop and laptop
      computers, servers, monitors, memory, peripherals and accessories, operating
      systems, application software, consumables and supplies.  In fiscal 2007,
      products manufactured by HP accounted for approximately 20% of our product
      sales
      in terms of revenue compared with 22% and 24% for the two consecutive prior
      fiscal years.




**BUSINESS
      PROCESS OUTSOURCING**




Effective
      October 1, 2006, we acquired 70% of the capital stock of two privately owned
      Pakistani companies, Ovex Technologies (Private) Limited and Ovex Pakistan
      (Private) Limited.  Ovex Technologies (Private) Limited was engaged in
      providing business process outsourcing, or BPO, services exclusively for the
      Company’s internal needs as well as for the customers of PBPO while
      Ovex Pakistan (Private) Limited provided services for the BPO market in
      Pakistan.





Subsequently,
      on July 7, 2007, the two companies were approved for merger by the Pakistan
      Court effective October 1, 2006.  The surviving company in the merger
      was Ovex Technologies (Private) Limited, or Ovex.  Ovex employs
      approximately 803 people. Since 2003, Ovex has provided us with BPO services
      for
      our selling and marketing operations. Commencing with the quarter ended June
      30,
      2006, Ovex has also assumed the responsibilities for our accounting and finance
      outsourcing.




With
      the
      addition of Ovex to our portfolio, we have continued to recognize the growth
      opportunities present in BPO services and have committed to its future as a
      viable segment of our business model. Ovex complements our existing investment
      in Premier BPO, Inc., or PBPO, a privately-held corporation that promotes and
      sells BPO services to U.S. businesses.   PBPO also has a wholly-owned
      Chinese subsidiary, Premier BPO Tianjin Co., LTD, or PBPOChina, that it formed
      in fiscal 2007 that provides BPO services in China similar to the services
      provided by Ovex in Pakistan.




Ovex
      has
      an ongoing business relationship with PBPO by virtue of having been the
      principal provider of BPO services to PBPO’s U.S. customers.  In addition,
      the approximate 30% owners of Ovex collectively own 16% of the outstanding
      shares of common stock of PBPO, as well as 50% of the outstanding shares of
      Series A non-voting convertible preferred stock of PBPO and have a
      representative on its board of directors. We, in turn, own 30% of the
      outstanding voting shares of PBPO’s common stock, 50% of the outstanding shares
      of PBPO’s Series A non-voting convertible preferred stock, have a representative
      on PBPO’s board of directors and consolidate PBPO in our financial reports as a
      variable interest entity, or VIE, in accordance with Financial Accounting
      Standards Board Interpretation No. 46.




PBPO
      shares workspace with Ovex in Islamabad for a nominal fee using
      contracted Ovex workers and, effective September 2005, entered into a five
      year cost-plus fixed fee service agreement with Ovex to supply contracted
      employees and an operating facility in Lahore, Pakistan.  In addition, PBPO
      has agreed to provide certain marketing services for Ovex. The agreements can
      be
      terminated with thirty days written notice by PBPO.




**COMPETITION**




We
      operate in the highly competitive sales segment of the information technology
      industry, and compete with a large number and variety of types of resellers
      of
      information technology products and services.  Our competition also
      includes hardware and software manufacturers and national computer retailers
      that market directly to end-users.  Many of these companies compete
      principally on the basis of price and may have lower costs than us, allowing
      them to offer the same products and services for less.  Others have
      developed highly specialized practices focusing on specific segments such as
      security, storage, server consolidation, voice-over-internet protocol,
      etc.  Many of our competitors are of equal size or smaller and sell to
      regional markets, or are larger, and sell nationally with substantially greater
      financial, technical, and marketing resources available to them.







7








Some
      of
      our larger competitors are MoreDirect, Inc., CompuCom, Inc., Technology
      Integration Group, Pomeroy IT Solutions, Inc., CDW Corporation, PC Mall, Inc.,
      Zones, Inc. and Insight Enterprises, Inc.  A few of these
      organizations stock inventory and take advantage of opportunistic seasonal
      buys
      which often affords them a pricing advantage.  On the services side,
      we compete with several large service providers, some of whom provide products
      and services and others who only provide services.  Those that provide
      services only include BancTec, Inc., Barrister Global Services Network. and
      Halifax Corporation.  We also partner with service only providers in
      several areas including dispatch, install, move, add and change support
      services.




Dell
      and
      Gateway, Inc., or Gateway, initially launched the manufacturer “direct” model
      and were successful in gaining market share.  Other manufacturers
      (e.g. IBM and HP) have adopted a direct model to actively market products
      directly to customers.   Sometimes this is done through an agent
      referral program by which independent sales agents receive commissions directly
      from manufacturers.  This has had the effect of reducing the role of
      distributors and resellers, particularly in the enterprise accounts, which
      is a
      large percentage of our traditional target market.  In order to
      compensate for this potential loss of business, some distributors are now also
      adopting sales agent programs as an alternative means of directly securing
      product orders to end user customers.  The “direct” business model can
      infringe on some value-added resellers, such as us, by taking a slice of those
      sales that can be resolved through a single vendor solution.




Our
      business model emphasizes comprehensive solution offerings with services wrapped
      around hardware and software products, attracting mainly enterprise
      organizations, government and to a lesser extent, mid-market
      customers.  With the sales channel continuing to consolidate,
      absorbing those companies that combine face-to-face direct selling with
      web-based models, we believe that our business model will succeed, as it
      embraces both comprehensive and web-based types of selling methods, allowing
      us
      to cater to various customer preferences.  We believe that we
      differentiate ourselves from our competitors through our eBusiness systems,
      services flexibility, and the scalability of our operations to meet our
      customers’ needs as well as providing a single point of contact for hardware,
      software, and services.




**GETTING
      PRODUCT TO THE CUSTOMER**




The
      distribution of information technology products requires considerable investment
      in inventory, production control systems, and the development and maintenance
      of
      distribution channels.  Resellers who assume these functions incur
      capital costs associated with the warehousing of products, including the costs
      of leasing warehouse space, maintaining inventory and tracking systems, and
      employing personnel to perform all the associated tasks.  Furthermore,
      resellers who stock inventory risk obsolescence costs, which we believe may
      be
      significant due to the rapid product innovation that characterizes this
      market.  These overhead and “touch” costs require expenses that we
      believe more than offset the lower price advantages offered for purchasing
      at
      volume discounts and holding for future sale.




Our
      business model eliminates many overhead and “touch” costs and substantial risks
      by leveraging the operational strengths of our suppliers, who have developed
      extensive warehousing, purchasing and distribution functions.  As a
      result, our continuing strategy is to limit our product inventory and the
      associated capital costs, allowing us to accept lower gross profit margins
      than
      many of our competitors.




By
      relying on the processing strengths of our suppliers, we are able to concentrate
      on developing our information systems and focus on more customer-oriented
      activities including researching, specifying, and delivering
      solutions.  After helping a customer select the most appropriate
      technology, our sales staff use our information systems to determine the best
      combination of price and availability for a wide variety of information
      technology products.




Our
      ability to fill and deliver orders with a high level of speed and accuracy
      is a
      key benefit of our business model.  Our sophisticated systems,
      which include all order processing functions, enable us to review, approve,
      and
      electronically transmit orders to the proper supplier(s) within minutes of
      receiving them from customers.  Most orders for in-stock product are
      picked, staged, and drop-shipped directly to the customer from the suppliers
      within 24 hours of receipt of an order, and on the same business day for orders
      received by 1 p.m. Pacific Time.  We usually electronically obtain
      order delivery information the day following shipment from our major
      suppliers.  We then use that information to produce an invoice, which
      is often sent to the customer electronically.  The standard
      delivery, based on product availability, is within two to three business
      days.  Custom configuration usually adds a few more business days to
      the shipping time.







8








**GETTING
      PRODUCT FROM THE SUPPLIER**




Our
      staff
      has the ability to access the current inventory and availability records of
      our
      suppliers, so we can quickly determine which supplier can best fill an order
      at
      a given price.  Furthermore, if any one supplier is unable to fill all
      of a customer’s requirements, we are generally able to split the order among
      multiple sources.  This increases the same-day fill rate, reduces back
      orders, and shrinks the time to complete an order.  Our suppliers
      maintain warehouses throughout the country, and their individual stocking levels
      are updated and readily available through our systems.  This allows
      our staff to determine where the product is available for shipment, better
      gauging the delivery time to the customer’s door.




We
      and
      our suppliers utilize various carriers, including industry giants United Parcel
      Service, Inc. and Federal Express Corporation, to deliver
      product.  Again taking advantage of a vendor’s particular expertise,
      we integrate the carriers’ tracking system facility into our own systems to
      closely monitor shipments and provide delivery status for our
      customers.  This provides an audit trail for the customer to update
      order status, by tying the customer purchase order to an En Pointe invoice
      and a
      subsequent proof of delivery.




We
      purchase most of our products from major distributors such as SYNNEX Corporation
      (“SYNNEX”), Tech Data Corporation (“Tech Data”), and Ingram Micro Inc. (“Ingram
      Micro”), and directly from large manufacturers such as IBM, HP (including the
      former Compaq), Dell and Microsoft.  These are suppliers who have the
      requisite system strengths and integration capabilities that enable our
      automated systems to function efficiently.  We have successfully
      implemented our business strategy due in large part to these system synergies
      and to our close relationships with our suppliers.  Equally
      significant to the success of our supplier relationships has been the volume
      of
      business we generate, as this volume has allowed us to negotiate more favorable
      terms with our suppliers.  See ‘‘Item 1A. Risk Factors — We Risk
      Depending on a Few Distributors and Manufacturers Who Could Compete With Us
      or
      Limit Our Access to Their Product Line.”




**INTELLECTUAL
      PROPERTY**




Our
      ability to effectively compete in our market will depend significantly on our
      ability to protect our intellectual property.  We do not have patents
      on any of our technology, which we believe to be material to our future
      success.  We rely primarily on trade secrets, proprietary knowledge
      and confidentiality agreements to establish and protect our rights in
      intellectual property, and to maintain our competitive
      position.  There can be no assurance that others may not independently
      develop similar or superior intellectual property, gain access to our trade
      secrets or knowledge, or that any confidentiality agreements between us and
      our
      employees will provide meaningful protection for us in the event of any
      unauthorized use or disclosure of our proprietary information.




SupplyAccess,
      Inc., a former affiliate of ours, was liquidated in February 2002, and as a
      result of that liquidation, we acquired the full rights to AccessPointetm as well
      as the
      intellectual property rights to all of SupplyAccess, Inc’s software, copyrights,
      trade secrets and other proprietary technology.




We
      conduct our business under the trademark and service mark ‘‘En Pointe
      Technologies’’ as well as our logo, ‘‘AccessPointetm’’
and other
      marks.  We have been issued registrations for our ‘‘En Pointe
      Technologies’’ and ‘‘Building Blocks’’ marks in the United States.  We
      do not believe that our operations are dependent upon any of our trademarks
      or
      service marks.  We also sell products and provide services under
      various trademarks, service marks, and trade names that are the properties
      of
      others.  These owners have reserved all rights with respect to
      their respective trademarks, service marks, and trade names.




**SEGMENT
      INFORMATION**




The
      provisions of SFAS No. 131, “Disclosures about Segments of an Enterprise and
      Related Information”, require public companies to report financial and
      descriptive information about their reportable operating segments.  We
      identify reportable segments based on how management internally evaluates
      separate financial information, business activities and management
      responsibility.  For the year ended September 30, 2007, we operated in
      three segments, U.S. Sales of Products and Services, Pakistan Business
      Process Services, and China Business Process Services.  See our
      Consolidated Financial Statements and Notes thereto included elsewhere in this
      Annual Report on Form 10-K for disclosures of the amounts reported for the
      different segments.   En Pointe Technologies, Inc. and its
      wholly-owned subsidiaries combined with PBPO operate in the U.S. Sales of
      Products and Services segment, while Ovex operates in the Pakistan Business
      Process Services segment and PBPOChina operates in the China Business Process
      Services segment.




In
      the
      two prior fiscal years, 2006 and 2005, before we had acquired Ovex and
      before PBPOChina commenced operations we reported in only one
      segment.





9





**EMPLOYEES**




As
      of
      September 30, 2007, En Pointe Technologies, Inc. and its wholly-owned
      subsidiaries employed approximately 555 individuals including approximately
      136
      sales, marketing and related support personnel, 325 service and support
      personnel, 46 warehousing, manufacturing, and logistic personnel, 21 information
      technology personnel and 27 employees in administration and
      finance.  We believe that our ability to recruit and retain highly
      skilled technical and other management personnel will be critical to our ability
      to execute our business model and growth strategy. None of our employees are
      represented by a labor union or are subject to a collective bargaining
      agreement.  We believe that our relations with our employees are
      good.




In
      addition to our U.S. employees, we have foreign employees working for
      Ovex in Pakistan that provide us with back-office support, provide our
      affiliate, PBPO, with customer BPO services support, and provide BPO services
      to
      a customer in Pakistan.  As of September 30, 2007, Ovex employed
      approximately 803 people in support of us and PBPO
      covering  customer support, sales, telemarketing, purchasing,
      operations, help desk, accounting, and information technology functions. 
As of September 30, 2007, PBPO and PBPOChina collectively employed a total
      of 68 people.




**ITEM
      1A. RISK FACTORS**




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 but not limited to those
      set forth in this paragraph and below, the inclusion of forward-looking
      information herein should not be regarded as a representation by us or any
      other
      person that our objectives or plans will be achieved; we may encounter
      competitive, technological, financial, economic and business challenges making
      it more difficult than expected to continue to sell our products and services;
      we 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 our operations or business; and any
      or
      all of these factors may affect our ability to continue our current sales rate
      or may result in lower sales volume than currently experienced.




Certain
      important factors affecting the forward-looking statements made herein include,
      but are not limited to:





**•**
            stagnate
                sales growth in the last five years;**•**
            limited
                availability of alternative credit facilities;**•**
            low
                margin products business; and**•**
            concentration
                of product and service sales in several major
                customers.





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 us to alter our marketing, capital expenditure or other budgets, which
      may
      in turn affect our 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.  We do not undertake and specifically
      decline any obligation to update any forward-looking statements or to publicly
      announce the results of any revisions to any statements to reflect new
      information or future events or developments.




The
      reader should carefully consider the following risks.  In addition,
      keep in mind that the risks described below are not the only risks
      faced.  The risks described below are only the risks that we currently
      believe are material to our business.  However, additional risks not
      presently known, or risks that are currently believed to be immaterial, may
      also
      impair business operations.





**THERE
      IS A RISK WE COULD LOSE OUR ASSET BASED FINANCING LINE WITHOUT BEING ABLE TO
      READILY REPLACE IT**




Our
      business requires significant capital to finance accounts receivable and, to
      a
      lesser extent, product inventories.  In order to obtain necessary
      working capital, we rely primarily on a line of credit that is collateralized
      by
      substantially all of our assets.  As a result, the amount of credit
      available to us may be adversely affected by numerous factors beyond our
      control, such as delays in collection or deterioration in the quality of our
      accounts receivable, economic trends in the information technology industry,
      reduction in interest-free flooring periods provided by various manufacturers
      and the lending policies of our creditors.  Any decrease or material
      limitation on the amount of capital available to us under our line of credit
      and
      other financing arrangements, particularly our interest-free flooring, may
      limit
      our ability to fill existing sales orders or expand our sales levels and,
      therefore, may have a material adverse effect on our business, financial
      position, results of operations and cash flows.  We are dependent on
      the availability of accounts receivable financing on reasonable terms and at
      levels that are high relative to our equity base in order to maintain and
      increase our sales.





10





Our
      financing agreement contains various liquidity debt covenants that must be
      met
      each quarter.  There can be no assurance that we will continue to meet
      those debt covenants and failure to do so would place us under default and
      could
      cause us to lose our financing.  There can be no assurance that
      such financing will continue to be available to us in the future on acceptable
      terms, as there are a very limited number of asset-based lenders that service
      our industry.  Our inability to have continuous access to such
      financing at reasonable costs could materially adversely impact our 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.’’





**THERE
      IS RISK THAT WE COULD LOSE A LARGE CUSTOMER WITHOUT BEING ABLE TO FIND A READY
      REPLACEMENT**




For
      fiscal years 2007, 2006 and 2005, no one customer accounted for 10% or more
      of
      our total net sales.  However, our sales do tend to be concentrated in
      a relatively few accounts with our top five customers in fiscal years 2007,
      2006
      and 2005 accounting for an aggregate of 38.9%, 27.1% and 31.9%, respectively,
      of
      total net sales and our top twenty-five customers representing an aggregate
      of
      63.8%, 59.7% and 63.4%, respectively, of total net sales.





For
      fiscal years 2007, 2006 and 2005, no one customer accounted for 10% or more
      of
      our total product or service sales, however, seven large customers accounted
      for
      an aggregate of 47.5%, 57.1% and 50.5%, respectively, of total service
      sales.  Our contracts for the provision of products or services are
      generally non-exclusive agreements that are terminable by either party upon
      30 days’ notice.  Either the loss of any large customer, or
      the failure of any large customer to pay its accounts receivable on a
      timely basis, or a material reduction in the amount of purchases made by any
      large customer could have a material adverse effect on our business, financial
      position, results of operations and cash flows.





**OUR
      ACQUISITION OF A SUBSTANTIAL INTEREST IN A PAKISTANI CORPORATION EXPOSES US
      TO
      FOREIGN OPERATIONAL RISKS**




With
      our
      acquisition of a majority interest in Ovex, a Pakistani corporation, we are
      exposed to adverse fluctuations in foreign currency exchange rates, limitations
      on asset transfers, changes in foreign regulations and political turmoil, any
      or
      all of which could adversely affect our operating results.  In
      addition, we have relocated many of our “back-office” functions to Ovex
      including, among others, customer support, purchasing, credit and collections,
      accounts payable, accounting and other administrative and support
      functions.  We established both voice and data communications between
      our corporate headquarters in El Segundo, California and
      Pakistan.  However, there can be no assurance that these lines of
      communication will not be interrupted.  Should we have interruptions
      with our communications to Pakistan, any such interruption could have a material
      adverse impact on our business, financial position, results of operations and
      cash flows.





**OUR
      LOW MARGINS EXPOSE US TO RISKS FROM MINOR ADVERSITIES**




Our
      overall gross profit percentages for the past three fiscal years 2007, 2006
      and
      2005 were 12.5%, 12.2%, and 10.7%, respectively, with gross margin from product
      sales in such fiscal years being 8.4%, 8.3% and 7.5%,
      respectively.  Our gross profit margins on product and software sales
      are low compared to many other resellers of information technology products
      and
      have continued to remain low.  Given the significant levels of
      competition that characterize the reseller market, as well as the lower gross
      profit margins that we generate as a result of our reliance on purchasing
      information technology products from our suppliers, it is unlikely that we
      will
      be able to increase product gross profit margins appreciably in our core
      business of reselling information technology products.  Moreover, in
      order to attract and retain many of our larger customers, we frequently must
      agree to pricing and maximum allowable mark-downs that serve to limit the
      profitability of product sales to such customers.  Accordingly, to the
      extent that our sales to such customers increase, our 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 our 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 us to maintain our gross profit
      margins and sales levels could have a material adverse effect on our business,
      financial position, results of operations and cash flows.





**COSTS
      AND OTHER FACTORS ASSOCIATED WITH PENDING OR FUTURE LITIGATION COULD MATERIALLY
      HARM OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL
      CONDITION.**







11








We
      at
      times receive claims and become subject to litigation, including claims related
      to customers, stockholders, acquisitions, employment, intellectual property,
      trade secrets and other commercial litigation related to the conduct of our
      business. Additionally, we may at times institute legal proceedings against
      third parties to protect our interests. Any litigation in which we are a named
      party could be costly and time consuming and could divert our management and
      key
      personnel from our business operations. In connection with any such litigation,
      we may be subject to significant damages or equitable remedies relating to
      the
      operation of our business. We cannot determine with any certainty the costs
      or
      outcome of pending or future litigation. Any such litigation may materially
      harm
      our business, results of operations and financial condition.




**THERE
      ARE RISKS IN CONDUCTING OUR DAILY BUSINESS PLANS AND
      STRATEGY**




For
      our
      first five full fiscal years since inception, we experienced rapid growth in
      net
      sales, employees and branch offices leading to peak net sales of $668.3 million
      in fiscal year 1999 from a base of $110.0 million in fiscal year
      1994.  Since fiscal year 1999 we have experienced a contraction in net
      sales reaching a low in net sales of $257.0 million in fiscal year 2002, or
      a compounded annual decline rate of 27% for the three year
      period.  Since 2002, we have seen a gradual increase in net sales to
      the $347.1 million reached in fiscal year 2007, which is a compounded annual
      growth rate of 3.7% over such five-year period.




The
      effort to increase net sales or to supplement the loss of net sales with higher
      margin products or services has and will continue to challenge our management,
      operational and financial resources.  To execute our growth strategy,
      we expect to require the addition of new management personnel, including sales
      and technical services personnel, and the development of additional expertise
      by
      existing personnel.  Our ability to manage effectively will require us
      to continue to implement and improve our operational, financial and sales
      systems at both the national and local level, to develop the skills of our
      managers and supervisors and to hire, train, motivate, retain and effectively
      manage our employees.  There can be no assurance that we will be
      successful in such an effort, and the failure to do so could materially
      adversely affect our business, financial position, results of operations and
      cash flows.




**WITH
      OUR FAST CHANGING INDUSTRY EVOLUTION WE RISK BEING OUTMODED OR EXCLUDED FROM
      THE
      DISTRIBUTION CHANNEL**




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




The
      segment of the information technology industry in which we operate is highly
      competitive.  We compete 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,**•**
            corporate
                resellers,**•**
            value-added
                resellers,**•**
            specialty
                retailers,**•**
            distributors,**•**
            franchisers,**•**
            mail-order
                and web-order companies,**•**
            national
                computer retailers,**•**
            service-only
                providers, and**•**
            manufacturers
                that have their own direct marketing operations to
                end-users.











12





Many
      of
      these companies compete principally on the basis of price and may have lower
      costs than us, which allow them to offer the same products and services at
      lower
      prices.  Many of our competitors are larger, have substantially
      greater financial, technical, marketing and other resources and offer a broader
      range of value-added services than we do.  We compete with, among
      others, CompuCom Systems, Inc., Dell, Gateway, Pomeroy IT Solutions, Inc.,
      CDW
      Corporation, IBM, HP, Insight Enterprises, Inc., PC Mall, Inc., GTSI Corp.,
      Zones, Inc., PC Connection, Inc., and certain distributors.  We expect
      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 we believe that we compete successfully with
      respect to most, if not all of these factors, there can be no assurance that
      we
      will continue to do so in the future.  The information technology
      industry has come to be characterized by aggressive price-cutting and we expect
      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.  We will need to continue to provide competitive
      prices, superior product selection and quick delivery response time in addition
      to developing a core competency in performing value-added services in order
      to
      remain competitive.  If we were to fail to compete favorably with
      respect to any of these factors, our business, financial position, results
      of
      operations and cash flows would be materially and adversely
      affected.  See ‘‘Business—Competition.’’




**WE
      RISK DEPENDING ON A FEW DISTRIBUTORS AND MANUFACTURERS WHO COULD COMPETE WITH
      US
      OR LIMIT OUR ACCESS TO THEIR PRODUCT LINE**




A
      key
      element of our past success and future business strategy involves the
      maintaining of alliances with certain key suppliers of information technology
      products and services, including, Tech Data, Microsoft, Ingram Micro, Synnex,
      and Dell.  These alliances enable us to make available to our
      customers a wide selection of products without subjecting us to many of the
      costs and risks associated with maintaining large amounts of
      inventory.  Products and services purchased from those five suppliers,
      in fiscal years 2007, 2006 and 2005 accounted for 57%, 67% and 76% of our
      aggregate purchases.  Furthermore, we compete with certain suppliers
      for many of the same customers.  Therefore, there can be no assurance
      that any such allied distributor will not use its position as a key supplier
      to
      pressure us from directly competing with them.  Substantially all of
      our contracts with our suppliers 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 us.  The termination or
      interruption of our relationships with any of the suppliers, modification of
      the
      terms or discontinuance of agreements with any of the suppliers, 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 our business, financial position,
      results of operations and cash flows.  See ‘‘Business—Getting Product
      to the Customer.’’




Certain
      of the products we offer are subject to manufacturer allocations, which limit
      the number of units of such products available to the suppliers, which in turn
      may limit the number of units available to us for resale to our
      customers.  Because of these limitations, there can be no assurance
      that we will be able to offer popular new products or product enhancements
      to
      our customers in sufficient quantity or in a timely manner to meet
      demand.  In order to offer the products of most manufacturers, we are
      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 suppliers.  As well, certain manufacturers provide us with
      substantial incentives in the form of allowances, training, financing, rebates,
      discounts, credits and cooperative advertising, which incentives directly affect
      our operating income.  There can be no assurance that we will continue
      to receive such incentives and authorizations in the future and any reduction
      in
      these incentives could have a material adverse effect on our business, financial
      position, results of operations and cash flows.  There can also be no
      assurance that we will be able to obtain or maintain authorizations to offer
      products, directly or indirectly, from new or existing
      manufacturers. Termination of our rights to act as a reseller of the
      products of one or more significant manufacturers or our failure to gain
      sufficient access to such new products or product enhancements could have a
      material adverse effect on our business, financial position, results of
      operations and cash flows.




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
      suppliers.  There can be no assurance that the continuing evolution of
      the information technology industry will not further adversely affect our
      distributors.  Because our overall business strategy depends on our
      relationships with our suppliers, our business, financial position, results
      of
      operations and cash flows would be materially adversely affected in the event
      that distributors in general and suppliers 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 our 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 us, which could have a material adverse impact on our business,
      financial position, results of operations and cash flows.





13





**WE
      HAVE THE RISK OF LOSING OUR SENIOR MANAGEMENT AND OTHER KEY PERSONNEL UPON
      WHOM
      WE DEPEND**




We
      believe that our success has been and will continue to be dependent on the
      services and efforts of our existing senior management and other key
      personnel.  The loss of the services of one or more of any of our
      existing senior management and other key personnel would have a material adverse
      effect on our business, financial position, results of operations and cash
      flows.




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




**WE
      RISK FAILURE TO INTEGRATE ACQUISITIONS AND/OR INVESTMENTS INTO OUR BUSINESS
      THAT
      COULD CAUSE FUTURE LOSSES**




One
      element of our growth strategy may include continuing to expand our business
      through strategic acquisitions and investments in complementary
      businesses.  To date, we have made several such acquisitions and
      investments.




However,
      we do not have significant acquisition or investment experience, and there
      can
      be no assurance that we will be able to successfully identify suitable
      acquisition or investment candidates in the future, complete acquisitions or
      investments, or successfully integrate acquired businesses into our
      operations.  Acquisitions and investments involve numerous risks,
      including but not limited to:





**•**
            failure
                to achieve anticipated operating results,**•**
            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 we have little or no prior experience,
                and**•**
            the
                potential loss of key employees, customers, or contracts of the acquired
                company.





Acquisitions
      and investments could also conflict with restrictions in our agreements with
      existing or future lenders, distributors or manufacturers.  We are
      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.  Failure to
      successfully manage potential acquisitions or investments in complementary
      businesses, or failure of any of our investments that are subject to
      consolidation, could have a material adverse effect on our business, financial
      position, results of operations and cash flows.




**WE
      RISK BUSINESS INTERRUPTION FROM OUR DEPENDENCE ON CENTRALIZED
      OPERATIONS**




We
      believe that our success to date has been, and future results of operations
      will
      be, dependent in large part upon our ability to provide prompt and efficient
      service to our customers.  As a result, a substantial disruption of
      our day-to-day operations could have a material adverse effect upon our
      business, financial position, results of operations and cash
      flows.  In addition, our success is largely dependent on the accuracy,
      quality and utilization of the information generated by our information systems,
      which are primarily based in El Segundo and Rancho Cucamonga,
      California.  Repairs, replacement, relocation or a substantial
      interruption in these systems or in our telephone or data communications
      systems, servers or power could have a material adverse effect on our business,
      financial position, results of operations and cash flows.  Although we
      have business interruption insurance, an uninsurable loss could have a material
      adverse effect on our business, financial position, results of operations and
      cash flows.  Our current use of a single configuration facility in
      Rancho Cucamonga, California also makes us 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 our business,
      financial position, results of operations and cash flows.







14





**WITH
      THE 40% CONCENTRATION OF OWNERSHIP OF OUR STOCK HELD BY A SMALL GROUP OF
      DIRECTORS, OFFICERS, FAMILY MEMBERS AND AN OUTSIDE PRINCIPAL STOCKHOLDER THERE
      ARE RISKS THAT THEY CAN EXERT SIGNIFICANT INFLUENCE OVER CORPORATE
      MATTERS**




The
      directors, executive officers, family members and a significant outside
      stockholder of En Pointe and their affiliates beneficially own, in the
      aggregate, approximately 40% of our outstanding common stock as of September
      30,
      2007.  As a result, these stockholders acting together will be able to
      exert considerable influence over the election of our directors and the outcome
      of most corporate actions requiring stockholder
      approval.  Additionally, the directors and executive officers have
      significant influence over the policies and operations of our management and
      the
      conduct of our business.  Such concentration of ownership may have the
      effect of delaying, deferring or preventing a change of control of En Pointe
      and
      consequently could affect the market price of our common stock.





**THERE
      ARE RISKS THAT OUR QUARTERLY OPERATING RESULTS CAN VARY FROM PAST RESULTS AND
      BECOME VOLATILE AND UNPREDICTABLE**




Our
      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 value-added
                services;**•**
            adoption
                of internet commerce models;**•**
            introduction
                of new hardware and software technologies;**•**
            introduction
                of new value-added services by us and our 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, including costs from turnover
                of sales
                personnel;**•**
            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 our net sales in each quarter results from
      orders booked in such quarter.  Accordingly, we believe that
      period-to-period comparisons of our 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, our operating
      results may be below the expectations of the public and investors.  In
      such event, the market price of our common stock would likely be materially
      adversely affected.  See ‘‘Management’s Discussion and Analysis of
      Financial Condition and Results of Operations.’’




**OUR
      STOCK TENDS TO BE VOLATILE WITH LARGE PERCENTAGE PRICE MOVES WHICH CAN EXPOSE
      INVESTORS TO UNANTICIPATED LOSSES**




Factors
      such as the announcement of acquisitions by us or our competitors,
      quarter-to-quarter variations in our operating results, 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 our common stock.  Moreover, trading volumes in our common
      stock has 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 our common stock.  See ‘‘Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
      of Equity Securities.’’





15





**IF
      OUR INTERNAL CONTROLS PROVE TO BE INEFFECTIVE THAT COULD NEGATIVELY IMPACT
      INVESTORS’ CONFIDENCE IN OUR COMPANY AND CAUSE OUR STOCK PRICE TO
      DROP**




Changing
      laws, regulations and standards relating to corporate governance and public
      disclosure, including the Sarbanes-Oxley Act of 2002 and related regulations
      implemented by the Securities and Exchange Commission, or SEC, and The Nasdaq
      Stock Market, or the Nasdaq, are creating uncertainty for public companies,
      increasing legal and financial compliance costs and making some activities
      more
      time consuming.  We are undergoing an evaluation of our internal
      controls systems to allow management to report on, and our independent auditors
      to attest to, our internal controls.  We are also in the process of
      performing the system and process evaluation and testing (and any necessary
      remediation) required to comply with the management certification and auditor
      attestation requirements of Section 404 of the Sarbanes-Oxley Act.  As
      a result, we expect to incur substantial additional expenses and diversion
      of
      management’s time.  While we anticipate being able to fully implement
      the requirements relating to internal controls and all other aspects of Section
      404 by the extended September 30, 2008 deadline, we cannot be certain as to
      the
      timing of completion of our evaluation, testing and remediation actions or
      the
      impact of the same on our operations since there is presently no precedent
      available by which to measure compliance adequacy.  If we are not able
      to implement the requirements of Section 404 in a timely manner or with adequate
      compliance, we may not be able to accurately report our financial results or
      prevent fraud and might be subject to sanctions or investigation by regulatory
      authorities, such as the SEC or the Nasdaq.  Any such action could
      harm our business or investors’ confidence in our company, and could cause our
      stock price to fall.





**IF
      PREFERRED STOCK IS ISSUED AS AN ANTI-TAKEOVER MEASURE, THERE IS A RISK THAT
      THE
      PRICE OF OUR COMMON STOCK COULD BE ADVERSELY AFFECTED**




Our
      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 our outstanding voting stock.  Further,
      Section 203 of the General Corporation Law of Delaware prohibits us from
      engaging in certain business combinations with interested
      stockholders.  These provisions may have the effect of delaying or
      preventing a change in control of En Pointe without action by our stockholders,
      and therefore could adversely affect the market price of our common
      stock.




**THERE
      ARE RISKS OUTSIDE OF OUR CONTROL OF UNFAVORABLE ECONOMIC CONDITIONS THAT COULD
      NEGATIVELY IMPACT OUR REVENUES AND PROFITS**




Revenue
      growth depends on the overall demand for information technology
      spending.  While economy in the United States appears to be stable,
      there can be no assurance that stability will continue.  Any downturn
      in the United States’ economy may result in cutbacks by customers in the
      purchase of information technology products and services, postponed or canceled
      orders, longer sales cycles and lower average selling prices.  To the
      extent that a downturn occurs, we believe demand for our products and services,
      and therefore future revenues, could be further adversely impacted.




**ITEM
      1B. UNRESOLVED
      STAFF
      COMMENTS**




Not
      applicable.




**ITEM
      2. PROPERTIES**




During
      June 2006, we moved from our former headquarters at 100 N. Sepulveda Boulevard
      in El Segundo, California, where we leased approximately 24,000 square feet
      of
      office space to 2381 Rosecrans Avenue in El Segundo, California where we are
      subleasing approximately 13,000 square feet of office space.  The
      sublease is for approximately two and a half years, ending on January 31,
      2009.  On October 29, 2007, we entered into a seven year lease agreement
      for 29,032 square feet of office space in Carson, California that was effective
      November 1, 2007 and relocated our headquarters there in December
      2007.  We are seeking to sublease the office space at 2381 Rosecrans
      Avenue to a third party for the balance of the term.




During
      October 2006, we also moved from our 126,000 square foot leased facility in
      Ontario, California, which was used for configuration, maintenance services,
      and
      storage for customer products to a 95,090 square foot subleased facility in
      Rancho Cucamonga, California.  The sublease is for approximately two
      and a half years, ending on February 15, 2009.







16








Currently
      we operate from leased branch offices in the following
      U.S. cities:




**•**
            Atlanta,
                Georgia**•**
            Austin,
                Texas**•**
            Beaverton,
                Oregon**•**
            Chicago,
                Illinois**•**
            Draper,
                Utah**•**
            Huntington
                Beach, California**•**
            San
                Francisco, California**•**
            Walpole,
                Massachusetts




Our
      VIE
      affiliate, PBPO, leases approximately 3,000 square feet for its main offices
      in
      Clarksville, Tennessee while the PBPOChina subsidiary that performs the
      China BPO services segment of our business in Tianjin leases 11,250 square
      feet
      of office space.  Ovex, our 70% owned subsidiary that performs the Pakistan
      BPO services segment of our business, leases office space in Lahore, Islamabad
      and Karachi, Pakistan, the square footage leased being 32,200, 24,780 and
      3,969 respectively.




Management
      believes our headquarters, sales offices, configuration facility, and those
      offices of our affiliates are adequate to support our current level of
      operations.




**ITEM
      3. LEGAL PROCEEDINGS**




In
      July
      2006, Church Gardens, LLC, the current owner of our former leased
      configuration facility in Ontario, California, filed suit against us in San
      Bernardino County Superior Court, Case No. RCV096518. The complaint centers
      on
      certain furniture, fixtures, equipment and leasehold improvements that were
      sold
      to, and leased back from us, by plaintiff’s predecessor in 1999 when we still
      occupied our former leased configuration facility in Ontario, California. The
      plaintiff alleges, among other things, that a portion of the leased-back
      property was sold, destroyed, altered, or removed from the premises, and demands
      both an inspection and an accounting of the property remaining and for the
      court
      to provide damages to the extent that we may have breached our contract. We
      dispute the allegations and believe that any property loss liability under
      the
      lease provisions would be limited to the $75,000 that we have already accrued
      on
      our financial statements.




In
      February 2007, we filed a cross-complaint against Church Gardens LLC. The
      cross-complaint asks that our $90,720 security deposit be returned with
      interest. In addition, we claim that Church Gardens LLC engaged in unfair
      business practices in retaining the security deposit and in not allowing the
      removal of certain personal property that we owned and that Church Gardens
      LLC
      engaged in unlawful conversion of certain property belonging to us. We also
      ask
      the court to grant declaratory relief as to our actions in our attempts to
      preserve the disputed property pending a judicial determination of rights.
      We
      also seek recovery of possession of our personal property and injunctive relief
      preventing the plaintiff from liquidating our property.




In
      January 2007, US Real Estate Consortium, the predecessor owner of our former
      leased configuration facility in Ontario, California filed suit against the
      current owner, Church Gardens LLC, in San Bernardino County Superior Court,
      Case
      No. RCV100476.




In
      March
      2007, the current owner, Church Gardens LLC, filed a cross-complaint against
      us
      and the former owner, US Real Estate Consortium, among others.  On May 31,
      2007, we answered and cross-claimed against the current owner,
      Church Gardens, LLC. On July 25, 2007, Church Gardens, LLC filed its
      answer to the first amended cross-complaint filed by us.  Both cases
      (RCV096518 and RCV100476) have now been consolidated for all
      purposes.




Although
      the first case (RCV096518) was originally filed in July 2006, no trial date
      in
      the now consolidated case has been set. There has been substantial discovery,
      and substantial law and motion practice to date. We are contesting the
      consolidated case vigorously, and intend to continue doing so.




There
      are
      various other claims and litigation proceedings in which we are involved in
      the
      ordinary course of business.  We accrue for costs related to
      contingencies when a loss is probable and the amount is reasonably
      determinable.  While the outcome of the foregoing and other claims and
      proceedings cannot be predicted with certainty, after consulting with legal
      counsel, management does not believe that it is reasonably possible that any
      ongoing or pending litigation will result in an unfavorable outcome to us or
      have a material adverse affect on our business, financial position and results
      of operations or cash flows.





17





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




Not
      applicable.




**PART
      II**




**ITEM
      5. MARKET
      FOR REGISTRANT’S COMMON EQUITY,
      RELATED STOCKHOLDER**




MATTERS
      AND ISSUER PURCHASES OF EQUITY SECURITIES




Our
      common stock, par value $0.001 per share, trades on the NASDAQ Capital Market
      under the symbol ‘‘ENPT.’’  The following table sets forth, for the periods
      indicated, the high and low sales prices for our common stock as reported by
      the
      NASDAQ Capital Market.






HIGH
            
            
            LOWFiscal
                  2006First quarter
            $
            3.10
            
            
            $
            2.02Second quarter
            
            2.70
            
            
            
            1.99Third quarter
            
            2.45
            
            
            
            1.34Fourth quarter
            
            3.08
            
            
            
            1.38Fiscal
                  2007First
                quarter
            
            7.47
            
            
            
            2.28Second quarter
            
            7.74
            
            
            
            3.04Third quarter
            
            4.50
            
            
            
            3.23Fourth quarter
            
            5.28
            
            
            
            2.55Fiscal
                2008First quarter (through 12/14/07)
            $
            3.48
            
            
            $
            2.69




On
      December 14, 2007, the closing sale price for our common stock on the NASDAQ
      Capital Market was $2.69 per share.  As of December 14, 2007, there were 56
      stockholders of record of our common stock.




**Dividends**





We
      have
      never declared or paid any cash dividends on our common stock.  We
      currently anticipate that we will retain all available funds for use in the
      operation of our business, and do not intend to pay any cash dividends in the
      foreseeable future.  The payment of any future dividends will be at the
      discretion of our Board of Directors and will depend upon, among other factors,
      future earnings, operations, capital requirements, our general financial
      condition and general business conditions.  Our ability to pay cash
      dividends is currently restricted by our credit facility, and the terms of
      future credit facilities or other agreements may contain similar
      restrictions.




**Repurchases
      of Securities**





During
      the quarter ended September 30, 2007, we did not repurchase any of our
      securities.







18





**Stock
      Performance Graph**




The
      following graph compares the cumulative 5-year total return attained by
      shareholders of En Pointe Technologies, Inc.'s common stock relative to the
      cumulative total returns of the NASDAQ Composite index and the RDG Technology
      Composite index. The graph tracks the performance of a $100 investment in our
      common stock and in each of the indexes (with the reinvestment of all dividends)
      from 9/30/2002 to 9/30/2007.








**ITEM
      6. SELECTED CONSOLIDATED
      FINANCIAL
      DATA**




The
      following selected consolidated financial data as of and for the years ended
      September 30, 2007, 2006, 2005, 2004 and 2003 has been derived from our audited
      consolidated financial statements.  The information set forth below is not
      necessarily indicative of the results of future operations.







19





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




Fiscal
                Year Ended September
                30,2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003(in
                thousands, except per share
                data)**Statement
                of Operations Data:**Net
                  sales
            
            $
            347,126
            
            
            $
            323,733
            
            
            $
            328,332
            
            
            $
            279,234
            
            
            $
            289,811Cost
                of sales
            
            
            303,575
            
            
            
            284,083
            
            
            
            293,274
            
            
            
            244,758
            
            
            
            253,771Gross
                  profit
            
            
            43,551
            
            
            
            39,650
            
            
            
            35,058
            
            
            
            34,476
            
            
            
            36,040Operating
                expenses:Selling
                  and marketing expenses
            
            
            30,565
            
            
            
            28,337
            
            
            
            25,792
            
            
            
            22,930
            
            
            
            27,556General
                and administrative expenses
            
            
            11,871
            
            
            
            11,098
            
            
            
            10,143
            
            
            
            10,048
            
            
            
            9,998Charges
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            393Operating
                income (loss)
            
            
            1,115
            
            
            
            215
            
            
            
            (877
            )
            
            
            1,499
            
            
            
            (1,907
            )Interest
                  income (expense)
            
            
            297
            
            
            
            181
            
            
            
            6
            
            
            
            (749
            )
            
            
            (871
            )Other
                income, net
            
            
            79
            
            
            
            36
            
            
            
            644
            
            
            
            646
            
            
            
            238Income
                  (loss) before taxes, minority interest and income (loss) from
                  affiliates
            
            
            1,491
            
            
            
            432
            
            
            
            (227
            )
            
            
            1,396
            
            
            
            (2,540
            )Income
                tax (benefit) provision
            
            
            (203
            )
            
            
            42
            
            
            
            21
            
            
            
            131
            
            
            
            --Income
                  (loss) before minority interest and income from
                  affiliates
            
            
            1,694
            
            
            
            390
            
            
            
            (248
            )
            
            
            1,265
            
            
            
            (2,540
            )Minority
                interests
            
            
            (68
            )
            
            
            121
            
            
            
            393
            
            
            
            136
            
            
            
            --Income
                  from affiliates
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            143Net
                income (loss)
            
            $
            1,626
            
            
            $
            511
            
            
            $
            145
            
            
            $
            1,401
            
            
            $
            (2,397
            )Net
                income (loss) per share:Basic
            
            $
            0.23
            
            
            $
            0.07
            
            
            $
            0.02
            
            
            $
            0.21
            
            
            $
            (.36
            )Diluted
            
            $
            0.22
            
            
            $
            0.07
            
            
            $
            0.02
            
            
            $
            0.20
            
            
            $
            (.36
            )Weighted
                  average shares and share equivalentsoutstanding:Basic
            
            
            7,145
            
            
            
            7,006
            
            
            
            6,866
            
            
            
            6,737
            
            
            
            6,720Diluted
            
            
            7,456
            
            
            
            7,125
            
            
            
            7,103
            
            
            
            6,854
            
            
            
            6,720




As
                of September
                30,2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003(in
                thousands)**Balance
                Sheet Data:**Working capital
            
            $
            16,444
            
            
            $
            16,497
            
            
            $
            16,064
            
            
            $
            17,878
            
            
            $
            14,732Total assets
            
            $
            86,006
            
            
            $
            66,238
            
            
            $
            62,896
            
            
            $
            61,432
            
            
            $
            51,655Borrowings under lines of credit and flooring
            
            $
            30,314
            
            
            $
            15,673
            
            
            $
            16,824
            
            
            $
            18,309
            
            
            $
            11,326Long term liabilities
            
            $
            447
            
            
            $
            238
            
            
            $
            584
            
            
            $
            5,628
            
            
            $
            5,391Stockholders' equity
            
            $
            21,263
            
            
            $
            19,011
            
            
            $
            18,451
            
            
            $
            17,978
            
            
            $
            16,426







20





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




For
      an
      understanding of the significant factors that influenced our performance during
      the past three fiscal years, this financial discussion should be read in
      conjunction with the Consolidated Financial Statements and the Notes thereto
      presented in this Form 10-K.




**EXECUTIVE
      OVERVIEW**




We
      began
      operations in March of 1993 as a reseller of information technology
      products.  In fiscal year 1999, value-added services were added to our
      customer offerings.  Value-added services represented 13.8%, 14.5% and
      14.9% of our net sales in fiscal years 2007, 2006 and 2005,
      respectively.  The gross profit margins on the value-added services
      that we currently offer are significantly higher than the gross profit margins
      on our information technology product business, but require additional overhead
      expense for supervision, idle time, and other expenses related to service
      offerings that offset a portion of the increased margin.  In October 2003,
      we made an initial investment in PBPO, a start up company in Tennessee
      that sells BPO services that carry higher gross profit margins, similar to
      those found in our value-added services.  Then, in October 2006 we
      broadened our BPO capability by acquiring a 70% interest in Ovex, a private
      company in Pakistan that had significant experience and success in
      providing BPO services for our internal operations as well as for PBPO's
      customers.




In
      our
      initial operating years from fiscal 1994 to fiscal 1999, with the aid of a
      robust economy and an information technology market that accommodated our
      business model, our net sales increased at a compounded annual growth rate
      of
      35.1%.  Seasonal trends were never prominent in our business, although
      March quarters were historically regarded as one of the least promising
      quarters.




In
      fiscal
      2000 we experienced our first annual net sales decline of 26%, or $173.8
      million, from net sales in fiscal 1999 due to a softer information technology
      market and difficulties in transitioning to a new enterprise resource planning
      business system.  Net sales continued to decline in subsequent fiscal years
      reaching a low of $257.0 million in fiscal year 2002, or a compounded
      annual decline rate of 27% for the three years.  The last five years
      have seen a compounded annual growth rate of 3.7% in net sales from $289.8
      million in fiscal year 2003 to the present $347.1 million in fiscal year
      2007.




Net
      sales
      increased $23.4 million, or 7.2%, and gross profits increased $3.9 million,
      or
      9.8%, in fiscal year 2007 from fiscal year 2006, driven principally by increased
      product sales.  Operating expenses, consisting mainly of selling and
      marketing expenses, increased a total of $3.0 million over fiscal year 2006
      results, leaving operating income of $1.1 million in fiscal year 2007, an
      improvement of $0.9 million over the $0.2 million reported in fiscal year
      2006.




Because
      our business model involves the resale of information technology products held
      in inventory by certain distributors, we do not maintain significant amounts
      of
      inventory on hand for resale.  We typically do not place an order for
      product purchases from distributors until we have received a customer purchase
      order.  Inventory is then drop-shipped by the distributor to either
      the customer or shipped to our configuration center in Rancho Cucamonga,
      California.  The distributor typically ships products within 24 hours
      following receipt of a purchase order and, consequently, substantially all
      of
      our product net sales in any quarter result from orders received in that
      quarter.  Although we maintain a relatively small amount of inventory
      in stock for resale, most of our inventory represents either merchandise being
      configured for customers’ orders or products purchased from distributors and
      shipped, but not yet received and accepted by our customers.




Product
      revenues are generally recognized upon delivery to the
      customer.  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 our distributors or manufacturers, less any incentive credits.




CRITICAL
      ACCOUNTING POLICIES




The
      preparation of financial statements and related disclosures in conformity with
      U.S. generally accepted accounting principles and our discussion and analysis
      of
      our financial condition and results of operations require us to make judgments,
      assumptions, and estimates that affect the amounts reported in our consolidated
      financial statements and accompanying notes.  Note 1 of the Notes to
      Consolidated Financial Statements of this Form 10-K describes the significant
      accounting policies and methods used in the preparation of our consolidated
      financial statements.  We base our estimates on historical experience
      and on various other assumptions we believe to be reasonable under the
      circumstances, the results of which form the basis for making judgments about
      the carrying values of assets and liabilities.  We regularly discuss
      with our audit committee the basis of our estimates.  Actual results may
      differ from these estimates and such differences may be material.





21








We
      believe the following critical accounting policies, among others, affect our
      more significant judgments and estimates used in the preparation of our
      consolidated financial statements:




***Revenue
      recognition***. Our net sales consist primarily of revenue from the
      sale of hardware, software, peripherals, and service and support
      contracts.  We apply the provisions of the SEC Staff Accounting
      Bulletin (SAB) No. 104, “Revenue Recognition in Financial Statements,” which
      provides guidance on the recognition, presentation and disclosure of revenue
      in
      financial statements filed with the SEC.  SAB No. 104 outlines the
      basic criteria that must be met to recognize revenue and provides guidance
      for
      disclosure related to revenue recognition policies.  In general, we
      recognize revenue when (i) persuasive evidence of an arrangement exists, (ii)
      delivery of products has occurred or services have been rendered, (iii) the
      sales price charged is fixed or determinable and (iv) collection is reasonably
      assured.




Under
      our
      standard shipping terms, title passes upon delivery to a common carrier but
      revenue is not recognized until delivery takes place which is generally two
      to
      three days later.  Product is therefore considered received and
      accepted by the customer only upon the customer’s receipt of the product from
      the carrier.  Any undelivered product is included in our
      inventory.




The
      majority of our sales relate to physical products and are recognized on a gross
      basis with the selling price to the customer recorded as net sales and the
      acquisition cost of the product recorded as cost of sales.  However,
      software maintenance contracts, software agency fees, and extended warranties
      that we sell in which we are not the primary obligor, are recorded on a net
      basis in accordance with SEC Staff Accounting Bulletin No. 104 “Revenue
      Recognition” and Emerging Issues Task Force 99-19, “Reporting Revenue Gross as a
      Principal versus Net as an Agent.” Such net revenues are recognized in full at
      the time of sale.




We
      have
      adopted the provisions of Statement of Position No. 97-2, “Software Revenue
      Recognition” (SOP 97-2) as amended by SOP No. 98-9, “Modification of SOP 97-2,
      Software Revenue Recognition with Respect to Certain Transactions” (SOP 98-9) in
      recognizing revenue from software transactions.  Revenue from software
      license sales is recognized when persuasive evidence of an arrangement exists,
      delivery of the product has been made, and a fixed fee and collectibility has
      been determined.




Service
      revenues are recognized based on contracted hourly rates, as services are
      rendered or upon completion of specified contracted services and acceptance
      by
      the customer.  Revenue from customer maintenance support
      agreements, in which we are not the primary obligor, is reported on a net
      basis and recognized at the time of the sale. 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 our suppliers, less rebates.




Deferred
      revenues result from prepaid management services and maintenance
      contracts.  Many of our management services are pre-billed quarterly
      and income is recognized as services are performed.  Our maintenance
      contracts are generally for services that may be performed over a one year
      period of time.  Income is recognized on such contracts ratably over
      the period of the contract.




***Allowance
      for doubtful accounts.*** We estimate our allowance for doubtful
      accounts related to trade receivables by two methods.  First, we
      evaluate specific accounts over 90 days outstanding and apply various levels
      of
      risk analysis to these accounts to determine a satisfactory risk category to
      which given percentages are applied to establish a reserve.  Second, a
      general reserve is established for all other accounts, exclusive of the accounts
      identified for the specific reserve, in which a percentage is applied that
      is
      supportable by historic collection patterns.




***Product
      returns*****.**  We provide an allowance for sales
      returns, which is based on historical experience.  In general, we
      follow a strict policy of duplicating the terms of our vendor or manufacturers’
product return policies.  However, in certain cases we must deviate
      from this policy in order to satisfy the requirements of certain sales contracts
      and/or to satisfy or maintain customer relations.  To establish a
      reserve for returns, outstanding Return Merchandise Authorizations, or RMAs,
      are
      reviewed.  Those RMAs issued for which the related product has not
      been returned by the customer are considered future sale reversals and are
      fully
      reserved.  In addition, an estimate, based on historical return
      patterns, is provided for probable future RMAs that relate to past
      sales.  Generally, customers return goods to our configuration
      facility in Rancho Cucamonga, California, where they are processed to return
      to
      the vendor.




***Vendor
      returns*****.**  After product has been returned to
      vendors under authenticated RMAs, we review such outstanding receivables from
      our vendors and establish a reserve on product that will not qualify for refund
      based on a review of specific vendor receivables.







22





***Rebates
      and Cooperative Marketing Incentives*****.**  We
      receive incentives from suppliers related to product and volume rebates and
      cooperative marketing development funds.  These incentives are
      generally under monthly, quarterly, or annual agreements with the suppliers;
      however, some of these incentives are product driven or are provided to support
      specific programs established by the supplier.  Suppliers generally
      require that we use their cooperative marketing development funds exclusively
      for advertising or other marketing programs.  As marketing expenses
      are recognized, these restricted cooperative marketing development funds are
      recorded as a reduction of the related marketing expense with any excess
      funding that can not be identified with a specific vendor program reducing
      cost
      of goods sold.




As
      rebates are earned, we record the rebate receivables with a corresponding
      reduction of cost of goods sold.  Any amounts received from suppliers
      related to cooperative marketing development funds are deferred until
      earned.  Incentive programs are subject to audit as to whether the
      requirements of the incentives were actually met.  We establish
      reserves to cover any collectibility risks including subsequent supplier
      audits.




***Inventory.*****Although
      we employ a virtual inventory model that generally limits our exposure to
      inventory losses, with certain large customers we contractually obligate
      ourselves to product availability terms that require maintaining physical
      inventory, as well as configured product.  Such inventory is generally
      confined to a very limited range of product that applies to specific customers
      or contracts.  Included in our inventory is product that has been
      returned by customers but is not acceptable as returnable by the
      vendor.  As a result, we expose ourselves to losses from such
      inventory that requires reserves for losses to be established.  We
      record varying reserves based upon the class of inventory (i.e. held for resale
      or returned from customers) and age of inventory.




**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 30,2007
            
            
            2006
            
            
            2005Net
                sales:Product
            
            
            86.2
            %
            
            
            85.5
            %
            
            
            85.1
            %Services
            
            
            13.8
            
            
            
            14.5
            
            
            
            14.9Total
                  net sales
            
            
            100.0
            
            
            
            100.0
            
            
            
            100.0Gross
                profit:Product
            
            
            7.2
            
            
            
            7.1
            
            
            
            6.3Services
            
            
            5.3
            
            
            
            5.1
            
            
            
            4.3Total
                  gross profit
            
            
            12.5
            
            
            
            12.2
            
            
            
            10.7Selling
                and marketing expenses
            
            
            8.8
            
            
            
            8.8
            
            
            
            7.9General
                  and administrative expenses
            
            
            3.4
            
            
            
            3.4
            
            
            
            3.1Operating
                income (loss)
            
            
            0.3
            
            
            
            0.0
            
            
            
            (0.2
            )Interest
                  income, net
            
            
            0.1
            
            
            
            0.1
            
            
            
            0.0Other
                income, net
            
            
            0.0
            
            
            
            0.0
            
            
            
            0.1Income
                  (loss) before taxes and minority interest
            
            
            0.4
            
            
            
            0.1
            
            
            
            (0.1
            )Income
                tax benefit
            
            
            (0.1
            )
            
            
            0.0
            
            
            
            0.0Income
                  (loss) before minority interest
            
            
            0.5
            
            
            
            0.1
            
            
            
            (0.1
            )Minority
                interest
            
            
            0.0
            
            
            
            0.1
            
            
            
            0.1Net
                  income (loss)
            
            
            0.5
            %
            
            
            0.2
            %
            
            
            0.0
            %





**COMPARISON
      OF FISCAL YEARS ENDED SEPTEMBER 30, 2007 AND 2006**




**NET
      SALES.**Net sales increased $23.4 million, or 7.2%, to
      $347.1 million in fiscal year 2007 from $323.7 million in fiscal year
      2006.  Our affiliate, PBPO, and subsidiary, Ovex, contributed $3.2
      million and $0.9 million, respectively, of the total net sales increase with
      the
      remaining $19.3 million increase coming from our core operations of sales and
      service of information technology products.  While no one customer
      accounted for 10% or more of total net sales in fiscal years 2007 or 2006,
      the
      core operation increase in sales resulted, in fact, from large volume customers
      who purchased increased amounts of our products and
      services.   For example, net sales to our top five customers
      accounted for 39.6% of total net sales in fiscal year 2007.  Net sales
      to these top five customers increased $53.1 million, or 15.6%, in fiscal year
      2007 over the total net sales to these same five customers in the prior fiscal
      year.





23







Product
      net sales in fiscal year 2007 increased $22.6 million, or 8.2%, over fiscal
      year
      2006 and were responsible for most of the increase in the total net sales for
      the year.  Top selling products were software, desktop computers and
      laptops, respectively, for both fiscal years 2007 and 2006 with software sales
      being the leading component of the sales mix.  Software agency
      commissions, a part of product sales, increased for the third consecutive year
      in fiscal year 2007, to $7.0 million, an increase of $1.5 million, or 21.0%
      over
      fiscal 2006 commissions.




Service
      net sales in fiscal year 2007 increased a marginal $0.8 million, or 1.7% over
      fiscal year 2006.  Service net sales from our affiliate, PBPO, and our
      subsidiary, Ovex, that promotes and performs business process outsourcing
      services, increased $4.1 million to an aggregate of $6.7 million for fiscal
      year
      2007 and were responsible for all of the increase in our service net sales
      for
      fiscal year 2007.  Core service net sales in fiscal year 2007, which
      relate to the service of information technology products and exclude the
      contributions of PBPO and Ovex, decreased $3.3 million to $41.1 million from
      $44.4 million in fiscal year 2006.  The decline in core service net
      sales in fiscal year 2007 was in large part from the conclusion of a substantial
      municipal services work project that was principally completed in fiscal year
      2006 as well as from a decrease of services to a major customer that has been
      adversely affected by the general slow down in the mortgage
      industry.




**GROSS
      PROFIT.**Gross profits increased $3.9 million, or 9.8%, to $43.6
      million in fiscal year 2007 from $39.7 million for fiscal year
      2006.  The bulk of the increase in gross profits, $2.2 million, was
      from product gross profits, with the remainder $1.7 million attributable to
      services.  Our affiliate, PBPO, and subsidiary, Ovex, contributed
      approximately one-third of the gross profits increase, or $1.3 million, on
      aggregate base sales of $2.1 million for fiscal year 2007.  Overall
      gross margins improved to 12.5% in fiscal year 2007 from 12.2% in the prior
      fiscal year.




Product
      gross profits increased $2.2 million in fiscal year 2007 to $25.2 million from
      $23.0 million in the prior fiscal year principally from increased sales
      volume.  Product gross margin percentages improved marginally to 8.4%
      in fiscal year 2007 from 8.3% in fiscal year 2006.  The slight
      improvement in margins was attributable to the increase in agency commission
      fees that bear no associated costs.  Excluding the agency commissions,
      product gross margins fell to 6.1% in fiscal year 2007 from 6.3% in the prior
      fiscal year.




Service
      gross profits increased $1.7 million in fiscal year 2007 to $18.3 million from
      $16.6 million in the prior fiscal year.  Most of the increase, $1.1
      million, was attributable to an increase in service gross profits from our
      affiliate, PBPO, which operates on an approximate 35% service gross
      margin.  Our core service gross profits, which relates to the service
      of information technology products and excludes the contributions of PBPO and
      Ovex, increased marginally $0.4 million in fiscal year 2007 to $16.2 million
      from $15.8 million in the prior fiscal year.  Related core service
      gross margins increased 3.8% to 39.4% from 35.6%.





While
      core service net sales were down, core service gross profits and margins were
      up.  Most of the service gross margin improvement can be traced to a
      major municipal service project that was largely completed in fiscal year 2006
      and whose revenues of $4.2 million and service gross margins of 11% adversely
      impacted fiscal 2006 results causing a 3% drop in overall gross margins for
      that
      year.





**SELLING
      AND MARKETING
      EXPENSES.**Selling and
      marketing expenses increased $2.2 million, or 7.9%, to $30.5 million
      in fiscal year 2007, from $28.3 million in fiscal year 2006.  The $2.2
      million increase in selling and marketing expenses in fiscal year 2007 was
      attributable principally to a $1.9 million increase in wages from the hiring
      of
      an additional 48 employees, including 40 for the call center in theU.S.and 8 for the recently formed cabling
      division, and $0.2 million in increased overtime pay.  The remaining
      $0.1 increase in selling and marketing expenses relates to increases in expenses
      for our affiliate, PBPO, and subsidiary, Ovex.  Selling and marketing
      expenses expressed as a percentage of net sales, were flat at 8.8% for fiscal
      years 2007 and 2006.




**GENERAL
      AND ADMINISTRATIVE EXPENSES.**  General and administrative expenses,
      or G&A, increased $0.8 million, or 7.0%, to $11.9 million in fiscal year
      2007 from $11.1 in fiscal year 2006.  All of the increase was
      attributed to our affiliate, PBPO, and subsidiary, Ovex, with G&A expense
      for PBPO and Ovex increasing $0.4 million and $0.6 million
      respectively.  The Ovex increase was due to our acquisition of Ovex
      stock and Ovex’s merger in fiscal year 2007 with no comparable expense in prior
      fiscal years.  The majority of the increase for PBPO relates to increases
      in salary as well as increases in travel and entertainment related
      costs.  As with selling and marketing expenses, when G&A expenses
      are expressed as a percentage of net sales, the results are flat at 3.4% for
      fiscal years 2007 and 2006.




**OPERATING
      INCOME.**  Operating income increased $0.9 million in fiscal year
      2007 to $1.1 million as compared with $0.2 million in the prior fiscal
      year.  The increase of $0.9 million in operating income can be
      attributed to the increase in gross profit of $3.9 million less the $3.0 million
      increase in operating expenses during fiscal year 2007 as discussed
      above.





24





**INTEREST
      INCOME, NET.**




Interest
      income is net of interest expense and consisted of the following components
      for
      the last two fiscal years (in thousands):




Year
                Ended September 30,2007
            
            
            2006Interest
                  income
            
            $
            615
            
            
            $
            263Interest
                expense
            
            
            (318
            )
            
            
            (82
            )Net
                  interest income
            
            $
            297
            
            
            $
            181




Net
      interest income increased $0.1 million in fiscal year 2007 to $0.3 million
      from $0.2 million in fiscal year 2006.  Interest income in both fiscal
      years resulted from our short term cash investments.   Interest
      expense increased $0.2 million in fiscal year 2007 to $0.3 million from $0.1
      million in fiscal year 2006.  The increase was principally from the
      acquisition of Ovex in fiscal year 2007 and the related interest expense that
      was not present in the prior fiscal year.  The Ovex interest expense
      includes $0.1 million related to short-term borrowings under an export finance
      program.  In addition, consolidated interest expense includes
      approximately $0.1 million related to capitalized leases.  The interest
      expense in fiscal years 2007 and 2006 from our lending facility with GE
      Commercial Distribution Finance Corporation was approximately $11,000 and
      $14,000 respectively, which is customarily low due to our interest-free
      borrowing periods allowed under the financing.





**OTHER
      INCOME.**  Other income increased a marginal $43,000 in fiscal
      year 2007 as compared with fiscal year 2006 but was not a significant factor
      for
      either fiscal year.




**INCOME
      TAX (BENEFIT) PROVISION**.  A $203,000 tax benefit was provided
      for fiscal year 2007, which arose principally from a $400,000 decrease to
      our valuation allowance for deferred tax benefits related to net operating
      loss tax benefits.  The decrease of $400,000 represented our estimate of
      the federal and state taxes at a combined rate of 40% that would be incurred
      in
      future periods and for which the tax benefit of the deferred net operating
      loss
      deduction would be available.  Only $263,000 of the $400,000 decrease was
      available for the reduction of deferred taxes since the balance, $137,000,
      relates to net operating losses arising from stock options and are considered
      an
      adjustment of equity.  As a result of the use of the deferred net operating
      loss of $263,000, future provisions for taxes, for financial statement
      purposes, will not benefit from the net operating loss deduction and will be
      computed at the full statutory rates.




We
      file a
      consolidated federal income tax return, while for many of our state tax returns
      we file separately under the name of our wholly-owned sales subsidiary, En
      Pointe Technologies Sales, Inc., that is qualified to do business in all fifty
      states.  Our consolidated return excludes both PBPO and Ovex because
      in the case of PBPO, our investment is less than the required 80% to consolidate
      under  federal tax law.  In the case of Ovex, we are not taxed on
      foreign income until it is distributed.




As
      of
      September 30, 2007 we had $5.3 million of  federal NOL carry-forwards,
      which at 35% federal tax rates would reduce future federal taxes by $1.9
      million.  In addition, there are $0.1 million of alternative minimum
      tax credits carry-forwards that bring the total future benefit to $2.0 million,
      of which $0.4 million was recognized in fiscal year 2007.  The NOL
      carry-forwards are scheduled to expire at various dates through fiscal year
      2023.  Section 382 of the Internal Revenue Code could limit the future
      use of some or all of the NOL carry-forwards if the ownership of our common
      stock changes by more than 50 percentage points in certain circumstances over
      a
      three year testing period.




**MINORITY
      INTEREST.**  Under FIN 46 and other recent changes in consolidation
      principles, certain minority interests are required to be
      consolidated.  We own an approximate 30% voting interest in PBPO and
      under FIN 46 are required to consolidate PBPO’s financial results in our
      financial statements.  As a result, we allocate certain losses to the
      other stockholders of PBPO who collectively own approximately 70% of
      PBPO. Losses so allocated to the “minority interest” are not based upon the
      percentage of ownership, but upon the “at risk” capital of those owners.
 Once the “minority interest at risk” capital has been absorbed by losses,
      all remaining losses are allocated to us, without regard for the amount of
      capital that we hold “at risk”.





25








Ovex,
      on
      the other hand, was acquired in fiscal year 2007 and we own a majority 70%
      interest in that company.  Thus, we allocate 30% of the net income of
      Ovex to its minority shareholders.  The allocations to the minority
      interest (in thousands) for the last two fiscal years was as
      follows:






Year
                Ended September 30,2007
            
            
            2006Ovex
                  profit
            
            
            (186
            )
            
            
            --PBPO
                loss
            
            $
            118
            
            
            $
            121(Profit)/loss
                  allocations
            
            $
            (68
            )
            
            $
            121




**NET
      INCOME**.  Net income increased $1.1 million to $1.6 million in
      fiscal year 2007 from $0.5 million in fiscal year 2006.  The principal
      reasons for the $1.1 million increase in net income was from the $0.9 million
      increase in operating income and the $0.2 million decrease in income
      taxes.




**COMPARISON
      OF FISCAL YEARS ENDED SEPTEMBER 30, 2006 AND 2005**




**NET
      SALES**.  Net sales decreased $4.6 million, or 1.4%, to $323.7
      million in fiscal year 2006 from $328.3 million in fiscal year
      2005.  Moderating the net sales decrease was the business of Software
      Medium, Inc., that we acquired in January 2006 and that contributed $3.9 million
      in net sales for fiscal year 2006 and PBPO, our variable interest entity
      affiliate, whose sales increased $1.7 million.  No one customer
      accounted for 10% or more of total net sales in fiscal year 2006 or
      2005.  However, sales do tend to be concentrated in a relatively few
      accounts as evidenced in fiscal years 2006 and 2005 when our top five customers
      made up 27.1% and 31.9%, respectively, of total net sales and our top
      twenty-five customers contributed 59.7% and 63.4%, respectively, of total net
      sales.




On
      a
      quarterly seasonal basis, our June quarter, helped by software agency
      commissions of $1.1 million, was the strongest net sales quarter of the fiscal
      year for the third consecutive year with the June 2006 fiscal quarter coming
      in
      at $95.6 million compared with $92.6 million in prior fiscal year
      period.  On the other hand, the March quarter of fiscal 2006 continued
      to be the weakest net sales quarter of the fiscal year for the third consecutive
      year.




Product
      sales in fiscal year 2006 decreased $2.6 million, or 0.9%, to $276.7 million
      from $279.3 million reported in fiscal year 2005, reflecting a decline in
      overall net sales from a few of our major customers.  Service revenues
      in fiscal year 2006 decreased year-over-year $2.0 million, a lesser decline
      than
      reported in product sales, but at a higher rate of 4.1%, to $47.0 million from
      the $49.0 million reported in the prior fiscal year.




**GROSS
      PROFIT.**  Gross profits increased $4.6 million, or 13.1%, to $39.7
      million in fiscal year 2006 from $35.1 million for fiscal year 2005. Services
      contributed $2.5 million of the gross profits increase, with products
      responsible for remaining $2.1 million.  With declining net sales, the
      increase in gross profits came solely from improvements in gross margin
      percentages which improved for both product and services to a combined 12.2%
      from 10.7% in fiscal year 2005.  Product gross margin percentages
      improved by 0.9% to 8.3% in fiscal year 2006 while service improved by 6.4%
      to
      35.5%.




Most
      of
      the $2.1 million increase in product gross profits came from agency commission
      fees of $1.8 million which in turn originated primarily from increased Microsoft
      software commission fees.  The service gross profits increase of $2.5
      million was from a combination of factors, however. PBPO, our consolidated
      affiliate, contributed $0.8 million of the increase in service gross profits
      for
      fiscal year 2006 over fiscal year 2005.  Two large logistic and asset
      management customers contributed the majority of the remaining $1.7 million
      increase in service gross profits.  These were high volume projects in
      which processing costs were successfully contained.  Other factors
      explaining the increase include the reaching of certain contractual milestones
      with our municipal service contracts that allowed us to recognize higher service
      margins as well as our acquisition in January 2006 of a security services
      business that traditionally earns above average gross profit
      margins.




**SELLING
      AND MARKETING EXPENSES.**  Selling and marketing expenses increased
      $2.5 million, or 9.9%, to $28.3 million in fiscal year 2006, from $25.8 million
      in fiscal year 2005.  The $2.5 million increase is inclusive of a
      decrease in PBPO’s selling and marketing expenses of $0.3
      million.  Excluding the decrease in PBPO’s selling and marketing
      expense, our core selling and marketing expenses increased by $2.8
      million.  The increase in selling and marketing expenses in fiscal
      year 2006 resulted primarily from $2.7 million of wage related expenses
      consisting of $1.4 million in commissions, mainly from increased software sales
      and draws, $0.9 million in wages, and $0.4 million in employee benefits and
      reimbursements.





26











We
      also
      experienced a $0.8 million increase in our business process outsourcing expenses
      from increased use of employees offshore and from costs related to software
      programming in India.




However,
      those costs were largely offset by $0.9 million from increased co-op funds
      and
      from a favorable settlement of disputed balances with creditors. When
      selling and marketing expenses are expressed as a percentage of net sales,
      there
      was an increase of 0.9% to 8.8% in fiscal year 2006 from 7.9% in fiscal year
      2005.




**GENERAL
      AND ADMINISTRATIVE EXPENSES.**  General and administrative expenses,
      or G&A, increased $1.0 million, or 9.4%, to $11.1 million in fiscal year
      2006 from $10.1 in fiscal year 2005.  The increase in G&A was
      principally the result of higher legal expenses of $0.7 million due to the
      three
      legal suits that we defended and to $0.3 million in the settlement of the First
      Union securities matter dating back to 2000.




When
      G&A expenses are expressed as a percentage of net sales, there was an
      increase of 0.3% to 3.4% in fiscal year 2006 from 3.1% in fiscal year
      2005.




**OPERATING
      INCOME (LOSS).**  Operating income of $0.2 million was realized in
      fiscal year 2006 compared with $0.9 million of operating loss in the prior
      fiscal year.  The increase of $1.1 million in operating income can be
      attributed to the increase in gross profit of $4.6 million less the $3.5 million
      increase in operating expenses during fiscal year 2006 as discussed
      above.




**INTEREST
      (INCOME) EXPENSE, NET.**  Interest income of $0.2 million in fiscal
      year 2006 is net of interest expense of $0.1 million.  Interest income
      resulted from our short term cash investments while most of interest expense
      in
      fiscal year 2006 was related to capitalized leases for computer equipment
      acquired.  The interest expense in fiscal year 2006 from our lending
      facility with GE Commercial Distribution Finance Corporation was approximately
      $14,000 which is customarily low or non-existent due to our interest-free
      borrowing periods allowed under the financing.




Net
      interest income increased $0.2 million in fiscal year 2006 compared with the
      prior fiscal year.  Most of the increase can be attributed to the
      inclusion in fiscal year 2005 of $0.2 million of interest expense related to
      the
      Ontario configuration facility that was not present in the fiscal year 2006
      due
      to the Ontario lease converting from a financing lease to an operating lease
      in
      which rentexpense replaces interest expense as a major expense
      item.




**OTHER
      INCOME.**  Other income decreased $0.6 million in fiscal year 2006
      from that of fiscal year 2005.  The decrease in other income was due
      to the inclusion in fiscal year 2005 of insurance recovery from prior year
      losses and rental income which did not repeat in fiscal year 2006.




**PROVISION
      FOR INCOME TAXES.**  We provided a $42,000 tax provision for fiscal
      year 2006, an increase of $21,000 from that provided in the prior fiscal
      year.  While we are not subject to the regular 34% corporate federal
      income tax rates because of the tax benefit derived from our past net operating
      losses, or NOLs, that can be carried forward, we are nevertheless subject to
      the
      federal alternative minimum tax.  The alternative minimum tax limits
      NOL carryforwards that can be applied in any one year to 90% of the current
      year’s taxable income and imposes a 20% tax on the remaining 10% of taxable
      income.




We
      file a
      consolidated federal income tax return, while for many of our state tax returns
      we file separately under the name of our wholly-owned sales subsidiary, En
      Pointe Technologies Sales, Inc., that is qualified to do business in all fifty
      states.  Our consolidated return excludes PBPO because our investment
      is less than the required 80% to consolidate under federal tax
      law.  Thus, none of the losses generated by PBPO are available for the
      reduction of income taxes.




As
      of
      September 30, 2006 we had $6.9 million of NOL carry-forwards for which a 100%
      valuation allowance has been provided.  The NOL carry-forwards are
      scheduled to expire at various dates through fiscal year
      2023.  Section 382 of the Internal Revenue Code could limit the future
      use of some or all of the NOL carry-forwards if the ownership of our common
      stock changes by more than 50 percentage points in certain circumstances over
      a
      three year testing period.  Of the $6.9 million NOL carry-forwards,
      $4.7 million will be considered an adjustment to additional paid-in capital
      and
      will not benefit future earnings, since those losses were attributable to the
      exercise of employee stock options, which had been recognized as expense for
      tax
      purposes but not for financial statement purposes.







27








**MINORITY
      INTEREST.**  Under FIN 46 and other recent changes in consolidation
      principles, certain minority interests are required to be
      consolidated.  We own an approximate 31% voting interest in PBPO and
      under FIN 46 are required to consolidate PBPO’s financial results in our
      financial statements.  As a result, we allocate certain losses to the
      other stockholders of PBPO who collectively own approximately 69% of
      PBPO.  Losses so allocated to the “minority interest” are not based
      upon the percentage of ownership, but upon the “at risk” capital of those
      owners.  Once the “minority interest at risk” capital has been
      absorbed by losses, all remaining losses are allocated to us, without regard
      for
      the amount of capital that we hold “at risk”.





**NET
      INCOME.**  Net income increased $0.4 million to $0.5 million in
      fiscal year 2006 from $0.1 million in fiscal year 2005.  The principal
      reason for the $0.4 million increase in net income was from the $1.1 million
      increase in operating income less $0.7 million of reductions in non-operating
      income, principally other income and income from recognizing the minority
      interest in our affiliate’s loss.




**LIQUIDITY
      AND CAPITAL RESOURCES**




Our
      sources of liquidity include cash and cash equivalents, cash flow from
      operations, and amounts available under our GE financing
      facility.  These sources have been adequate for day-to-day operations
      and for capital expenditures.  Although we can not provide any
      assurance, we believe that our remaining cash balances, cash flows from
      operations, and availability of funds under our financing facility will be
      sufficient to satisfy our operating requirements for the next fiscal
      year.





**Cash
      flows from operating activities:**





During
      fiscal 2007, our operating activities used cash totaling $15.3 million as
      compared with $5.5 million that was provided by operating activities in the
      prior fiscal year.  The lead contributors to the $20.8 million net
      decrease in cash from operating activities were increases in inventory and
      accounts receivable that together increased $19.5 million from fiscal year
      2006.




Our
      accounts receivable balance, net of allowances for returns and doubtful
      accounts, at September 30, 2007 and 2006, was $61.4 million and $46.4 million,
      respectively, an increase of $15.0 million in fiscal year
      2007.   The accounts receivable increase was principally from a
      $15.0 million sale made to the U.S. government a few days prior to the end
      of
      fiscal year 2007.  The $15.0 million sale was also responsible for the
      increase in the number of days’ sales outstanding in accounts receivable to 65
      days from 52 days, as of September 30, 2007 and 2006, respectively.




Inventory,
      net of allowance, increased $4.6 million in fiscal year 2007 to $8.8 million
      from the $4.2 million reported at the end of the prior fiscal
      year.  The majority of the increase resulted from increases in
      physical inventory purchased for specific customer orders and to a lesser extent
      to an increase in inventory in transit at 2007 fiscal year end.




**Cash
      flows from investing activities:**





Investing
      activities used cash totaling $5.2 million for fiscal year 2007,
      an increase of $3.7 million from the prior fiscal year.  The $3.7
      million increase resulted from increased acquisition costs of $0.8 million,
      increased purchases of property and equipment of $1.9 million, and a $1.0
      million short-term cash investment.





**Cash
      flows from financing activities:**





Financing
      activities provided net cash totaling $16.2 million in fiscal 2007, $16.9
      million more than the $0.7 million of net cash that was used in fiscal
      2006.  Most of the $16.2 million increase in cash provided in fiscal
      2007 was from an increase of $15.8 million in net borrowings under our line
      of
      credit.  In addition, our subsidiary, Ovex borrowed $1.9 million under a
      government sponsored export finance borrowing program that carries annual
      interest rates of 6.5%.




**Credit
      facility:**





As
      of
      September 30, 2007, we had approximately $6.0 million in cash and working
      capital of $16.4 million.







28








Our
      two
      primary information technology sales subsidiaries, En Pointe Technologies Sales,
      Inc. and En Pointe Gov, Inc., and GE Commercial Distribution Finance Corporation
      (“GE”) are parties to that certain Business Financing Agreement and that certain
      Agreement for Wholesale Financing dated June 25, 2004, as amended to date
      (collectively, the Agreements”).  We are the guarantor of the
      obligations under the Agreements.  Under the flooring arrangement, the
      two subsidiaries may purchase and finance information technology products from
      GE-approved vendors on terms that depend upon certain variable
      factors.  The two subsidiaries may borrow up to 85% of their
      collective eligible accounts receivable at an interest rate of prime plus 1.0%
      per annum, subject to a minimum rate of 5.0%.  Such purchases from
      GE-approved vendors have historically been on terms that allow interest-free
      flooring.  The original Agreements provided for a $30.0 million
      accounts receivable and flooring facility and expired on June 25,
      2007**,** but were extended on June 13, 2007 to July 31, 2007 via
      a
      temporary overline letter agreement.




Effective
      July 25, 2007, the facility was increased to $45.0 million and certain financial
      covenants were revised pursuant to an addendum executed among the
      parties.  The addendum also provided an extension of the term of the
      facility for a period of three years from August 1, 2007 and for successive
      one-year renewal periods thereafter, subject to termination at the end of any
      such period on at least sixty days prior written notice by any party to the
      other parties.




Effective
      September 25, 2007, we entered into an amendment to delete all prior financial
      covenants contained in the Agreements and to restate them effective for the
      last
      day of each calendar quarter as follows (as such terms are defined in the
      Agreements):




**•**
            
            Tangible
                Net Worth and Subordinated Debt in the combined amount of not less
                than
                $12,750,000.**•**
            
            Total Funded
                Indebtedness to EBITDA for the preceding four fiscal quarters
                then ended, shall be no more
                than 3.00:1.00.




We
      were
      in compliance with all of our debt covenants as of September 30,
      2007.




The
      GE
      facility is collateralized by accounts receivable, inventory and substantially
      all of our other assets.  As of September 30, 2007, approximately
      $30.3 million in borrowings were outstanding under the $45.0 million financing
      facility.  At September 30, 2007, there were additional borrowings
      available of approximately $14.7 million after taking into consideration the
      borrowing limitations under the Agreements, as amended to date.




**RECENT
      ACCOUNTING PRONOUNCEMENTS**




Accounting
      pronouncements adopted:





In
      September 2006, the SEC released Staff Accounting Bulletin No. 108,
*Considering the Effects of Prior Year Misstatements when Quantifying
      Misstatements in Current Year Financial Statements* ("SAB
      108").  We adopted SAB 108 in the fourth quarter of fiscal year
      2007. SAB 108 requires registrants to use both a balance sheet approach and
      an income statement approach when quantifying and evaluating the materiality
      of
      a misstatement and to adjust the financial statements if either approach results
      in quantifying a misstatement that is material.





In
      adopting the requirements of SAB 108, we determined that previously accrued
      taxes that were overstated by $0.2 million and immaterial to the balance sheet,
      could be considered material to the income statement, if
      adjusted.  The accrued tax overstatement resulted from an under
      accrual of an income tax refund in years prior to 2002, which had been evaluated
      as being immaterial under the reversing (rollover) method at that
      time.  We reported the cumulative effect of the initial application of
      SAB 108 by adjusting accumulated deficit as of September 30, 2006 with a
      credit of $0.2 million.





In
      March
      2006, the Financial Accounting Standards Board (“FASB”) issued FAS 156,
*Accounting for Servicing of Financial Assets - an Amendment of FASB
      Statement No. 140*.  This standard clarifies when to separately
      account for servicing rights, requires servicing rights to be separately
      recognized initially at fair value, and provides the option of subsequently
      accounting for servicing rights at either fair value or under the amortization
      method.  The standard is effective for fiscal years beginning after
      September 15, 2006 but can be adopted early as long as financial statements
      for
      the fiscal year in which early adoption is elected, including interim
      statements, have not yet been issued.  We adopted this accounting
      pronouncement effective October 1, 2006 and the adoption has not had a material
      effect on our consolidated financial statements.





29








In
      February 2006, the FASB issued FAS 155, *Accounting for Certain Hybrid
      Financial Instruments - an Amendment of FASB Statements No. 133 and
      140*.  This statement permits fair value remeasurement for any
      hybrid financial instrument that contains an embedded derivative that would
      otherwise have to be accounted for separately.  The new statement also
      requires companies to identify interests in securitized financial assets that
      are freestanding derivatives or contain embedded derivatives that would have
      to
      be accounted for separately, clarifies which interest-and principal-only strips
      are subject to Statement No. 133, and amends Statement No. 140 to revise the
      conditions of a qualifying special purpose entity due to the new requirement
      to
      identify whether interests in securitized financial assets are freestanding
      derivatives or contain embedded derivates.  This statement is
      effective for all financial instruments acquired or issued after the beginning
      of an entity's first fiscal year that begins after September 15,
      2006.  We adopted this accounting pronouncement effective October 1,
      2006 and the adoption has not had a material effect on our consolidated
      financial statements.





Accounting
      pronouncements pending adoption:





In
      February 2007, the FASB issued SFAS No. 159, *The Fair Value Option for
      Financial Assets and Financial Liabilities-Including an Amendment of FASB
      Statement No. 115*, which is effective for the Company in fiscal years
      beginning July 1, 2008.  This statement permits an entity to
      choose to measure many financial instruments and certain other items at fair
      value at specified election dates.  Subsequent unrealized gains and
      losses on items for which the fair value option has been elected will be
      reported in earnings.  We are currently evaluating the potential impact, if
      any, that the adoption of SFAS 159 will have on our consolidated financial
      statements.





In
      September 2006, the FASB issued FAS 157, *Fair Value
      Measurements*.  This standard defines fair value, establishes a
      framework for measuring fair value in generally accepted accounting principles,
      and expands disclosures about fair value measurements.  This statement
      is effective for financial statements issued for fiscal years beginning after
      November 15, 2007. We do not anticipate that the adoption of this accounting
      pronouncement will have a material effect on our consolidated financial
      statements.





In
      July
      2006, the FASB issued Interpretation No. 48, *Accounting for Uncertainty in
      Income Taxes* ("FIN No. 48").  This interpretation requires
      recognition and measurement of uncertain income tax positions using a
      "more-likely-than-not" approach.  The provisions of FIN No. 48 are
      effective for fiscal years beginning after December 15, 2006.  We do
      not anticipate that the adoption of this accounting pronouncement will have
      a
      material effect on our consolidated financial statements.




**OFF-BALANCE
      SHEET ARRANGEMENTS**




We
      do not
      currently have any off-balance sheet arrangements within the meaning of Item
      303(a)(4) of Regulation S-K.




**OBLIGATIONS
      AND COMMITMENTS**




As
      of
      September 30, 2007, we had the following obligations and commitments to make
      future payments, contracts, contractual obligations and commercial
      commitments:






Payments
                Due by Period (In
                Thousands)Less
                ThanContractual
                Cash Obligations
            
            Total
            
            
            
            
            
            1
                Year
            
            
            1-3
                Years
            
            
            4-5
                Years
            
            
            After
                5 YearsCapital
                  leases
            
            $
            1,077
            
            
            
            
            
            $
            257
            
            
            $
            782
            
            
            $
            38
            
            
            $
            --Operating
                leases
            
            $
            6,327
            
            
            
            
            
            $
            231
            
            
            $
            3,382
            
            
            $
            1,291
            
            
            $
            1,423Lines
                  of credit
            
            $
            30,314
            
            
            
            
            
            $
            30,314
            
            
            $
            --
            
            
            $
            --
            
            
            $
            --




**Impact
      of Inflation**




We
      do not
      believe that inflation has had or will have a material effect on our net sales
      or results of operations.







30








**ITEM
      7A.  QUANTITATIVE
      AND QUALITATIVE
      DISCLOSURE ABOUT MARKET RISK**




The
      primary objective of our investment activities is to preserve principal while
      at
      the same time maximizing the income we receive from our investments without
      significantly increasing risk.  Some of the securities that we invest
      in may have market risk.  This means that a change in prevailing
      interest rates may cause the principal amount of the investment to
      fluctuate.  For example, if we hold a security that was issued with a
      fixed interest rate at the then-prevailing rate and the prevailing interest
      rate
      later rises, the principal amount of our investment will probably
      decline.  Seeking to minimize this risk, we maintain our portfolio of
      cash equivalents and short-term investments in a variety of securities,
      including commercial paper, money market funds, government and non-government
      debt securities.  The average duration of all of our investments in
      fiscal year 2007 was less than one year.  Due to the short-term nature
      of these investments, we believe we have no material exposure to interest rate
      risk arising from our investments.  A hypothetical 10% adverse move in
      interest rates along the entire interest rate yield curve would not materially
      affect the fair market value of our interest sensitive financial
      investments.  Declines in interest rates over time will, however,
      reduce our investment income, while increases in interest rates over time will
      increase our interest expense.  Historically, and as of September 30,
      2007, we have not used derivative instruments or engaged in hedging
      activities.




We
      presently have limited exposure to market risk from changes in interest rates
      from borrowings under our line of credit with GE.  While GE’s lending
      agreements provide for interest at 1% over prime per annum with a minimum rate
      of 5.0%, effectively with the interest-free flooring that has been made
      available, we incur little or no interest expense.  Therefore, a
      hypothetical 10% increase in the interest rate from the levels as of September
      30, 2007 would not have a material impact on our financial position,
      consolidated results of operations or cash flows.





We
      are
      exposed to foreign currency risk and exchange rate differences to the extent
      of
      our investment in Ovex in Pakistan since such operations incur local operating
      costs and generate third party revenues in currencies other than the U.S.
      dollar..  To date we have not entered into any hedging transactions or
      market sensitive instruments to attempt to reduce our exposure to foreign
      currency exchange risks.  However, we may decide in the future to
      implement an active hedging program utilizing derivative instruments to assist
      in managing our foreign currency exchange risk.  Based on our overall
      foreign exchange rate exposure at September 30, 2007, a 10% change in the Rupee
      would not have a material effect on our financial position, consolidated results
      of operations or cash flows.




We
      are
      also committed to certain off-balance sheet obligations represented by operating
      leases for office facilities and various types of office equipment which are
      fully disclosed in the financial statement footnotes.  We have no
      commercial paper, derivatives, swaps, hedges, joint ventures and/or
      partnerships, or currency fluctuation to disclose and evaluate for market
      risks.




**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**




Not
      Applicable




**ITEM
      9A.  CONTROLS AND
      PROCEDURES**




We
      maintain disclosure controls and procedures (as defined in Rules 13a-15(e)
      and
      15(d)-15(e) under the Securities Exchange Act of 1934, as amended, or the
      Exchange Act) that are designed to ensure that information required to be
      disclosed in our reports under the Exchange Act, is recorded, processed,
      summarized and reported within the time periods specified in the Commission’s
      rules and forms, and that such information is accumulated and communicated
      to
      our management, including our Chief Executive Officer and Chief Financial
      Officer, as appropriate, to allow timely decisions regarding required
      disclosure.




An
      evaluation as of the end of the period covered by this annual report was carried
      out under the supervision and with the participation of our management,
      including our Chief Executive Officer and Chief Financial Officer, of the
      effectiveness of the design and operation our “disclosure controls and
      procedures,” as such term is defined under Rules 13a-15(e) and 15d -15(e)
      promulgated under the Exchange Act.  Based upon that evaluation, our
      Chief Executive Officer and Chief Financial Officer concluded that our
      disclosure controls and procedures were effective.







31








Our
      management, including our Chief Executive Officer and Chief Financial Officer,
      have evaluated any changes in our internal control over financial reporting
      that
      occurred during the quarterly period covered by this report, and have concluded
      that there was no change during the fourth quarter of our 2007 fiscal year
      that
      has materially affected, or is reasonably likely to materially affect, our
      internal control over financial reporting.




**ITEM
      9B.  OTHER INFORMATION**




Not
      Applicable.




**PART
      III**




**ITEM
      10.  DIRECTORS,
      EXECUTIVE OFFICERS AND
      CORPORATE GOVERNANCE**





There
      is
      hereby incorporated by reference the information appearing under the captions
      ''DIRECTORS,’’ “EXECUTIVE OFFICERS,” “BOARD COMMITTEES -- AUDIT COMMITTEE” and
      ''SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE’’ from our definitive
      proxy statement for the 2008 Annual Meeting of the Stockholders to be filed
      with
      the Commission on or before January 28, 2008.




We
      adopted a Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act
      of
      2002 during the first quarter of 2004, which applies to our principal
      executive officer, principal financial officer, principal accounting officer
      or
      controller, or persons performing similar functions and other designated
      officers and employees.  We posted the Code of Ethics on our website
      at www.enpointe.com.  Any amendment or waiver to our Code of Ethics
      that applies to our directors or executive officers will be posted on our
      website or in a report filed with the SEC on Form 8-K.




**ITEM
      11.  EXECUTIVE
      COMPENSATION**




There
      is
      hereby incorporated by reference information appearing under the captions
“COMPENSATION DISCUSSION AND ANALYSIS,” ''EXECUTIVE COMPENSATION,’’ “DIRECTORS’
COMPENSATION,” “Option Matters,” “Compensation Committee Report” and
“Compensation Committee Interlocks and Insider Participation” from our
      definitive proxy statement for the 2008 Annual Meeting of Stockholders to be
      filed with the Commission on or before January 28, 2008.




**ITEM
      12.  SECURITY
      OWNERSHIP OF CERTAIN
      BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
      MATTERS**




There
      is
      hereby incorporated by reference the information appearing under the caption
      ''Security Ownership of Certain Beneficial Owners and Management’’ from our
      definitive proxy statement for the 2008 Annual Meeting of Stockholders to be
      filed with the Commission on or before January 28, 2008.







32





**Equity
      Compensation Plan Information**




The
      following table sets forth information regarding outstanding options, warrants
      and rights and shares reserved for future issuance under our existing equity
      compensation plans as of September 30, 2007.  Our sole remaining
      active stockholder approved equity compensation plan is the 1996 Stock Incentive
      Plan.  It was established in May 1996, had a ten year life, and by its
      terms terminated in May 2006 and has not been replaced.  Our stock
      purchase plan also terminated in May 2006 and has not been
      replaced.  We do not have any non-stockholder approved equity
      compensation plans.




Number
                of securitiesremaining
                available forNumber
                of securities
            
            
            
            
            
            
            
            future
                issuance under equityto
                be issued upon exercise
            
            
            Weighted-average
            
            
            
            compensation
                plans as ofof
                outstanding options,
            
            
            
            exercise
                price of
            
            
            
            September
                30, 2007warrants
                and rights as
            
            
            
            outstanding
                options,
            
            
            
            (excluding
                securitiesof
                September 30, 2007
            
            
            
            warrants
                and rights
            
            
            
            reflected
                in column (a))(a)
            
            
            
            (b)
            
            
            
            (c)Plan
                CategoryEquity
                compensation plansapproved
                by security holders:1996
                  Stock Incentive Plan
            
            
            1,400,448
            
            
            $
            3.45
            
            
            
            NoneEmployee
                Stock Purchase Plan
            
            
            N/A
            
            
            
            N/A
            
            
            
            N/AEquity
                  compensation plans notapproved
                by security holders
            
            None
            
            
            
            N/A
            
            
            
            NoneTotal
            
            
            1,400,448
            
            
            $
            3.45
            
            
            
            None




**ITEM
      13.  CERTAIN RELATIONSHIPS
      AND RELATED
      TRANSACTIONS, AND DIRECTOR INDEPENDENCE**




There
      is
      hereby incorporated by reference the information appearing under the
      captions “Corporate Governance” and ''Certain Transactions’’ from our
      definitive proxy statement for the 2008 Annual Meeting of Stockholders to be
      filed with the Commission on or before January 28, 2008.




**ITEM
      14.  PRINCIPAL ACCOUNTANT
      FEES AND
      SERVICES**




There
      is
      hereby incorporated by reference the information appearing under the captions
      ''PRINCIPAL ACCOUNTANT FEES AND SERVICES” and “POLICY ON AUDIT COMMITTEE
      PRE-APPROVAL OF AUDIT SERVICES AND PERMISSIBLE NON-AUDIT SERVICES OF INDEPENDENT
      AUDITORS” from our definitive proxy statement for the 2008 Annual Meeting of
      Stockholders to be filed with the Commission on or before January 28,
      2008.




**PART
      IV**




**ITEM
      15.  EXHIBITS
      AND FINANCIAL STATEMENT
      SCHEDULES**




(a)
      The
      following documents are filed as part of this report:




(1)
      Financial Statements




The
      list
      of financial statements contained in the accompanying Index to Financial
      Statements covered by Report of Independent Accountants is herein incorporated
      by reference.




(2)
      Financial Statement Schedules




The
      list
      of financial statements schedules contained in the accompanying Index to
      Financial Statements covered by Report of Independent Accountants is herein
      incorporated by reference.




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





33










(3)
      Exhibits





See
      (b)
      below.




(b)
      Exhibits




The
      list
      of exhibits on the accompanying Exhibit Index is herein incorporated by
      reference.










34








En
      Pointe
      Technologies, Inc.




**INDEX
      TO FINANCIAL STATEMENTS**




PageReports
                of Independent Registered Public
                Accounting Firms
            F-2
                – F-3Consolidated
                Balance Sheets as of September 30, 2007
                and 2006
            F-4Consolidated
                Statements of Operations for
                each of the Three Years in the Period Ended September 30,
                2007
            F-5Consolidated
                Statements of Stockholders’ Equity
                for each of the Three Years in the Period Ended September 30,
                2007
            F-6Consolidated
                Statements of Cash Flows for each of the
                Three Years in the Period Ended September 30, 2007
            F-7Notes
                to Consolidated Financial
                Statements
            F-8Schedule
                II—Valuation and Qualifying
                Accounts
            F-26

















F
              -
              1
















**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
      FIRM**




To
      the
      Board of Directors and Stockholders


En
      Pointe
      Technologies, Inc.


El
      Segundo, California




We
      have
      audited the accompanying consolidated balance sheets of En Pointe Technologies,
      Inc. and subsidiaries (the "Company") as of September 30, 2007 and 2006,
      and the related consolidated statements of operations, stockholders’ equity, and
      cash flows for the years then ended.  In connection with our
      audits of the consolidated financial statements, we have also audited Schedule
      II (Valuation and qualifying accounts).  These consolidated financial
      statements and schedule are the responsibility of the Company’s
      management.  Our responsibility is to express an opinion on these
      consolidated financial statements and schedule based on our audits.




We
      conducted our audits in accordance with the standards established by the Public
      Company Accounting Oversight Board (United States).  Those standards
      require that we plan and perform the audits to obtain reasonable assurance
      about
      whether the financial statements are free of material
      misstatement.  The Company is not required to have, nor were we
      engaged to perform, an audit of its internal control over financial
      reporting.  Our audits included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting.  Accordingly, we express no such opinion.  An
      audit also includes examining, on a test basis, evidence supporting the amounts
      and disclosures in the financial statements, assessing the accounting principles
      used and significant estimates made by management, as well as evaluating the
      overall financial statement presentation.  We believe that our audits
      provide a reasonable basis for our opinion.




In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of En Pointe Technologies,
      Inc.
      and subsidiaries as of September 30, 2007 and 2006, and the results
      of their operations and their cash flows for the years then ended, in
      conformity with accounting principles generally accepted in the United States
      of
      America.  Also in our opinion, the related schedule, when considered
      in relation to the basic consolidated financial statements taken as a whole,
      present fairly, in all material respects, the information set forth
      therein.
















/s/
      Rose,
      Snyder & Jacobs


A
      Corporation of Certified Public Accountants


Encino,
      California




December
      4, 2007














F
              -
              2










**INDEPENDENT
      REGISTERED PUBLIC ACCOUNTING FIRM**




Board
      of
      Directors and Stockholders




En
      Pointe
      Technologies, Inc.




El
      Segundo, California




We
      have
      audited the accompanying consolidated statements of operations,
      stockholders’ equity, and cash flows of En Pointe Technologies, Inc. for the
      year ended September 30, 2005.  We have also audited the schedule
      listed in the accompanying index.  These consolidated financial
      statements and financial statement schedule are the responsibility of the
      Company’s management.  Our responsibility is to express an opinion on
      these consolidated financial statements and financial statement schedule based
      on our audit.




We
      conducted our audit of these statements in accordance with the standards of
      the
      Public Company Accounting Oversight Board (United States).  Those
      standards require that we plan and perform the audit to obtain reasonable
      assurance about whether the financial statements are free of material
      misstatement.  The Company is not required to have, nor were we
      engaged to perform, an audit of its internal control over financial
      reporting.  Our audit included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting.  Accordingly, we express no such opinion.  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 audit
      provide a reasonable basis for our opinion.




In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the results of operations and cash
      flows of En Pointe Technologies, Inc. for the year ended September 30, 2005,
      in
      conformity with accounting principles generally accepted in the United States
      of
      America.  Also, in our opinion, Schedule II, (Valuation and qualifying
      accounts) for the year ended September 30, 2005, presents fairly, in all
      material respects, the information set forth therein.













/s/
      BDO
      SEIDMAN, LLP


Los
      Angeles, California


December
      23, 2005








F
              -
              3





***En
      Pointe Technologies, Inc.***


***Consolidated
      Balance Sheets***


*(In
      Thousands Except Share and Per Share Amounts)*




September
                30,2007
            
            
            2006**ASSETS:**Current
                assets:Cash
            
            $
            6,000
            
            
            $
            10,240Restricted
                cash
            
            
            76
            
            
            
            74Short
                  term cash investment
            
            
            1,000
            
            
            
            --Accounts
                receivable, net of allowance for returnsand
                  doubtful accounts of $794 and $1,110 respectively
            
            
            61,391
            
            
            
            46,417Inventories,
                net of allowances of $552 and $523, respectively
            
            
            8,768
            
            
            
            4,201Prepaid
                  expenses and other current assets
            
            
            1,548
            
            
            
            1,067Total
                current assets
            
            
            78,783
            
            
            
            61,999Property
                and equipment, net of accumulateddepreciation
                  and amortization
            
            
            5,022
            
            
            
            2,765Other
                  assets
            
            
            2,201
            
            
            
            1,474Total
                assets
            
            $
            86,006
            
            
            $
            66,238**LIABILITIES
                  AND STOCKHOLDERS' EQUITY:**Current
                liabilities:Accounts
                  payable, trade
            
            $
            19,034
            
            
            $
            19,105Borrowings
                under line of credit
            
            
            30,314
            
            
            
            15,673Short-term borrowings and current maturities of long-term
                  debt
            
            
            2,450
            
            
            
            346Accrued
                employee compensation and benefits
            
            
            4,264
            
            
            
            3,684Other
                  accrued liabilities
            
            
            1,913
            
            
            
            2,112Deferred
                income
            
            
            582
            
            
            
            368Accrued
                  taxes and other liabilities
            
            
            3,782
            
            
            
            4,214Total
                current liabilities
            
            
            62,339
            
            
            
            45,502Long
                  term liabilities
            
            
            447
            
            
            
            238Total
                liabilities
            
            
            62,786
            
            
            
            45,740Minority
                interest
            
            
            1,957
            
            
            
            1,487Commitments
                  and contingencies (Notes 7 and 11)Stockholders'
                equity:Preferred
                  stock, $.001 par value:Shares
                authorized--5,000,000No
                  shares issued or outstanding
            
            
            --
            
            
            
            --Common
                stock, $.001 par value:Shares
                  authorized--15,000,000; with 7,159,193 and 7,030,506shares
                issued
            
            
            7
            
            
            
            7Additional
                  paid-in capital
            
            
            42,207
            
            
            
            41,767Treasury
                stock
            
            
            (1
            )
            
            
            (1
            )Accumulated
                  other comprehensive income
            
            
            (14
            )
            
            
            --Accumulated
                  deficit
            
            
            (20,936
            )
            
            
            (22,762
            )Total
                stockholders' equity
            
            
            21,263
            
            
            
            19,011Total
                  liabilities and stockholders' equity
            
            $
            86,006
            
            
            $
            66,238





See
      Notes
      to Consolidated Financial Statements.







F
              -
              4





***En
      Pointe Technologies, Inc.***


***Consolidated
      Statements of
      Operations***


*(In
      Thousands Except Per Share Amounts)*






Year
                Ended September 30,2007
            
            
            2006
            
            
            2005Net
                sales:Product
            
            $
            299,335
            
            
            $
            276,736
            
            
            $
            279,325Service
            
            
            47,791
            
            
            
            46,997
            
            
            
            49,007Total
                  net sales
            
            
            347,126
            
            
            
            323,733
            
            
            
            328,332Cost
                of sales:Product
            
            
            274,128
            
            
            
            253,765
            
            
            
            258,516Service
            
            
            29,447
            
            
            
            30,318
            
            
            
            34,758Total
                  cost of sales
            
            
            303,575
            
            
            
            284,083
            
            
            
            293,274Gross
                profit:Product
            
            
            25,207
            
            
            
            22,971
            
            
            
            20,809Service
            
            
            18,344
            
            
            
            16,679
            
            
            
            14,249Total
                  gross profit
            
            
            43,551
            
            
            
            39,650
            
            
            
            35,058Selling
                  and marketing expenses
            
            
            30,565
            
            
            
            28,337
            
            
            
            25,792General
                and administrative expenses
            
            
            11,871
            
            
            
            11,098
            
            
            
            10,143Operating
                  income (loss)
            
            
            1,115
            
            
            
            215
            
            
            
            (877
            )Interest
                  income, net
            
            
            297
            
            
            
            181
            
            
            
            6Other
                income, net
            
            
            79
            
            
            
            36
            
            
            
            644Income
                  (loss) before income taxes and minority interest
            
            
            1,491
            
            
            
            432
            
            
            
            (227
            )Income
                tax (benefit) provision
            
            
            (203
            )
            
            
            42
            
            
            
            21Income
                  (loss) before minority interest
            
            
            1,694
            
            
            
            390
            
            
            
            (248
            )Minority
                interest
            
            
            (68
            )
            
            
            121
            
            
            
            393Net
                  income
            
            $
            1,626
            
            
            $
            511
            
            
            $
            145Net
                  income per share:Basic
            
            $
            0.23
            
            
            $
            0.07
            
            
            $
            0.02Diluted
            
            $
            0.22
            
            
            $
            0.07
            
            
            $
            0.02Weighted
                  average shares outstanding:Basic
            
            
            7,145
            
            
            
            7,006
            
            
            
            6,866Diluted
            
            
            7,456
            
            
            
            7,125
            
            
            
            7,103










See
      Notes
      to Consolidated Financial Statements.








F
              -
              5


***En
        Pointe Technologies, Inc.***
 ***Consolidated
        Statements of Stockholders’
Equity***
 ***(In
        Thousands)***
 
   AccumulatedAdditional
              
              
              
              
              
              OtherCommon
                  Stock
              
              
              Paid-In
              
              
              Treasury
              
              
              Comprehensive
              
              
              (AccumulatedShares
              
              
              Amount
              
              
              Capital
              
              
              Stock
              
              
              Income
              
              
              Deficit)
              
              
              TotalBalance
                    at September 30, 2004
              6,814
              
              $
              7
              
              $
              41,390
              
              $
              (1)
              
              $
              
              
              $
              (23,418
              )
              $
              17,978Net
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              145
              
              
              145Issuance
                    of common stock under stock option plan
              159
              
              
              
              
              
              260
              
              
              
              
              
              
              
              
              
              
              
              260Deferred
                  compensation related toacceleration
                    of stock options
              
              
              
              
              
              
              68
              
              
              
              
              
              
              
              
              
              
              
              68Balance
                  at September 30, 2005
              6,973
              
              $
              7
              
              $
              41,718
              
              $
              (1)
              
              $
              --
              
              $
              (23,273
              )
              $
              18,451Net
                    income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              511
              
              
              511Issuance
                  of common stock under stock option plan
              58
              
              
              
              
              
              105
              
              
              
              
              
              
              
              
              
              
              
              105Deferred
                    compensation related toacceleration
                  of stock options
              
              
              
              
              
              
              (56
              )
              
              
              
              
              
              
              
              
              
              
              (56
              )Balance
                    at September 30, 2006
              7,031
              
              $
              7
              
              $
              41,767
              
              $
              (1)
              
              $
              --
              
              $
              (22,762
              )
              $
              19,011SAB
                  108 cumulative effect adjustment (Note 1)200
              
              
              200Balance
                  at September 30, 2006, as adjusted
              7,031
              
              
              7
              
              
              41,767
              
              
              (1)
              
              
              --
              
              
              (22,562
              )
              
              19,211Net
                    income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,626
              
              
              1,626Foreign
                  currency translation
              
              
              
              
              
              
              
              
              
              
              
              
              (14
              )
              
              
              
              
              (14
              )Comprehensive
                    income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,612Issuance
                  of common stock under stock option plan
              30
              
              
              
              
              
              63
              
              
              
              
              
              
              
              
              
              
              
              63Net operating loss tax benefit related to stock
                    options
              
              
              
              
              
              
              137
              
              
              
              
              
              
              
              
              
              
              
              137Stock
                  issued related to business acquisition
              98
              
              
              
              
              
              240
              
              
              
              
              
              
              
              
              
              
              
              240Balance
                    at September 30, 2007
              7,159
              
              $
              7
              
              $
              42,207
              
              $
              (1)
              
              $
              (14
              )
              $
              (20,936
              )
              $
              21,263
  
 
  
 See
        Notes
        to Consolidated Financial Statements.
 
 F
        - 6










***En
      Pointe Technologies, Inc.***


***Consolidated
      Statements of Cash
      Flows***


**(In
      Thousands)**




Year
                Ended September 30,2007
            
            
            2006
            
            
            2005Cash
                flows from operating activities:Net
                  income
            
            $
            1,626
            
            
            $
            511
            
            
            $
            145Adjustments
                to reconcile net incometo
                  net cash used by operations:Depreciation
                and amortization
            
            
            2,492
            
            
            
            1,491
            
            
            
            1,110Loss
                  (gain) on disposal of assets
            
            
            --
            
            
            
            52
            
            
            
            (22
            )Amortization
                of option expense
            
            
            --
            
            
            
            (56
            )
            
            
            68Amortization
                  of deferred gain on sale-leaseback
            
            
            (35
            )
            
            
            (354
            )
            
            
            (330
            )Allowances
                for doubtful accounts
            
            
            123
            
            
            
            415
            
            
            
            255Allowance
                  for returns and other allowances
            
            
            --
            
            
            
            --
            
            
            
            --Allowance
                for inventory obsolescence
            
            
            
            
            
            
            149
            
            
            
            20Minority
                  interest in income (loss) of affiliates
            
            
            68
            
            
            
            (121
            )
            
            
            (393
            )Increase
                in deferred tax benefit
            
            
            (263
            )
            
            
            --
            
            
            
            --Changes
                  in operating assets and liabilities:Restricted
                cash
            
            
            (2
            )
            
            
            (2
            )
            
            
            (1
            )Accounts
                  receivable
            
            
            (15,052
            )
            
            
            (5,916
            )
            
            
            (9,067
            )Inventories
            
            
            (4,495
            )
            
            
            6,017
            
            
            
            (3,282
            )Prepaid
                  expenses and other current assets
            
            
            168
            
            
            
            (303
            )
            
            
            (186
            )Other
                assets
            
            
            69
            
            
            
            (28
            )
            
            
            (37
            )Accounts
                  payable, trade
            
            
            (51
            )
            
            
            661
            
            
            
            4,473Accrued
                expenses
            
            
            426
            
            
            
            1,027
            
            
            
            257Accrued
                  taxes and other liabilities and deferred income
            
            
            (343
            )
            
            
            1,942
            
            
            
            1,548Net
                cash (used) provided by operating activities
            
            
            (15,269
            )
            
            
            5,485
            
            
            
            (5,442
            )Cash
                flows from investing activities:Acquisition
                  of business
            
            
            (1,302
            )
            
            
            (550
            )
            
            
            (878
            )Proceeds
                from sale of assets
            
            
            --
            
            
            
            --
            
            
            
            154Short-term
                  cash investment
            
            
            (1,000
            )
            
            
            --
            
            
            
            --Purchase
                of property and equipment
            
            
            (2,849
            )
            
            
            (904
            )
            
            
            (1,999
            )Net
                  cash used by investing activities
            
            
            (5,151
            )
            
            
            (1,454
            )
            
            
            (2,723
            )Cash
                  flows from financing activities:Net
                borrowings under line of credit
            
            
            14,641
            
            
            
            (1,151
            )
            
            
            (1,485
            )Net borrowings under export loan
            
            
            1,931
            
            
            
            --
            
            
            
            --Capital
                contributed by minority interest
            
            
            100
            
            
            
            705
            
            
            
            385Proceeds
                  from sale of stock under employee plans
            
            
            63
            
            
            
            105
            
            
            
            260Payment
                on long term liabilities
            
            
            (555
            )
            
            
            (352
            )
            
            
            (164
            )Net
                  cash provided (used) by financing activities
            
            
            16,180
            
            
            
            (693
            )
            
            
            (1,004
            )(Decrease)
                increase in cash
            
            
            (4,240
            )
            
            
            3,337
            
            
            
            (9,169
            )Cash
                  at beginning of year
            
            
            10,240
            
            
            
            6,903
            
            
            
            16,072Cash
                at end of year
            
            $
            6,000
            
            
            $
            10,240
            
            
            $
            6,903




Supplemental
                disclosures of cash flow information:Interest
                  paid
            
            $
            139
            
            
            $
            82
            
            
            $
            260Income
                taxes paid
            
            $
            23
            
            
            $
            31
            
            
            $
            215Capitalized
                  leases
            
            $
            836
            
            
            $
            --
            
            
            $
            1,009Stock
                issued for acquisition of business
            
            $
            240
            
            
            $
            --
            
            
            $
            --





See
      Notes
      to Consolidated Financial Statements.








F
              -
              7


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




**1
      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**




**ORGANIZATION**




The
      Company is a reseller of information technology products and a provider of
      value-added services to large and medium sized companies and government entities
      with sales and service personnel in 17 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.  The parent company, En Pointe Technologies, Inc., is a holding
      company and provides administrative services to its subsidiaries.  All
      sales are conducted through subsidiaries.




**LIQUIDITY
      AND CAPITAL RESOURCES**




As
      of
      September 30, 2007, the Company had approximately $6.0 million in cash and
      working capital of $16.4 million.  As discussed in Note 3, in July
      2007, the Company entered into an Addendum to its original replacement working
      capital financing facility with GE Commercial Distribution Finance Corporation
      (“GE”).  Under terms of the Addendum the Company’s two wholly-owned
      subsidiaries engaged in information technology hardware and software selling
      may
      borrow up to $45.0 million.  The term of the facility is for a period
      of three years, except that either party may terminate the agreement upon 60
      days’ prior written notice to the other party.  As of September 30,
      2007, credit line borrowings amounted to $30.3 million with additional
      borrowings available of approximately $14.7 million after taking into
      consideration the available collateral and borrowing limitations under its
      agreements.  Borrowings under the line of credit agreement are
      collateralized by substantially all of the Company’s assets.  The
      financing agreements contain various liquidity financial debt covenants as
      explained in Note 3.  The Company was in compliance with all of its
      debt covenants as of September 30, 2007.




**PRINCIPLES
      OF CONSOLIDATION**




The
      consolidated financial statements include the Company’s accounts and those of
      its wholly-owned and majority-owned subsidiaries as well its affiliate, Premier
      BPO, Inc. (formerly known as En Pointe Global Services, Inc., “PBPO”), an
      approximate 30% voting interest owned Variable Interest Entity.  All
      intercompany accounts and transactions have been eliminated in the consolidated
      financial statements.  Since there are other stockholders of PBPO who
      collectively represent approximately 69% voting interest, both their majority
      ownership interest and their entitlement to share in losses is reflected in
      the
      Company’s consolidated balance sheet and statement of operations as “minority
      interest”.  Losses allocated to the 69% owners of PBPO are not based
      upon the percentage of ownership, but upon the “at risk” capital of each of
      those owners.  Losses in excess of their “at risk” capital are
      allocated to the Company without regard for the Company’s capital at
      risk.  To date, such losses absorbed amounted to $2.4 million and
      exceed the Company’s invested capital of $1.4 million by $1.0
      million.




**INVESTMENT
      IN VARIABLE INTEREST ENTITY (“VIE”) - PREMIER PBO, INC.
      (“PBPO”)**




The
      Company has, in a series of investments, invested through September 30,
      2007, the cumulative amount of $759,000 (representing an approximate 30%
      voting interest) in the common stock of PBPO, in the privately-held
      corporation.  PBPO is a business process outsourcing company formed in
      October 2003 and headquartered in Clarksville, Tennessee.




In
      addition to the Company’s common stock investment in PBPO, the Company
      invested $600,000 in PBPO in the form of a five-year 6% interest-bearing note
      that subsequently was converted into Series A non-voting convertible preferred
      stock of PBPO in October 2004.  The preferred stock may not be
      converted to common stock until the earlier of five years from the issuance
      date
      of the preferred stock or the effective date of an initial public
      offering.  The conversion price is set as the greater of $100 per
      share or the fair market value, as determined under the preferred stock
      agreement.  En Pointe’s approximate 30% voting interest in PBPO
      referenced above excludes the Series A non-voting convertible preferred stock
      that it holds.




PBPO
      is
      considered a related party because of the Company’s equity interest in PBPO as
      well as the interrelationship of several of the investors with the
      Company.  One of the Company’s board members, Mark Briggs, owns
      approximately 17% of PBPO and also serves as its Chairman of the Board and
      Chief
      Executive Officer.  Further, the Company’s CEO, Bob Din, represents En
      Pointe’s interest as a member of the board of directors of PBPO.  In
      addition, the owners of Ovex Technologies (Private) Limited (“Ovex”), the
      Pakistani company that performs the operational and accounting side of the
      Company’s outsourcing under a cost plus fixed agreement that may be cancelled
      upon written notice, owns collectively approximately 16% of
      PBPO.  Omar and Arif Saeed, who as of October 1, 2006 were
      collectively approximate 30% owners of Ovex also hold shares of Series A
      non-voting convertible preferred stock of PBPO that they received in October
      2004 in exchange for the conversion of their five-year notes that aggregated
      $603,000 in principal and interest.  The preferred shares held by the
      Saeeds are a component of the PBPO minority interest and as such are not subject
      to the allocation of PBPO losses.





F
              - 8





Because
      of the substantial investment that the Company made in PBPO, the related party
      nature of the investment, as well as other factors, when the Company’s acquired
      interest in PBPO was evaluated, it was determined that PBPO met the tests of
      a
      Variable Interest Entity under Financial Accounting Standards Board (“FASB”)
      Interpretation No. 46 (“FIN 46”) and PBPO’s financial results have thus been
      consolidated with the Company’s financial statements since PBPO’s
      inception.




PBPO,
      has
      contracted with Ovex in Pakistan and has employees in China to provide its
      workforces for back-office support.  PBPO shares workspace with
      the Company in Islamabad for a nominal fee using contracted Ovex workers and
      contracts directly with Ovex for workspace and workers in Lahore.




**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**




Net
      sales
      consist primarily of revenue from the sale of hardware, software, peripherals,
      and service and support contracts.  The Company applies the provisions
      of the SEC Staff Accounting Bulletin (SAB) No. 104, “Revenue Recognition in
      Financial Statements,” which provides guidance on the recognition, presentation
      and disclosure of revenue in financial statements filed with the SEC.  SAB
      No 104 outlines the basic criteria that must be met to recognize revenue and
      provides guidance for disclosure related to revenue recognition policies. In
      general, the Company recognizes revenue when (i) persuasive evidence of an
      arrangement exists, (ii) delivery of products has occurred or services have
      been
      rendered, (iii) the sales price charged is fixed or determinable and (iv)
      collection is reasonably assured.




Under
      our
      standard shipping terms title passes upon delivery to a common carrier but
      revenue is not recognized until delivery takes place which is generally two
      to
      three days later.  Product is therefore considered received and
      accepted by the customer only upon the customer’s receipt of the product from
      the carrier.  Any undelivered product is included in our
      inventory.





The
      majority of the Company’s sales relate to physical products and are recognized
      on a gross basis with the selling price to the customer recorded as net sales
      and the acquisition cost of the product recorded as cost of
      sales.  However, software maintenance contracts, software agency fees,
      and extended warranties that are sold in which the Company is not the primary
      obligor, are recorded on a net basis in accordance with SEC Staff Accounting
      Bulletin No. 104 “Revenue Recognition” and Emerging Issues Task Force 99-19,
“Reporting Revenue Gross as a Principal versus Net as an Agent.”  Such
      net revenues are recognized in full at the time of sale.




The
      Company has adopted the provisions of Statement of Position No. 97-2, “Software
      Revenue Recognition” (SOP 97-2) as amended by SOP No. 98-9, “Modification of SOP
      97-2, Software Revenue Recognition with Respect to Certain Transactions” (SOP
      98-9) in recognizing revenue from software transactions.  Revenue from
      software license sales is recognized when persuasive evidence of an arrangement
      exists, delivery of the product has been made, and a fixed fee and
      collectibility has been determined.




Service
      revenues are recognized based on contracted hourly rates, as services are
      rendered or upon completion of specified contracted services and acceptance
      by
      the customer.  Revenue from customer maintenance support
      agreements, in which the Company is not the primary obligor, is
      reported on a net basis and recognized at the time of the sale. 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 our suppliers, less rebates.




Deferred
      revenues result from prepaid management services and maintenance
      contracts.  Many management services are pre-billed quarterly and
      income is recognized as services are performed.  The Company’s
      maintenance contracts are generally for services that may be performed over
      a
      one year period of time.  Income is recognized on such contracts
      ratably over the period of the contract.







**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 typically exceed federally insured limits.





F
              -
              9





**RESTRICTED
      CASH**




Restricted
      cash at September 30, 2007 and 2006 represents deposits maintained for certain
      government tax agencies.




**INVENTORIES**




Inventories
      consist principally of merchandise being configured for customer orders and
      merchandise purchased by the Company that has been drop shipped, but
      not yet received and accepted by the customer and are stated at the lower of
      cost (specific identification method) or market.  On an ongoing basis,
      inventories are reviewed and written down for estimated obsolescence or
      unmarketable inventories equal to the difference between the cost of inventories
      and the estimated net realizable value.  Changes to increase inventory
      reserves are recorded as an increase in cost of goods sold.




**PROPERTY
      AND EQUIPMENT**




Property
      and equipment are stated at cost and are depreciated using the straight-line
      method over their estimated useful lives of three to seven
      years.  Assets acquired under capital lease arrangements are recorded
      at the present value of the minimum lease payments and are amortized using
      the
      straight-line method over the life of the asset or term of the lease, whichever
      is shorter.  Such amortization expense is included in depreciation
      expense.  Leasehold improvements are amortized using the straight-line
      method over the shorter of the lease terms or the useful lives of the
      improvements.  Expenses for repairs and maintenance are charged to
      expense as incurred, while renewals and betterments are
      capitalized.  Gains or losses on the sale or disposal of property and
      equipment are reflected in operating income.




The
      Company accounts for computer software costs developed for internal use in
      accordance with Statement of Position 98-1 (SOP 98-1), “Accounting for the Costs
      of Computer Software Developed or Obtained for Internal Use,” which requires
      companies to capitalize certain qualifying costs during the application
      development stage of the related software development project and to exclude
      the
      initial planning phase that determines performance requirements, most data
      conversion, general and administrative costs related to payroll and training
      costs incurred.  Whenever a software program is considered
      operational, the Company considers the project to be completed and places it
      into service and commences amortization of the development cost in the
      succeeding month.




In
      fiscal
      year 2005 the Company concluded the development of three internal-use software
      programs that are being amortized on a straight-line basis over the economic
      lives of each of the software products that is estimated to be four
      years.  Costs capitalized include internal payroll and direct fringe
      benefits and external direct project costs, including labor and
      travel.  The Company began amortizing its first internal-use programs
      in May and the remaining two in October 2005.  The Company’s property
      and equipment (see Note 2), as of September 30, 2007, 2006, and 2005 included
      $948,000, $781,000 and $781,000 respectively of capitalized software development
      costs included in computer equipment and software in addition to the software
      under-development.




**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 the Company’s
      long-term liabilities also approximates fair value based on interest rates
      currently available to us for debt of similar terms and remaining
      maturities.




**IMPAIRMENT
      OF LONG-LIVED ASSETS**




The
      Company assesses the potential impairments of its long-lived assets in
      accordance with the provisions of SFAS No. 144, “Accounting for the Impairment
      or Disposal of Long-lived Assets”.  An impairment review is performed
      whenever events or changes in circumstances indicate that the carrying value
      of
      the assets may not be recoverable.  Factors the Company considers
      include, but are not limited to, significant underperformance relative to
      expected historical or projected future operating results; significant changes
      in the manner of use of the acquired assets or the strategy for the overall
      business; and significant negative industry or economic trends.  When
      the carrying value of a long-lived asset may not be recoverable based upon
      the
      existence of one or more of the above indicators of impairment, the Company
      estimates the future undiscounted cash flows expected to result from the use
      of
      the asset and its eventual disposition.  If the sum of the expected
      future undiscounted cash flows and eventual disposition is less than the
      carrying amount of the asset, the Company recognizes an impairment
      loss.  An impairment loss is reflected as the amount by which the
      carrying amount of the asset exceeds the fair value of the asset, based on
      the
      fair market value if available, or discounted cash flows, if not.  To
      date, the Company has not recognized an impairment charge related to the
      write-down of long-lived assets.







F
              -
              10





**GOODWILL
      AND INTANGIBLE ASSETS**




The
      Company accounts for its goodwill and intangible assets in accordance with
      the
      provisions of Statement of Financial Accounting Standard (SFAS) No. 142,
“Goodwill and Other Intangible Assets”, which requires, among other things, that
      purchased goodwill and certain intangibles not be amortized.  Under a
      nonamortization approach, goodwill and intangibles having an indefinite life
      are
      not amortized, but instead will be reviewed for impairment at least annually
      or
      if an event occurs or circumstances indicate that the carrying amount may be
      impaired.  Events or circumstances which could indicate an impairment
      include a significant change in the business climate, economic and industry
      trends, legal factors, negative operating performance indicators, significant
      competition, changes in strategy or disposition of a reporting unit or a portion
      thereof.  Goodwill impairment testing is performed at the reporting
      unit level.




SFAS
      142
      requires that goodwill be tested annually for impairment using a two-step
      process.  If an event occurs that would more likely than not reduce
      the fair value of a reporting unit below its carrying amount, then goodwill
      shall be tested at that time.  The first step of the goodwill
      impairment test, used to identify potential impairment, compares the fair value
      of a reporting unit with its carrying amount, including goodwill.  If
      the fair value of a reporting unit exceeds its carrying amount, goodwill of
      the
      reporting unit is not considered to be impaired and the second step of the
      impairment test is unnecessary.  If the carrying amount of a reporting
      unit exceeds its fair value, the second step of the goodwill impairment test
      must be performed to measure the amount of impairment loss, if
      any.  The second step of the goodwill impairment test compares the
      implied fair value of reporting unit goodwill with the carrying amount of that
      goodwill.  The implied fair value of goodwill is determined in the
      same manner as the amount of goodwill recognized in a business
      combination.  If the carrying amount of the reporting unit goodwill
      exceeds the implied fair value of that goodwill, an impairment loss is
      recognized in an amount equal to that excess.




Application
      of the goodwill impairment test requires judgment, including the identification
      of reporting units, assignment of assets and liabilities to reporting units,
      assignment of goodwill to reporting units, and determination of the fair value
      of each reporting unit.  The fair value of each reporting unit is
      estimated using a discounted cash flow methodology.  This requires
      significant judgments including estimation of future cash flows, which is
      dependent on internal forecasts, estimation of the long-term rate of growth
      for
      the


Company’s
      business, the useful life over which cash flows will occur, and determination
      of
      the weighted average cost of capital.  Changes in these estimates and
      assumptions could materially affect the determination of fair value and/or
      goodwill impairment for each reporting unit.




In
      accordance with SFAS 142, the Company selected September 30 as the date on
      which
      to perform its annual goodwill impairment test.  Based on its
      valuation of goodwill, no impairment charges related to the write-down of
      goodwill were recognized for the years ended September 30, 2007, 2006 and
      2005.




In
      connection with the Company’s acquisitions, the Company has applied the
      provisions of SFAS No. 141 “Business Combinations”, using the purchase method of
      accounting.  The assets and liabilities assumed were recorded at their
      estimated fair values as determined by management and were based on information
      currently available and current assumptions as to future
      operations.  The excess purchase price over those fair values was
      recorded as goodwill.  The Company’s goodwill balance during the years
      ended September 30, 2007 and 2006 was $1,080,000 and $623,000, respectively,
      and
      was included in other assets in the accompanying consolidated balance
      sheets.




Separable
      intangible assets that have finite useful lives are amortized over their useful
      lives.  An impaired asset is written down to fair
      value.  Intangible assets with finite useful lives consist of customer
      relationships and non-compete agreements and are amortized over the expected
      benefit period using the straight-line and sum-of-the-years-digits
      methods.  At September 30, 2007 and 2006, such intangible assets
      amounted to $705,000 (net of $1,096,000 of accumulated amortization) and
      $609,000 (net of $674,000 of accumulated amortization), respectively, and are
      included in other assets in the accompanying consolidated balance
      sheets.







**ADVERTISING
      AND SHIPPING AND HANDLING COSTS**




The
      Company reports the costs of all advertising in the periods in which those
      costs
      are incurred.  For the fiscal years ended September 30, 2007, 2006,
      and 2005 advertising expense was approximately $403,000, $346,000 and $224,000
      respectively.  Shipping and handling costs incurred by the Company are
      included in cost of sales.







F
              -
              11








**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 more likely than not 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.




**CONCENTRATION
      OF CREDIT RISK AND MAJOR CUSTOMERS AND VENDORS**




Financial
      instruments that potentially subject the Company to significant concentrations
      of credit risk consists principally of cash deposits and trade accounts
      receivable. The Company’s cash deposits are placed with a few financial
      institutions. The combined account balances at one or more institutions
      typically exceed the $100,000 Federal Depository Insurance Corporation ("FDIC")
      insurance coverage, and, as a result, there is a concentration of credit risk
      related to amounts on deposit in excess of FDIC insurance coverage. The Company
      believes that the risk is not significant, as the Company does not anticipate
      the financial institutions' non-performance.




The
      Company had one large customer that accounted for 24% of its total accounts
      receivable at the end of fiscal year 2007.  That customer subsequently
      timely paid the balance owed to the Company in full.  Other than
      that one customer, no other one customer accounted for more than 10% of net
      sales or outstanding accounts receivable at fiscal year end for the past three
      fiscal years.





The
      Company performs periodic credit evaluations of the financial condition of
      its
      customers, monitors collections and payments from customers, and generally
      does
      not require collateral.  Receivables are generally due within 45
      days.  The Company provides for the possible inability to collect
      accounts receivable by recording an allowance for doubtful
      accounts.  The Company writes off an account when it is considered to
      be uncollectible.  The Company estimates its allowance for doubtful
      accounts based on historical experience, aging of accounts receivable, and
      information regarding the creditworthiness of its customers.  To date,
      losses have been within the range of management’s expectations.




The
      Company contracts with various suppliers.  Although there are a
      limited number of suppliers capable of supplying its inventory needs, the
      Company believes that any shortfalls from existing suppliers would be absorbed
      from other suppliers on comparable terms.  However, a change in
      suppliers could cause a delay in sales and adversely effect
      results.




Purchases
      from the Company’s three largest vendors during the years ended September 30,
      2007, 2006, and 2005, comprised, 49%, 51%, and 54%, respectively, of its total
      purchases of product.




**TREASURY
      STOCK**




The
      Company uses the specific identification method for accounting for treasury
      stock.  During the 2004 fiscal year, the Company issued 1,000
      additional shares for employee stock benefit plans with a cost basis of
      $2,000.  At September 30, 2007 and 2006, there remained approximately
      1,000 treasury shares, with a cost of $1,000.




**STOCK
      BASED COMPENSATION**




Prior
      to
      October 1, 2005, the Company accounted for grants of options to employees to
      purchase its common stock using the intrinsic value method in accordance with
      Accounting Principle Board (“APB”) Opinion No. 25 and FASB Interpretation No. 44
      (“FIN No. 44”), “Accounting for Certain Transactions Involving Stock
      Compensation”.  As permitted by SFAS No. 123 and as amended by SFAS
      No. 148, the Company had chosen to continue to account for such option grants
      under APB Opinion No. 25 and provide the expanded disclosures specified in
      SFAS
      No. 123, as amended by SFAS No. 148.  Beginning October 1, 2005, the
      Company adopted the provisions of SFAS No. 123(R) using the prospective
      method.







F
              -
              12








On
      July
      19, 2005, the Board of Directors and Compensation Committee approved
      accelerating the exercisability of 316,106 unvested stock options outstanding
      under the Company’s 1996 stock incentive plan effective as of July 20,
      2005.  The options are held by employees, including executive
      officers, and directors, and have a range of exercise prices of $1.25 to $3.38
      per share and a weighted average exercise price of $2.03 per
      share.  The closing price per share of the Company’s common stock on
      July 19, 2005, the last trading day before effectiveness of the acceleration,
      was $3.21.  Of the total number of options accelerated, executive
      officers and directors of the Company hold options to purchase an aggregate
      of
      202,906 shares of common stock.  In order to prevent unintended
      personal benefits, shares of the Company’s common stock received upon exercise
      of an accelerated option remain subject to the original vesting period with
      respect to transferability of such shares and, consequently, may not be sold
      or
      otherwise transferred prior to the earlier of termination of continuous service
      with the Company or expiration of such original vesting period.




The
      purpose of accelerating vesting was to minimize the Company’s recognition of
      compensation expense associated with these options upon adoption of SFAS No.
      123(R) in the first quarter of fiscal 2006.  The maximum aggregate
      pre-tax expense associated with the accelerated options that would have been
      reflected in the Company’s consolidated financial statements in future fiscal
      years is estimated to be approximately $581,000.  The accelerated
      exercisability of options created an additional compensation expense to provide
      for an estimate of the benefit that would be received by future terminating
      employees who exercise options prior to the term of their respective original
      vesting periods.  The compensation expense was based an estimate of
      the future turnover percentage times the intrinsic value of the accelerated
      stock options on July 20, 2005 and amounted to additional compensation expense
      of approximately $68,000, all of which was recognized in the fourth quarter
      of
      fiscal 2005.  However, to the extent that any accelerated options are
      exercised prior to the term of their respective original vesting periods and
      the
      estimated compensation expense proves insufficient, the Company may incur
      additional compensation expense under SFAS No. 123(R).  The Company’s
      full Board of Directors ratified the acceleration to the extent affected options
      were held by members of the Compensation Committee.




Had
      the
      option grants and the acceleration of option grants been determined based on
      their fair value at the grant date for awards consistent with the provisions
      of
      SFAS No. 123, the effect on the compensation cost for 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):




Fiscal
                Year Ended September 30,2007
            
            
            2006
            
            
            2005Net
                  income as reported
            
            $
            1,626
            
            
            $
            511
            
            
            $
            145Stock
                based compensation cost, net of related taxeffects,
                  using the fair value method of reporting
            
            
            --
            
            
            
            --
            
            
            
            (868
            )Effect
                of acceleration of unvested stock options
            
            
            --
            
            
            
            --
            
            
            
            (581
            )Pro
                  forma net income (loss)
            
            $
            1,626
            
            
            $
            511
            
            
            $
            (1,304
            )Basic
                  earnings (loss) per common share:As
                reported
            
            $
            0.23
            
            
            $
            0.07
            
            
            $
            0.02Pro
                  forma
            
            $
            0.23
            
            
            $
            0.07
            
            
            $
            (0.19
            )Diluted
                  earnings (loss) per common share:As
                reported
            
            $
            0.22
            
            
            $
            0.07
            
            
            $
            0.02Pro
                  forma
            
            $
            0.22
            
            
            $
            0.07
            
            
            $
            (0.18
            )







F
              -
              13








**VENDOR
      PROGRAMS**




The
      Company receives incentives from suppliers related to product and volume rebates
      and cooperative marketing development funds.  These incentives are
      generally under monthly, quarterly, or annual agreements with the suppliers;
      however, some of these incentives are product driven or are provided to support
      specific programs established by the supplier.  Suppliers generally
      require that the Company uses their cooperative marketing development funds
      exclusively for advertising or other marketing programs.  These
      restricted cooperative marketing development funds are generally recognized
      as a
      reduction of operating expense or in some cases, when funds are in excess of
      their targeted marketing program, a reduction of cost of goods sold in
      accordance with Emerging Issues Task Force Issue No. 02-16, “Accounting by a
      Customer (Including a Reseller) for Certain Consideration Received from a
      Vendor”, as the related marketing expenses are recognized.




As
      rebates are earned, the Company records the income as a reduction of cost of
      goods sold.  Any amounts received from suppliers related to
      cooperative marketing development funds, are deferred until
      earned.  Incentive programs are subject to audit as to whether the
      requirements of the incentives were actually met.  The Company
      establishes reserves to cover any collectibility risks including subsequent
      supplier audits.




**EARNINGS
      PER SHARE**




The
      Company accounts for earnings per common share in accordance with SFAS 128
      “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 share equivalents, consisting
      of stock options, 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 has reported comprehensive
      income for the fiscal year ended September 30, 2007, but did not have any
      components of comprehensive income for fiscal years ended September 30, 2006
      and
      2005.




**SEGMENT
      REPORTING**




The
      provisions of SFAS No. 131,
“Disclosures about Segments of anEnterpriseand Related Information”, require
      public companies to report financial and descriptive information about
      their reportable operating segments.  The Company identifies
      reportable segments based on how management internally evaluates separate
      financial information, business activities and management
      responsibility.  For the years ended September 30, 2006 and 2005, the
      Company operated in only one segment.  In fiscal year ended September 30,
      2007, the Company began operating in three segments as
      follows:


As
                of and for the Year Ended September 30,
                2007US
            
            
            Pakistan
            
            
            ChinaSales
                of Product
            
            
            Business
                Process
            
            
            Business
                Process
            
            
            Intersegment
            
            
            ConsolidatedIn
                Thousands
            
            and
                Services
            
            
            Services
            
            
            Services
            
            
            Eliminations
            
            
            TotalSales
                  from non affiliated customers
            
            $
            346,237
            
            
            $
            884
            
            
            $
            5
            
            
            $
            --
            
            
            $
            347,126Intersegment
                sales
            
            $
            --
            
            
            $
            7,827
            
            
            $
            218
            
            
            $
            (8,045
            )
            
            $
            0Depreciation
                  and amortization
            
            $
            1,920
            
            
            $
            378
            
            
            $
            22
            
            
            $
            --
            
            
            $
            2,320Segment
                profit (loss)
            
            $
            1,140
            
            
            $
            649
            
            
            $
            (96
            )
            
            $
            (67
            )
            
            $
            1,626Segment
                  assets
            
            $
            87,887
            
            
            $
            4,232
            
            
            $
            170
            
            
            $
            (6,283
            )
            
            $
            86,006




The
      Company recognizes revenues in geographic areas based on the location to which
      the product was shipped or services have been rendered.





F
              -
              14





**MINORITY
      INTEREST**





Minority
      interest consists of capital contributed by minority interests as well as
      earnings or losses allocated to them.  The Company has minority
      interest resulting from its equity investments in PBPO and Ovex.  The
      changes in minority interest (in thousands) since October 1, 2005 are as
      follows:




Year
                Ended September 30,2007
            
            
            2006Beginning
                  minority interest balance
            
            $
            1,487
            
            
            $
            903Minority
                interest acquired in Ovex acquisition
            
            
            302
            
            
            
            -Capital
                  contributed by PBPO minority interest
            
            
            100
            
            
            
            705Earnings
                (loss) allocated to minority shareholders
            
            
            68
            
            
            
            (121
            )Ending
                  minority interest balance
            
            $
            1,957
            
            
            $
            1,487




**RECENT
      ACCOUNTING PRONOUNCEMENTS**




Accounting
      pronouncements adopted:





In
      September 2006, the SEC released Staff Accounting Bulletin No. 108,
*Considering the Effects of Prior Year Misstatements when Quantifying
      Misstatements in Current Year Financial Statements* ("SAB
      108").  The Company adopted SAB 108 in the fourth quarter of fiscal
      2007. SAB 108 requires registrants to use both a balance sheet approach and
      an income statement approach when quantifying and evaluating the materiality
      of
      a misstatement and to adjust the financial statements if either approach results
      in quantifying a misstatement that is material.





In
      adopting the requirements of SAB 108, the Company determined that previously
      accrued taxes that were overstated by $0.2 million and immaterial to the balance
      sheet, could be considered material to the income statement, if
      adjusted.  The accrued tax overstatement resulted from an under
      accrual of an income tax refund in years prior to 2002, which had been evaluated
      as being immaterial under the reversing (rollover) method at that time.
 The Company reported the cumulative effect of the initial application of
      SAB 108 by adjusting accumulated deficit as of September 30, 2006 with a
      credit of $0.2 million.





In
      March
      2006, the Financial Accounting Standards Board (“FASB”) issued FAS 156,
*Accounting for Servicing of Financial Assets - an Amendment of FASB
      Statement No. 140*. This standard clarifies when to separately account for
      servicing rights, requires servicing rights to be separately recognized
      initially at fair value, and provides the option of subsequently accounting
      for
      servicing rights at either fair value or under the amortization
      method.  The standard is effective for fiscal years beginning after
      September 15, 2006 but can be adopted early as long as financial statements
      for
      the fiscal year in which early adoption is elected, including interim
      statements, have not yet been issued.  The Company adopted this
      accounting pronouncement effective October 1, 2006 and the adoption has not
      had
      a material effect on its consolidated financial statements.





In
      February 2006, the FASB issued FAS 155, *Accounting for Certain Hybrid
      Financial Instruments - an Amendment of FASB Statements No. 133 and
      140*.  This statement permits fair value remeasurement for any
      hybrid financial instrument that contains an embedded derivative that would
      otherwise have to be accounted for separately.  The new statement also
      requires companies to identify interests in securitized financial assets that
      are freestanding derivatives or contain embedded derivatives that would have
      to
      be


accounted
      for separately, clarifies which interest-and principal-only strips are subject
      to Statement No. 133, and amends Statement No. 140 to revise the conditions
      of a
      qualifying special purpose entity due to the new requirement to identify whether
      interests in securitized financial assets are freestanding derivatives or
      contain embedded derivates.  This statement is effective for all
      financial instruments acquired or issued after the beginning of an entity's
      first fiscal year that begins after September 15, 2006.  The Company
      adopted this accounting pronouncement effective October 1, 2006 and the adoption
      has not had a material effect on its consolidated financial
      statements.





Accounting
      pronouncements pending adoption:





In
      February 2007, the FASB issued SFAS No. 159, *The Fair Value Option for
      Financial Assets and Financial Liabilities-Including an Amendment of FASB
      Statement No. 115*, which is effective for the Company in fiscal years
      beginning July 1, 2008.  This statement permits an entity to
      choose to measure many financial instruments and certain other items at fair
      value at specified election dates.  Subsequent unrealized gains and
      losses on items for which the fair value option has been elected will be
      reported in earnings.  The Company does not anticipate that the adoption of
      this accounting pronouncement will have a material effect on its consolidated
      financial statements





F
              -
              15











In
      September 2006, the FASB issued FAS 157, *Fair Value
      Measurements*.  This standard defines fair value, establishes a
      framework for measuring fair value in generally accepted accounting principles,
      and expands disclosures about fair value measurements.  This statement
      is effective for financial statements issued for fiscal years beginning after
      November 15, 2007.  The Company does not anticipate that the adoption
      of this accounting pronouncement will have a material effect on its consolidated
      financial statements.





In
      July
      2006, the FASB issued Interpretation No. 48, *Accounting for Uncertainty in
      Income Taxes* ("FIN No. 48").  This interpretation requires
      recognition and measurement of uncertain income tax positions using a
      "more-likely-than-not" approach.  The provisions of FIN No. 48 are
      effective for fiscal years beginning after December 15, 2006.  The
      Company does not anticipate that the adoption of this accounting pronouncement
      will have a material effect on its consolidated financial
      statements.




**PRIOR
      YEAR BALANCE SHEET RECLASSIFICATION**




In
      the
      September 30, 2006 financial statements, current maturities of long-term debt
      of
      $346,000 was included with Accrued Taxes and Other Liabilities in the balance
      sheet presentation.  For fiscal year 2007 the current maturities of
      long-term debt were reclassified for both 2007 and 2006 fiscal years and
      included with Short-Term Borrowings and Current Maturities of Long-Term
      Debt.




**2
      PROPERTY AND EQUIPMENT**




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


September
                30,2007
            
            
            2006Software
                  under development
            
            $
            344
            
            
            $
            197Computer
                equipment and software
            
            
            12,925
            
            
            
            9,519Office
                  equipment and other
            
            
            1,075
            
            
            
            1,006Warehouse
                equipment
            
            
            116
            
            
            
            151Leasehold
                  improvements
            
            
            812
            
            
            
            561Capitalized
                leases (see Note 7)
            
            
            1,938
            
            
            
            1,21117,210
            
            
            
            12,644Less:
                Accumulated depreciation and amortization
            
            
            (12,188
            )
            
            
            (9,879
            )$
            5,022
            
            
            $
            2,765




Depreciation
      and amortization expense was $2,320,000, $1,491,000 and $1,110,000 for the
      years
      ended September 30, 2007, 2006, and 2005, respectively.  Assets fully
      depreciated were $8,380,000 and $8,328,000 for the years ended September
      30, 2007, and 2006, respectively.  Accumulated amortization on
      capitalized leases was $849,000 and $433,000 at September 30, 2007 and 2006,
      respectively.




**3
      LINES OF CREDIT**




The
      Company’s two primary information technology sales subsidiaries, En Pointe
      Technologies Sales, Inc. and En Pointe Gov, Inc., and GE Commercial Distribution
      Finance Corporation (“GE”) are parties to that certain Business Financing
      Agreement and that certain Agreement for Wholesale Financing dated June 25,
      2004, as amended to date (collectively, the “Agreements”).  The
      Company is the guarantor of the obligations under the
      Agreements.  Under the flooring arrangement, the two subsidiaries may
      purchase and finance information technology products from GE-approved vendors
      on
      terms that depend upon certain variable factors.  The two subsidiaries
      may borrow up to 85% of the Company’s collective eligible accounts receivable at
      an interest rate of prime plus 1.0% per annum, subject to a minimum rate of
      5.0%.  Such purchases from GE-approved vendors have historically been
      on terms that allow interest-free flooring.  The
      original Agreements provided for a $30.0 million accounts receivable and
      flooring facility and expired on June 25, 2007**,** but were
      extended on June 13, 2007 to July 31, 2007 via a temporary overline letter
      agreement.







F
              -
 16








Effective
      July 25, 2007, the facility was increased to $45.0 million and certain financial
      covenants were revised pursuant to an addendum executed among the
      parties.  The addendum also provided an extension of the term of the
      facility for a period of three years from August 1, 2007 and for successive
      one-year renewal periods thereafter, subject to termination at the end of any
      such period on at least sixty days prior written notice by any party to the
      other parties.




Effective
      September 25, 2007, the parties entered into an amendment to delete all prior
      financial covenants contained in the Agreements and to restate them effective
      for the last day of each calendar quarter as follows (as such terms are defined
      in the Agreements):




**•**
            
            Tangible
                Net Worth and Subordinated Debt in the combined amount of not less
                than
                $12,750,000.**•**
            
            Total Funded
                Indebtedness to EBITDA for the preceding four fiscal quarters
                then ended, shall be no more
                than 3.00:1.00.




The
      GE
      facility is collateralized by accounts receivable, inventory and substantially
      all of our other assets.  As of September 30, 2007, approximately
      $30.3 million in borrowings were outstanding under the $45.0 million financing
      facility.  At September 30, 2007, there were additional borrowings
      available of approximately $14.7 million after taking into consideration the
      borrowing limitations under the Agreements, as amended to date.




Since
      the
      Company replaced its working capital financing facility in June 2004, minimal
      interest expense has been incurred on borrowings under the line of credit
      because of the extended interest-free period under the flooring
      plan.  In fiscal years 2007, 2006 and 2005 such interest expense
      amounted to $11,000, $14,000 and $3,000 respectively.  Total interest
      expense, the majority of which in fiscal years 2007 and 2006 applied to
      capitalized leases and in the 2005 fiscal year related principally to the
      Ontario facility lease, for the years ended September 30, 2007, 2006 and 2005
      was $318,000, $82,000 and $233,000 respectively.




**4
      OTHER INCOME**




Other
      income consisted chiefly of insurance recovery from prior year losses, rental
      income, and early payment discounts from state sales tax
      authorities.




**5
      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.  The Company’s 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.




**6
      INCOME TAXES**




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




Year
                Ended September 30,2007
            
            
            2006
            
            
            2005Current:Federal
            
            $
            28
            
            
            $
            20
            
            
            $
            13State
            
            
            32
            
            
            
            22
            
            
            
            8$
            60
            
            
            $
            42
            
            
            $
            21




Deferred:Federal
            
            
            (213
            )
            
            
            --
            
            
            
            --State
            
            
            (50
            )
            
            
            --
            
            
            
            --(263
            )
            
            
            --
            
            
            
            --$
            (203
            )
            
            $
            --
            
            
            $
            --









F
              -
              17








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




Year
                Ended September
                30,2007
            
            2006
            
            2005Federal
                  statutory rate
            
            35
            
            %
            
            35
            
            %
            
            35
            
            %State
                taxes, net of federal benefits
            
            1
            
            
            
            2
            
            
            
            5Expenses
                  not deductible
            
            5
            
            
            
            8
            
            
            
            23Affiliate
                (earnings) losses not taxable
            
            (11
            )
            
            
            35
            
            
            
            312Minority
                  interest
            
            2
            
            
            
            (8
            )
            
            
            (83
            )Net
                operating loss carryforward
            
            (50
            )
            
            
            (82
            )
            
            
            (123
            )Valuation
                  allowances
            
            8
            
            
            
            18
            
            
            
            (156
            )(14
            )
            %
            
            8
            
            %
            
            13
            
            %




The
      Company’s consolidated return excludes two affiliates (see “Affilate (earnings)
      losses not taxable” in table above), PBPO and Ovex.  PBPO is excluded
      because the Company’s investment is less than the required 80% ownership
      required to consolidate under federal tax law and Ovex is excluded because
      foreign income is not subject to U.S. tax until distributed.




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 a portion of the net deferred tax asset of
      $4.9 million, management has provided a valuation
      allowance.  Significant components of deferred taxes are as follows
      (in thousands):




September
                30,2007
            
            
            2006Deferred
                tax assets:Accounts
                  receivable and other allowances
            $
            533
            
            
            $
            628Expenses
                not currently deductible
            
            1,170
            
            
            
            883Depreciation
            
            295
            
            
            
            250Federal
                net operating loss and alternative minimum tax credits
            2,001
            
            
            
            2,436State
                  net operating loss
            
            933
            
            
            
            1,8004,931
            
            
            
            5,996Deferred
                  tax liabilities
            
            --
            
            
            
            --Net
                deferred tax asset
            
            4,931
            
            
            
            5,996Valuation
                  allowance
            
            (4,531
            )
            
            
            (5,996
            )Deferred
                tax asset
            $
            400
            
            
            $
            --




Portion
                  allocated to income
            
            $
            263Portion
                allocated to equity related to stock options
            
            
            137Total
                  deferred tax asset
            
            $
            400




The
      Company had the following Federal
      net operating losses (‘‘NOL’’) available:




Year
                NOL Incurred
            
            NOL
                Amount
            
            Expiration
                Date2000
            
            $
            31
            
            20202002
            
            
            3,458
            
            20222003
            
            
            1,832
            
            2023$
            5,321




The
      above
      $5.3 million NOL carry forward will not benefit earnings, as it was
      attributable to the exercise of stock options and will be considered an
      adjustment to additional paid-in capital.







F
              -
              18








**7
      LONG-TERM LIABILITIES AND COMMITMENTS AND CONTINGENCIES**




The
      Company leases office facilities and various types of office
      equipment.  These leases vary in duration and many contain renewal
      options and/or escalation clauses.  Estimated future minimum lease
      payments under leases having initial or remaining non-cancelable lease terms
      in
      excess of one year at September 30, 2007 were approximately as follows (in
      thousands):




Minimum
                Lease
            
            
            
            CapitalizedPayments
            
            
            
            LeasesFiscal
                  year 2008
            
            $
            1,769
            
            
            $
            593Fiscal
                year 2009
            
            
            1,107
            
            
            
            305Fiscal
                  year 2010
            
            
            737
            
            
            
            141Fiscal
                year 2011
            
            
            637
            
            
            
            38Fiscal
                  year 2012
            
            
            653Thereafter
            
            
            1,424Total
                  minimum lease payments
            
            $
            6,327
            
            
            
            1,077Less
                amount representing interest
            
            
            
            
            
            
            (111
            )Principal
                  amount
            
            
            
            
            
            $
            966Current
            
            
            
            
            
            
            519Long-term
            
            
            
            
            
            
            447Total
            
            
            
            
            
            $
            966


In
      June
      1999, the Company entered into a sale-leaseback arrangement for a 126,000 square
      foot configuration facility in Ontario, California.  Under SFAS No.
      98, because of a sublease that was for more than 10% of the total leased
      premises, the Company was required to account for its lease, which would have
      otherwise been considered an operating lease, as a financing
      transaction.  The Company recorded lease payments as a reduction of
      its obligation to the lessor and as interest expense on such obligation, as
      well
      as depreciation expense on the capitalized property.




Upon
      termination of the sublease and conclusion that the Company no longer has a
      continuing interest in its Ontario facility in March 2005, the Company, in
      accordance with SFAS No. 98, removed the leased assets and liability accounts
      from its balance sheet.  However, over approximately six years, the
      capitalized leased assets had been depreciated more rapidly than the liability
      to the lessor was being amortized, resulting in the liability to the lessor
      exceeding the net book value of the capitalized lease property by $0.7 million
      at the date immediately preceding the termination of the sublease.




The
      $0.7
      million gain was deferred and amortized on a straight-line basis over
      approximately sixteen months, which represented the conclusion of the seventh
      year of the fifteen year lease and the first date on which the Company could
      terminate the lease without cost or penalty.  During the years ended
      September 30, 2007, 2006 and 2005, the Company amortized into earnings $30,000,
      $387,000, and $330,000 respectively, of deferred gain.




For
      the
      years ended September 30, 2005 and 2004, Ontario facility rent expense, which
      was characterized as a financing lease under SFAS No. 98 until March 2005 and
      reported as interest expense, was approximately $218,000 and $534,000,
      respectively.




On
      August
      26, 2005 the Company gave notification to the lessor of the Ontario facility
      of
      its intention to terminate the lease and its notification was acknowledged
      on
      September 14, 2005.  On March 30, 2006, the Company amended the lease
      agreement to extend the lease that was due to terminate on May 31, 2006 until
      October 31, 2006.  In August 2006, the Company found the alternative
      location for its configuration center that it was seeking and entered into
      a
      sublease agreement for approximately 95,090 square feet at Rancho Cucamonga,
      California.  The sublease is for approximately two and a half years,
      ending on February 15, 2009.




During
      June 2006, the Company moved its headquarters in El Segundo, California, where
      it leased approximately 24,000 square feet of office space, to an alternative
      El
      Segundo location where approximately 13,000 square feet of office space was
      subleased.  The sublease is for approximately two and a half years,
      ending on January 31, 2009.




Rent
      expense for the years ended September 30, 2007, 2006, and 2005 under all
      operating leases was approximately $1,292,000, $1,812,000 and $1,820,000,
      respectively.







F
              - 19








Under
      an
      amendment to the employment agreement of the Company’s CEO entered into on
      October 1, 2004 and effective October 15, 2004, there is provision that in
      the
      event of termination of employment, under certain circumstances following an
      unapproved change in control of the Company, a severance payout equal to four
      times annual base salary in a single lump-sum payment will be made




**8
      EARNINGS PER SHARE AND PREFERRED STOCK**




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


Year
                Ended September 30,2007
            
            
            2006
            
            
            2005Net
                  income
            
            $
            1,626
            
            
            $
            511
            
            
            $
            145Denominator:Weighted-average
                shares outstanding
            
            
            7,145
            
            
            
            7,006
            
            
            
            6,866Effect
                  of dilutive securities:Dilutive
                potential of options and warrants
            
            
            311
            
            
            
            119
            
            
            
            237Weighted-average
                  shares and share equivalentsoutstanding
            
            
            7,456
            
            
            
            7,125
            
            
            
            7,103Basic
                income per share
            
            $
            0.23
            
            
            $
            0.07
            
            
            $
            0.02Diluted
                  income per share
            
            $
            0.22
            
            
            $
            0.07
            
            
            $
            0.02




The
      Company has an anti-takeover provision in its Certificate of Incorporation,
      as
      amended to date, that grants its Board of Directors 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 Company’s
      outstanding voting stock.  Further, Section 203 of the General
      Corporation Law of Delaware prohibits the Company from engaging in certain
      business combinations with interested stockholders.  These provisions
      may have the effect of delaying or preventing a change in the Company’s control
      without action by the stockholders, and therefore could adversely affect the
      market price of its common stock.




**9
      STOCK OPTIONS**




In
      March
      1996, the Company instituted a qualified 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.  However, in anticipation of
      the adverse effects that adoption of SFAS No. 123(R) would have, the
      Compensation Committee and Board of Directors approved and made effective July
      20, 2005 the acceleration of all unvested stock options.  In March
      2006, under its terms, the the stock option plan terminated and no further
      shares are available for grant under the plan.




No
      options have been granted since the fiscal year ended September 30, 2005, when
      the Company granted options to purchase 275,000 shares of common stock to a
      director and an employee with exercise prices ranging from $2.00 to $2.10 per
      share.  The options granted were accelerated so as to be fully vested
      as of July 20, 2005 and will expire ten years from the date of grant unless
      earlier exercised or terminated.  A compensation charge was not
      recorded in connection with the issuance of such options as the exercise price
      of the stock options granted was not less than the fair market value of the
      Company’s stock price as of the date of grant.







F
              -
              20








The
      following is a summary of stock option activity:


TotalExerciseNumber
                of Shares
            
            
            ValueNon-Qualified
            
            
            Incentive
            
            
            (In
                Thousands)Outstanding
                  at September 30, 2004
            
            
            616,667
            
            
            
            878,721
            
            
            $
            5,257Granted
            
            
            250,000
            
            
            
            25,000
            
            
            
            575Exercised
            
            
            (46,000
            )
            
            
            (113,136
            )
            
            
            (260
            )Cancelled
            
            
            --
            
            
            
            (65,479
            )
            
            
            (306
            )Outstanding
                  at September 30, 2005
            
            
            820,667
            
            
            
            725,106
            
            
            $
            5,266Granted
            
            
            --
            
            
            
            --
            
            
            
            --Exercised
            
            
            (4,000
            )
            
            
            (53,034
            )
            
            
            (105
            )Cancelled
            
            
            --
            
            
            
            (88,291
            )
            
            
            (331
            )Outstanding
                  at September 30, 2006
            
            
            816,667
            
            
            
            583,781
            
            
            $
            4,830Granted
            
            
            --
            
            
            
            --
            
            
            
            --Exercised
            
            
            --
            
            
            
            (31,125
            )
            
            
            (62
            )Cancelled
            
            
            (8,333
            )
            
            
            (75,234
            )
            
            
            (84
            )Outstanding
                  at September 30, 2007
            
            
            808,334
            
            
            
            477,422
            
            
            $
            4,684






Weighted
            
            
            RemainingOptions
            
            
            Average
            
            
            ContractualExercisable
            
            
            Exercise
                Price
            
            
            LifeSeptember
                  30, 2005
            
            1,545,773
            
            $
            3.41
            
            
            7.65September
                30, 2006
            
            1,400,448
            
            $
            3.45
            
            
            5.63September
                  30, 2007
            
            1,285,756
            
            $
            2.96
            
            
            4.92




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 2005 (there were
      no grants in 2006 or 2007):




Expected
            
            
            
            Risk
                FreeDividend
            
            Expected
            
            Interest
            
            ExpectedYield
            
            Volatility
            
            Rate
            
            LivesYear ended September 30, 2005
            
            0%
            
            105%
            
            3.35%
            
            5






**10
      ACQUISITION OF BUSINESSES**





On
      September 19, 2006, the Company entered into a Share Purchase Agreement with
      Omar Saeed and Arif Saeed (the "Saeeds"), effective October 1, 2006, to acquire
      70% of the capital stock of two privately owned Pakistani companies, Ovex
      Technologies (Private) Limited and Ovex Pakistan (Private) Limited.
      Subsequently, on July 7, 2007, the two companies were approved for merger by
      the
      Pakistan Court effective October 1, 2006.  The surviving company in
      the merger was Ovex Technologies (Private) Limited
      (“Ovex”).





Both
      companies are engaged in providing business process outsourcing ("BPO") services
      and were wholly-owned by the Saeeds. Under the terms of the agreement, the
      Company paid the Saeeds a total of $1,680,000 in exchange for 70% of the capital
      stock of each of the two companies. The form of the consideration paid consisted
      of $240,000 in cash, $240,000 in unregistered shares of Company common stock,
      and a promissory note in the principal amount of $1,200,000, which promissory
      note was repaid in full in November 2006.  Additionally, the board of
      directors of Ovex consists of five members; one designated by the Company
      (Edward O. Hunter, a director of the Company, serves as the Company’s designee),
      one of the Saeeds and three designated mutually by the two
      designees.





F
              -
              21








The
      Company allocated the $1,680,000 purchase price to the tangible and intangible
      assets acquired, based on their estimated fair values. The excess purchase
      price
      over those fair values was recorded as goodwill. The fair value assigned to
      the
      intangible assets acquired was based on valuations estimated by management
      with
      the assistance of an independent appraisal firm.  In accordance with
      SFAS No. 142, “Goodwill and Other Intangible Assets”, goodwill and purchased
      intangibles with indefinite lives are not amortized but will be reviewed
      periodically for impairment. Of the purchase price, approximately $98,000 was
      allocated to amortizable (over five years using sum of the year’s digits method)
      customer relationships and approximately $420,000 was allocated to amortizable
      (over five years on a straight-line basis) non-competition
      agreements.  The allocation of the purchase price (in thousands) was
      as follows:




Tangible
                  assets acquired
            
            $
            704Excess
                purchase price over net assets acquired
            976Purchase
                  price
            
            $
            1,680Intangible
                  assets:Goodwill
            
            
            458Covenant
                  not to compete
            
            
            420Customer
                relationships
            
            
            98Total
                  intangibles
            
            $
            976




On
      January 18, 2006, pursuant to an Asset Purchase Agreement with Software Medium,
      Inc., a Texas corporation (“SMI”), and Veridyn, LLC, a Texas limited liability
      company and a wholly-owned subsidiary of SMI (“Veridyn,” and collectively with
      SMI, the “Sellers”), the Company acquired certain depreciable and intangible
      assets and assumed certain liabilities, including a short-term lease commitment
      for office facilities.  On closing, $550,000 in cash was paid to the
      Sellers.  Two of Sellers’ officers entered into employment agreements
      with the Company.  One of the officers was guaranteed a $250,000 bonus
      that will be payable over two years, subject to continued employment and is
      considered part of the purchase price.  The other Sellers’ officer’s
      employment agreement contains a performance-based bonus provision that is based
      on the percentage of Earnings before Interest, Taxes, Depreciation and
      Amortization (“EBITDA”) on sales of security services.  The bonus is
      payable over three years on a quarterly basis, subject to continued employment,
      and approximates 25% of such EBITDA per year, subject to a maximum annual
      aggregate bonus payment of $400,000.  Additional fees payable and
      estimated to be payable for professional services directly related to the
      acquisition total $175,000.




The
      Company allocated the $975,000 purchase price to the tangible and intangible
      assets acquired, based on their estimated fair values.  The excess
      purchase price over those fair values was recorded as goodwill.  The
      fair value assigned to the intangible assets acquired was based on valuations
      estimated by management with the assistance of an independent appraisal
      firm.  In accordance with SFAS No. 142, “Goodwill and Other Intangible
      Assets”, goodwill and purchased intangibles with indefinite lives acquired after
      June 30, 2001 are not amortized but will be reviewed periodically for
      impairment.  Of the purchase price, approximately $154,000 was
      allocated to amortizable (over five years using sum of the year’s digits method)
      customer relationships and approximately $460,000 was allocated to amortizable
      (over three years on a straight-line basis) non-competition
      agreements.  The allocation of the purchase


price
      (in
      thousands) was as follows:




Depreciable
                  assets acquired
            
            $
            57Excess
                purchase price over net assets acquired
            
            
            918Purchase
                  price
            
            $
            975Intangible
                  assets:Customer
                relationships
            
            
            154Goodwill
            
            
            304Covenant
                not to compete
            
            
            460Total
                  intangibles
            
            $
            918




Management
      considers that sum-of-the-years digits best reflects the pattern in which the
      economic benefits of SMI and Viablelinks (as defined below) customer
      relationships will be realized.  At September 30, 2005, the Company
      increased its amortization of the Tabin (as defined below) customer
      relationships $50,000 in recognition of impairment of certain customer
      relationships.





F
              -
              22








In prior
      fiscal years, in addition to the transactions described above, the Company
      made
      the following acquisitions:




October
                  11, 2002
            
            Tabin
                  Corporation ("Tabin")October
                  01, 2004
            
            Viablelinks,
                  Inc. ("Viablelinks")





At
      September 30, 2007, amortization of customer relationships for current and
      future years is as follows (in thousands):




Tabin
            
            
            Viablelinks
            
            
            SMI
            
            
            Ovex
            
            
            TotalBeginning
                  accumulated amortization
            $
            402
            
            
            $
            120
            
            
            $
            153
            
            
            $
            --
            
            
            $
            675Fiscal
                year 2007 amortization
            
            
            68
            
            
            
            40
            
            
            
            197
            
            
            
            116
            
            
            
            421Ending
                  accumulated amortization
            
            $
            470
            
            
            $
            160
            
            
            $
            350
            
            
            $
            116
            
            
            $
            1096Fiscal
                year:2008
            
            $
            --
            
            
            $
            27
            
            
            $
            187
            
            
            $
            110
            
            
            $
            3242009
            
            
            --
            
            
            
            13
            
            
            
            61
            
            
            
            104
            
            
            
            1782010
            
            
            --
            
            
            
            --
            
            
            
            13
            
            
            
            97
            
            
            
            1102011
            
            
            --
            
            
            
            --
            
            
            
            3
            
            
            
            91
            
            
            
            94Total
                  future year's amortization
            
            $
            --
            
            
            $
            40
            
            
            $
            264
            
            
            $
            402
            
            
            $
            706Total
                  amortization
            
            $
            470
            
            
            $
            200
            
            
            $
            614
            
            
            $
            518
            
            
            $
            1802




The
      following unaudited pro forma consolidated financial information reflects the
      results of operations for the two years ended September 30, 2006 as if the
      acquisitions of Ovex and SMI had occurred on October 1,
      2004   Pro form results for the year ended September 30, 2007 is
      not presented because both companies were fully integrated with the Company’s
      operations during that period.  (In thousands, except per share
      data):




Year
                Ended September
                30,2006
            
            
            2005Pro
                Forma
            
            
            As
                Reported
            
            
            Pro
                Forma
            
            
            As
                ReportedNet
                  sales
            
            $
            327,090
            
            
            $
            323,723
            
            
            $
            342,140
            
            
            $
            328,332Net
                income
            
            $
            826
            
            
            $
            511
            
            
            $
            769
            
            
            $
            145Net
                  income per share:Basic
            
            $
            0.12
            
            
            $
            0.07
            
            
            $
            0.11
            
            
            $
            0.02Diluted
            
            $
            0.12
            
            
            $
            0.07
            
            
            $
            0.11
            
            
            $
            0.02Weighted
                average shares outstanding:Basic
            
            
            7,006
            
            
            
            7,006
            
            
            
            6,866
            
            
            
            6,866Diluted
            
            
            7,125
            
            
            
            7,125
            
            
            
            7,103
            
            
            
            7,103




These
      pro
      forma results have been prepared for comparative purposes only and do not
      purport to be indicative of what operating results would have been had the
      acquisitions actually taken place in those earlier years.  In addition,
      these results are not intended to be a projection of future results and do
      not
      reflect any synergies that might be achieved from the combined
      operations.




**11
      LITIGATION**




In
      January 2007, in order to avoid the cost of ongoing litigation, the Company
      reached a settlement agreement with Softchoice Corporation (“Softchoice”)
      relating to an action that was brought against the Company in January 2006
      in
      the Los Angeles County Superior Court, Case No. SC088295, seeking general and
      special damages of an unspecified amount as well as punitive damages from the
      economic harm caused by the hiring of five former employees of
      Softchoice.   Terms of the settlement agreement stipulate that a
      payment to Softchoice of $212,500 be made.   The full amount of
      the settlement payment was recognized in the March 2007 quarterly financial
      statements.   The settlement was a business decision and in
      entering into the settlement, the Company made no admission of
      liability







F
              -
              23








In
      January 2007, in order to avoid the cost of ongoing litigation, the Company
      negotiated a settlement agreement with Websense, Inc., a former supplier to
      Software Medium, Inc. (“SMI”) relating to an action that was brought against the
      Company in February 2006 in the San Diego County Superior Court, Case
      No. GIC859375.  Websense, Inc. ("Websense") was the holder of a SMI secured
      promissory note and alleged that in the Company’s acquisition of the assets of
      SMI and its subsidiary, Veridyn LLC, via an asset purchase agreement, that
      the Company was liable for the debts of SMI as a successor.   
Under the settlement agreement, the Company will pay Websense, Inc. the sum
      of
      one dollar ($1) and in addition has agreed to purchase one hundred thousand
      dollars ($100,000) of software published by Websense, Inc. and will become
      an
      authorized vendor of its products.  The settlement was a business
      decision and in entering into the settlement, the Company made no admission
      of
      liability




In
      July
      2006, Church Gardens, LLC, the current owner of the Company's formerly
      leased configuration facility in Ontario, California, filed suit against the
      Company in San Bernardino County Superior Court, Case No. RCV096518. 
The complaint centers on certain furniture, fixtures, equipment and leasehold
      improvements that were sold to, and leased back from the Company , by
      plaintiff’s predecessor in 1999 when the Company still occupied its
      former leased configuration facility in Ontario, California. The plaintiff
      alleges, among other things, that a portion of the leased-back property was
      sold, destroyed, altered, or removed from the premises, and demands both an
      inspection and an accounting of the property remaining and for the court to
      provide damages to the extent that the Company may have breached its
      contract.  The Company disputes the allegations and believes that any
      property loss liability under the lease provisions would be limited to the
      $75,000 that has already been accrued in the financial
      statements.




In
      February 2007, the Company filed a cross-complaint against Church Gardens
      LLC. The cross-complaint asks that the Company's $90,720 security deposit be
      returned with interest.  In addition, the Company claims that Church
      Gardens LLC engaged in unfair business practices in retaining the security
      deposit and in not allowing the removal of certain personal property that the
      Company owned and that Church Gardens LLC engaged in unlawful conversion of
      certain property belonging to the Company.  The Company also asks the
      court to grant declaratory relief as to the Company's  actions in its
      attempts to preserve the disputed property pending a judicial determination
      of
      rights.  The Company also seeks recovery of possession of its
      personal property and injunctive relief preventing the plaintiff from
      liquidating its property.




In
      January 2007, US Real Estate Consortium, the predecessor owner of the
      Company's former leased configuration facility in Ontario, California filed
      suit against the current owner, Church Gardens LLC, in San Bernardino County
      Superior Court, Case No. RCV100476.




In
      March
      2007, the current owner, Church Gardens LLC, filed a cross-complaint against
      the
      Company and the former owner, US Real Estate Consortium, among
      others.  On May 31, 2007, the Company answered and cross-claimed
      against the current owner, Church Gardens, LLC.  On July 25, 2007,
      Church Gardens, LLC filed its answer to the first amended cross-complaint
      filed by us.  Both cases (RCV096518 and RCV100476) have now been
      consolidated for all purposes.




Although
      the first case (RCV096518) was originally filed in July 2006, no trial date
      in
      the now consolidated case has been set. There has been substantial discovery,
      and substantial law and motion practice to date.  The Company is
      contesting the consolidated case vigorously, and intends to continue doing
      so.




There
      are
      various other claims and litigation proceedings in which the Company is involved
      in the ordinary course of business.  The Company accrues for costs
      related to contingencies when a loss is probable and the amount is reasonably
      determinable.  While the outcome of the foregoing and other claims and
      proceedings cannot be predicted with certainty, after consulting with legal
      counsel, management does not believe that it is reasonably possible that any
      ongoing or pending litigation will result in an unfavorable outcome to the
      Company or have a material adverse affect on the Company’s business, financial
      position and results of operations or cash flows.







F
              -
              24








**12
      QUARTERLY FINANCIAL DATA (UNAUDITED)**




Selected
      financial information for the quarterly periods in the fiscal years ended
      September 30, 2007 and 2006 is presented below (in thousands, except per share
      amounts):




Fiscal
                2007 Quarter EndedSeptember
            
            June
            
            March
            
            DecemberNet
                  sales
            
            $
            97,041
            
            $
            99,967
            
            $
            74,498
            
            $
            75,620Gross
                profit
            
            
            11,704
            
            
            11,888
            
            
            10,086
            
            
            9,873Net
                  (loss) income
            
            
            729
            
            
            412
            
            
            213
            
            
            272Basic
                net (loss) income per share
            
            
            .10
            
            
            0.06
            
            
            0.03
            
            
            0.04Diluted
                  net (loss) income per share
            
            
            .10
            
            
            0.06
            
            
            0.03
            
            
            0.04






Fiscal
                2006 Quarter EndedSeptember
            
            June
            
            March
            
            DecemberNet
                  sales
            
            $
            78,409
            
            $
            95,624
            
            $
            71,012
            
            $
            78,688Gross
                profit
            
            
            11,400
            
            
            11,492
            
            
            9,238
            
            
            7,520Net
                  (loss) income
            
            
            1,529
            
            
            1,016
            
            
            (1,037
            )
            (997
            )Basic
                net (loss) income per share
            
            
            0.22
            
            
            0.14
            
            
            (.15
            )
            (.14
            )Diluted
                  net (loss) income per share
            
            
            0.21
            
            
            0.14
            
            
            (.15
            )
            (.14
            )




**13
      SUBSEQUENT EVENT**




On
      October 29, 2007, the Company entered into a lease agreement for the its
      corporate headquarters.  The property leased is a two story office building
      with 29,032 square feet of office space in Carson, California. The lease is
      for
      a period of seven years commencing on November 1, 2007.  The lease
      requires monthly payments of $48,483.44 for the first year and contains an
      annual base rent increase of 3% that is effective for each November 1 for the
      succeeding six years. There is an option at the Company’s election to
      extend the lease for two additional five year periods. Each of the two option
      periods to extend the lease contain the same base rent increases of 3% as found
      in the original lease.  The scheduled monthly payments under the lease
      extension options are at the same original base monthly rate of $48,483.44
      plus
      the sum of the accumulated annual 3% base rent increases to date. The
      lessee is responsible for the payment of real property taxes on the leased
      premises as well as for all utilities and services.





The
      lessor of the leased corporate headquarters, Dominguez Channel, LLC, is 85%
      owned by the Chief Executive Officer of the Company and four members of his
      immediate family, two of whom are employees and another a director of the
      Company.










F
              -
              25





**En
      Pointe Technologies, Inc.**




**Schedule
      II**




**VALUATION
      AND QUALIFYING
      ACCOUNTS**






Balance
                At
            
            
            Charges
                (Reversals)
            
            
            
            
            
            
            Balance
                AtBeginning
                of
            
            
            to
                Cost and
            
            
            
            
            
            
            End
                ofPeriod
            
            
            Expenses
            
            
            Deductions
            
            
            Period**Year
                Ended September 30, 2007(in thousands):**Allowance
                  for doubtful accounts
            
            $
            1,011
            
            
            $
            205
            
            
            $
            (521
            )
            
            $
            695Allowance
                for returns
            
            
            99
            
            
            
            —
            
            
            
            —
            
            
            
            99Allowance
                  for inventory valuation
            
            
            523
            
            
            
            29
            
            
            
            —
            
            
            
            552$
            1,633
            
            
            $
            234
            
            
            $
            (521
            )
            
            $
            1,346**Year
                Ended September 30, 2006(in thousands):**Allowance
                  for doubtful accounts
            
            $
            723
            
            
            $
            415
            
            
            $
            (127
            )
            
            $
            1,011Allowance
                for returns
            
            
            99
            
            
            
            —
            
            
            
            —
            
            
            
            99Allowance
                  for inventory valuation
            
            
            374
            
            
            
            149
            
            
            
            —
            
            
            
            523$
            1,196
            
            
            $
            564
            
            
            $
            (127
            )
            
            $
            1,633**Year
                Ended September 30, 2005(in thousands):**Allowance
                  for doubtful accounts
            
            $
            945
            
            
            $
            255
            
            
            $
            (477
            )
            
            $
            723Allowance
                for returns
            
            
            99
            
            
            
            —
            
            
            
            —
            
            
            
            99Allowance
                  for inventory valuation
            
            
            354
            
            
            $
            20
            
            
            
            —
            
            
            
            374$
            1,398
            
            
            $
            275
            
            
            $
            (477
            )
            
            $
            1,196











F
              -
              26





**SIGNATURES**




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




EN
      POINTE
      TECHNOLOGIES, INC.




Dated:
                December 17, 2007
            
            BY:
                /s/ ATTIAZAZ “BOB” DINAttiazaz
                ‘‘Bob’’ Din,Chief
                Executive Officer and President(Principal
                Executive Officer)




**POWER
      OF ATTORNEY**




We,
      the
      undersigned directors and officers of En Pointe Technologies, Inc. do hereby
      constitute and appoint Attiazaz Din and Javed Latif, 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 (including post-effective amendments) hereto; 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 report has
      been
      signed below by the following persons in the capacities and on the dates
      indicated.




Signature
            
            Title
            
            Date/s/
                MANSOOR S. SHAH
            
            Chairman
                of the Board and Director
            
            December
                17, 2007Mansoor
                S. Shah/s/
                ATTIAZAZ “BOB” DIN
            
            Chief
                Executive Officer, President and Director (Principal Executive
                Officer)
            
            December
                17, 2007Attiazaz
                “Bob” Din/s/
                JAVED LATIF
            
            Chief
                Financial Officer and Senior Vice President (Principal Financial
                and
                Principal Accounting Officer)
            
            December
                17, 2007Javed
                Latif/s/
                NAUREEN DIN
            
            Director
            
            December
                17, 2007Naureen
                Din/s/
                ZUBAIR AHMED
            
            Director
            
            December
                17, 2007Zubair
                Ahmed/s/
                MARK BRIGGS
            
            Director
            
            December
                17, 2007Mark
                Briggs/s/
                EDWARD O. HUNTER
            
            Director
            
            December
                17, 2007Edward
                O. Hunter/s/
                TIMOTHY J. LILLIGREN
            
            Director
            
            December
                17, 2007Timothy
                J. Lilligren











**Index
      to Exhibits**




ExhibitNumber
            
            Description2.1
            
            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).3.4
            
            Certificate
                of Amendment to Certificate of Incorporation of Registrant filed
                May 16,
                2005. (incorporated by reference to the same numbered exhibit to
                the
                Registrant’s Form 10-Q filed May 16, 2005).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).10.3
            
            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 March 1,
                1996 (incorporated by reference to the same numbered exhibit to the
                Registrant’s Registration Statement on Form S-1 filed May 8,
                1996).*10.6
            
            Amended
                Employment Agreement between the Registrant and Attiazaz ‘‘Bob’’ Din,
                dated April 2, 1997 (incorporated by reference to the same numbered
                exhibit to the Registrant’s Registration Statement on Form 10-K filed
                December 29, 1997).*10.24
            
            Assignment
                and License Agreement between the Registrant and SupplyAccess, Inc.,
                dated
                September 21, 2001 (incorporated by reference to the same numbered
                exhibit
                to the Registrant’s Form 10-K filed December 31, 2001.)10.27
            
            Employment
                Agreement between the Registrant and Kevin Schatzle, dated March
                28, 2002.
                (incorporated by reference to the same numbered exhibit to the
                Registrant’s Form 10-K filed December 27, 2002).*10.31
            
            Asset
                Purchase Agreement entered into as of October 9, 2002 between Tabin
                Corporation and En Pointe Technologies Sales, Inc. (incorporated
                by
                reference to the same numbered exhibit to the Registrant’s Form 10-K filed
                December 27, 2002).10.36
            
            Employment
                agreement between the Registrant and Javed Latif, dated March 28,
                2002.
                (incorporated by reference to the same numbered exhibit to the
                Registrant’s Form 10-Q filed February 14, 2003).*10.39
            
            Employee
                Leasing and Licensing Agreement by and between the Registrant and
                En
                Pointe Global Services, Inc., dated October 17, 2003. (incorporated
                by
                reference to the same numbered exhibit to the Registrant’s Form 10-Q filed
                May 17, 2004).10.41
            
            Business
                Financing Agreement between En Pointe Technologies Sales, Inc. and
                GE
                Commercial Distribution Finance Corporation, dated June 25, 2004.
                (incorporated by reference to the same numbered exhibit to the
                Registrant’s Form 10-Q filed August 16,
                2004).














ExhibitNumber
            
            Description10.42
            
            Agreement
                for Wholesale Financing between En Pointe Technologies, Inc. and
                GE
                Commercial Distribution Finance Corporation, dated June 25, 2004.
                (incorporated by reference to the same numbered exhibit to the
                Registrant’s Form 10-Q filed August 16, 2004).10.43
            
            Addendum
                to Business Financing Agreement and Agreement for Wholesale Financing
                between En Pointe Technologies, Inc. and GE Commercial Distribution
                Finance Corporation, dated June 25, 2004. (incorporated by reference
                to
                the same numbered exhibit to the Registrant’s Form 10-Q filed August 16,
                2004).10.44
            
            Addendum
                to Business Financing Agreement and Agreement for Wholesale Financing
                between En Pointe Technologies, Inc. and GE Commercial Distribution
                Finance Corporation, dated July 27, 2004. (incorporated by reference
                to
                the same numbered exhibit to the Registrant’s Form 10-Q filed August 16,
                2004).10.45
            
            Asset
                Purchase Agreement entered into as of October 1, 2004 between Viablelinks,
                Inc. and En Pointe Technologies Sales, Inc. (incorporated by reference
                to
                the same numbered exhibit to the Registrant’s Form 10-Q filed February 14,
                2005).10.46
            
            Subscription
                Agreement dated March 18, 2005 between Premier BPO Inc. and the Registrant
                (incorporated by reference to the same numbered exhibit to the
                Registrant’s Form 10-Q filed May 16, 2005).10.47
            
            Amendment
                to Employment Agreement between the Registrant and Attiazaz ‘‘Bob’’
                Din, dated November 15, 2004 (incorporated by reference to exhibit
                99.1 to the Registrant’s Form 8-K filed on November 18,
                2004.)*10.48
            
            Addendum
                to Business Financing Agreement and Agreement for Wholesale Financing
                among En Pointe Technologies Sales, Inc., En Pointe Gov, Inc. and GE
                Commercial Distribution Finance Corporation, effective January 23,
                2006.
                (incorporated by reference to the same numbered exhibit to the
                Registrant’s Form 8-K filed January 30, 2006).10.49
            
            Asset
                Purchase Agreement entered into as of January 18, 2006 between Software
                Medium, Inc., Veridyn, LLC and En Pointe Technologies Sales, Inc.
                (incorporated by reference to the same numbered exhibit to the
                Registrant’s Form 10-Q filed February 14, 2006).10.50
            
            Employment
                Agreement between the Registrant and Robert Mercer, dated March 28,
                2002.
                (incorporated by reference to the same numbered exhibit to the
                Registrant’s Form 10-Q filed February 14, 2006).10.51
            
            Employment
                Agreement between the Registrant and Robert Mercer, dated March 28,
                2002.
                (incorporated by reference to the same numbered exhibit to the
                Registrant’s Form 10-Q filed February 14, 2006).*10.52
            
            Employment
                Agreement between the Registrant and David L. Mochalski, dated May
                28,
                2002. (incorporated by reference to the same numbered exhibit to
                the
                Registrant’s Form 10-Q filed February 14, 2006).*10.53
            
            Sublease
                dated March 30, 2006 between Jetabout North America, Inc. and the
                Registrant for the property located at 2381 Rosecrans Avenue, El
                Segundo,
                California 90245 (incorporated by reference to the same numbered
                Exhibit to the Registrant’s Form 10-Q filed May 15,
                2006).10.55
            
            Addendum
                to Business Financing Agreement and Agreement for Wholesale Financing
                among En Pointe Technologies Sales, Inc., En Pointe Gov, Inc. and
                GE
                Commercial Distribution Finance Corporation, dated May 12, 2006
                (incorporated by reference to the same numbered exhibit to the
                Registrant’s Form 8-K filed May 17, 2006).10.56
            
            Sublease
                dated July 12, 2006 between North Pacific Group, Inc. and the Registrant
                for certain industrial warehouse properties located at 11081 Tacoma
                Drive,
                Rancho Cucamonga, California 91730 (incorporated by reference to the
                same numbered exhibit to the Registrant’s Form 8-K filed September 1,
                2006).10.57
            
            Share
                Purchase Agreement dated September 19, 2006, by and among the Registrant,
                Omar Saeed and Arif Saeed. (incorporated by reference to the same
                numbered
                Exhibit to the Registrant’s Form 8-K filed September 25,
                2006).














ExhibitNumber
            
            Description10.58
            
            Employment
                Agreement between the Registrant and Richard R. Emil, dated September
                27,
                2006. (incorporated by reference to the same numbered exhibit to
                the
                Registrant’s Form 8-K filed September 27, 2006).*10.59
            
            Promissory
                Note between the Registrant and Omar and Arif Saeed, dated October
                5,
                2006.  (incorporated by reference to the same numbered exhibit
                to the Registrant’s Form 10-K filed December 18, 2006).10.60
            
            Amendment
                to Share Purchase Agreement effective October 1, 2006, by and among
                the
                Registrant, Omar Saeed and Arif Saeed.  (incorporated by
                reference to the same numbered exhibit to the Registrant’s Form 10-K filed
                December 18, 2006).10.61
            
            Temporary
                Overline Agreement by GE Commercial Distribution Finance
                Corporation for En Pointe Technologies Sales, Inc. and En Pointe Gov,
                Inc., dated June 13, 2007.  (incorporated by reference to
                exhibit 10.60 to the Registrant’s Form 8-K filed June 14,
                2007).10.62
            
            Amendment
                to Business Financing Agreement and Agreement for Wholesale Financing
                among En Pointe Technologies Sales, Inc., En Pointe Gov, Inc. and
                GE
                Commercial Distribution Finance Corporation, dated July 30,
                2007.  (incorporated by reference to exhibit 10.61 to the
                Registrant’s Form 8-K filed July 31, 2007).10.63
            
            Addendum
                to Business Financing Agreement and Agreement for Wholesale Financing
                among En Pointe Technologies Sales, Inc., En Pointe Gov, Inc. and
                GE
                Commercial Distribution Finance Corporation, dated September 25,
                2007.  (incorporated by reference to the same numbered
                exhibit to the Registrant’s Form 8-K filed September 26,
                2007).10.64
            
            Lease
                dated October 29, 2007 between Dominguez Channel, LLC and En Pointe
                Technologies Sales, Inc. for certain office properties located at
                18701 S.
                Figueroa Street, Carson, California (incorporated by reference to
                the same
                numbered exhibit to the Registrant’s Form 8-K/A filed October 31,
                2007).21.1
            
            Subsidiaries
                of the Company23.1
            
            Consent
                of Rose, Snyder & Jacobs CPA Corp.23.2
            
            Consent
                of BDO Seidman, LLP.31.1
            
            Certification
                of the Chief Executive Officer, as required by Rule 13a-14(a) or
                15d-14(a)
                of the Securities Exchange Act of 1934, as amended.31.2
            
            Certification
                of the Chief Financial Officer, as required by Rule 13a-14(a) or
                15d-14(a)
                of the Securities Exchange Act of 1934, as amended.32.1
            
            Certifications
                of the Chief Executive Officer and Chief Financial Officer, as required
                by
                Rule 13a-14(b) or 15d-14(b) of the Securities Exchange Act of 1934,
                as
                amended, and 18 U.S.C. Section 1350.


*Each
      of these Exhibits constitutes a
      management contract, compensatory plan, or arrangement.