---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549

---

FORM 10-K

|ý                                            | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934    
|-------------------------------------------- | ----------------------------------------------------------------------------------------
|For the Fiscal Year Ended September 30, 2002
|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 organization)                                                  |  | (I.R.S. Employer Identification No.)
|100 NORTH SEPULVEDA BOULEVARD, 19TH FLOOR, EL SEGUNDO, CALIFORNIA 90245(Address of principal executive offices)
|Registrant's telephone number, including area code:(310) 725-5200                                              

---

Securities
registered pursuant to Section 12(b) of the Act:
None

Securities
registered pursuant to Section 12(g) of the Act: Common Stock, par value $.001 per share(Title Of Class)

---

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. ý Yes o No

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

The
aggregate market value of the voting stock held by non-affiliates of the Registrant, based upon the closing sales price of the Common Stock as of December 20,
2002, was approximately $3,606,930.

The
number of outstanding shares of the Registrant's Common Stock as of December 20, 2002 was 6,721,827.

DOCUMENTS INCORPORATED BY REFERENCE

PORTIONS OF REGISTRANT'S PROXY STATEMENT FOR THE 2003 ANNUAL MEETING OF STOCKHOLDERS (TO BE FILED WITH THE COMMISSION ON OR BEFORE JANUARY 28, 2003):
PART III, ITEMS 10-13.

---

---

---

EN POINTE TECHNOLOGIES, INC.
FORM 10-K
YEAR ENDED SEPTEMBER 30, 2002

Table of Contents

|PART I         |  |                                                                                       |  |    
|-------------- |  | ------------------------------------------------------------------------------------- |  | ---
|ITEM 1         |  | BUSINESS                                                                              |  | 1  
|ITEM 2.        |  | PROPERTIES                                                                            |  | 18 
|ITEM 3.        |  | LEGAL PROCEEDINGS                                                                     |  | 18 
|ITEM 4.        |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |  | 20 
|PART II        |  |                                                                                       |  |    
|ITEM 5.        |  | MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                 |  | 21 
|ITEM 6.        |  | SELECTED FINANCIAL DATA                                                               |  | 22 
|ITEM 7.        |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  | 24 
|ITEM 7A.       |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  | 34 
|ITEM 8.        |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           |  | 35 
|ITEM 9.        |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES |  | 35 
|PART III       |  |                                                                                       |  |    
|ITEM 10.       |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                    |  | 36 
|ITEM 11.       |  | EXECUTIVE COMPENSATION                                                                |  | 36 
|ITEM 12.       |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                        |  | 36 
|ITEM 13.       |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                        |  | 36 
|ITEM 14.       |  | CONTROLS AND PROCEDURES                                                               |  | 36 
|PART IV        |  |                                                                                       |  |    
|ITEM 15        |  | EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K                     |  | 37 
|               |  | CONSOLIDATED FINANCIAL STATEMENTS                                                     |  | F-1
|SIGNATURES     |  |                                                                                      
|               |  | CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER, AND DIRECTORS                       |  | S-1
|CERTIFICATIONS |  |                                                                                      
|               |  | CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER                                   |  | S-3

---



PART I

THIS ANNUAL REPORT ON FORM 10-K CONTAINS FORWARD-LOOKING STATEMENTS RELATING TO FUTURE EVENTS OR THE FUTURE FINANCIAL
PERFORMANCE OF THE COMPANY INCLUDING, BUT NOT LIMITED TO, STATEMENTS CONTAINED IN: "ITEM 1. BUSINESS FACTORS WHICH MAY AFFECT FUTURE OPERATING RESULTS" 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 "FACTORS WHICH MAY AFFECT FUTURE OPERATING RESULTS," WHICH
COULD CAUSE ACTUAL EVENTS, PERFORMANCE OR RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH STATEMENTS.

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

ITEM 1. BUSINESS

GENERAL

En Pointe Technologies, Inc., originally incorporated in Texas on January 25, 1993 and reincorporated in Delaware on February 6, 1996.
The Company is 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. The Company uses proprietary and
non-proprietary software and systems to drop-ship materials, repair and operation products to its customers through an electronically linked network of suppliers that include
distributors and certain manufacturers in the United States. This software allows En Pointe to serve as an electronic clearinghouse of computers and computer related products without many of
the risks and costs associated with maintaining inventory. In addition to seeking efficiencies and growth in its traditional large-enterprise focused core business, En Pointe continues to
devote resources to the development of its professional services infrastructure. En Pointe is represented in approximately 22 sales and service markets throughout the United States, and
maintains a value-added integration facility in Ontario, California that is ISO 9001:2000 certified.

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

1

---

BUSINESS MODEL

En Pointe's virtual inventory business model has been developed and enhanced over time, but since its inception in 1993, its core concepts have remained
the same. The model's essential elements are (i) a low cost overhead structure resulting from the automation of many management and operating functions; (ii) effective electronic
information systems; and (iii) reduced working capital requirements due to the leveraging of its virtual inventory model and its allied distributor relationships. The Company's highly
sophisticated and customized SAP, enterprise resource planning system allows it to monitor sales, product returns, inventories, profitability and accounts receivable at the sales representative and
customer level. Additionally, the Company has tightly integrated product purchasing and customer invoicing into its information systems to expedite procurement and billing.
AccessPointetm, an eBusiness platform, provides En Pointe and its customers with up-to-date product information and streamlines the procurement process.
The completely integrated eBusiness information-technology architecture helps the Company maintain effective online communication links with its sales representatives, selected suppliers, and many of
its customers. AccessPointetm is available free of charge to En Pointe's customers. Additionally, AccessPointetm can be licensed for a fee as a hosted or
non-hosted solution to complement existing procurement processes.

The
Company continues to focus on cost control in its business model and strives to maintain a low-cost overhead structure through the automation of many of its management
and operating functions. The day-to-day customer support function is shared between a centralized staff at headquarters and local account management to improve field response
yet maintain direct access to all back office functions
and senior management. Increased local coverage has fueled efforts to identify new opportunities. The Company believes 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.

En Pointe's
product sales are conducted from physical and virtual locations, located in approximately 22 markets in 21 states. The Company's service business is offered nationally
and is managed and resourced by its in-house technical staff using limited engagements of contracted third party service providers. The Company believes in seeking for new, secondary
markets where there is a business case to support a group of individuals or a specific account opportunity.

In
May, 2002, En Pointe Technologies, Inc. was 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 require
certain purchases to be made from certified minority controlled companies.

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

The
data provided by the Company's customized information system allows its sales representatives to design each customer's orders according to their particular needs. Product can be
delivered directly from suppliers to the customer or aggregated at En Pointe's configuration facility located in Ontario, California. En Pointe simplifies the ordering, staging, and
delivery process through supply chain management for any size order. En Pointe's configuration facility is located close to its 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. The configuration facility tests and loads systems with

2

---

predefined customer images. Systems are then shipped ready-to-install, saving customers money in downstream deployment costs. Just-in-time
configuration works well with the Company's information system by identifying which of its suppliers can supply the desired product at the best price when needed from different products offered from
multiple suppliers.

A
distinct advantage of the Company's business model is the economy achieved by the conservation of working capital through leveraging a virtual inventory model that engages the
extensive warehousing, purchasing, distribution functions, marketing, and information-technology functions of its suppliers. Since inception, the Company has been an innovator in using the drop
shipping capabilities of its
suppliers whenever product configuration is not required. Drop shipping avoids the costs and risks associated with maintaining inventory, enabling the Company to quickly adapt its product offerings to
changing market demands. As product proliferation has occurred, the Company's limited inventory position has given it a competitive advantage with respect to price and availability on a broad range of
products. The Company believes its business model allows it to have the capacity to increase sales with minimal capital investment. En Pointe can also utilize the infrastructure of its
suppliers for marketing efforts with its existing customers through e-mail advertising and marketing campaigns targeted at total technology solutions.

The
Company also offers managed services that usually involve multi-year desktop and server support contracts for specified periods of time. They are provided to a few large
national accounts by dedicated on-site resources trained and certified to provide installations, moves, adds, changes, desktop and server support, and break-fix services.

eBusiness

En Pointe's eBusiness offering is supported by its Internet procurement system, AccessPointetm, catalog-content management, service
management tools and back-office systems, each of which are integral parts of its business. The continuing development and function of the Company's information systems is therefore
crucial to En Pointe's success.

AccessPointetm
allows En Pointe to integrate into other companies' procurement systems and provids real time links to content, price and availability of products.
AccessPointetm electronically links En Pointe's back- office systems to its suppliers and customers. The application provides direct on-line access to
hundreds of millions of dollars of information-technology inventory, representing over 200,000 sku's from over 1,000 manufacturers, and can be used to set up private exchanges across a range of
information-technology categories.

Attributes
of AccessPointetm eBusiness offering include:



3

---



AccessPointetm
is available to customers as a tool to access information and procure information-technology products and services from En Pointe. In addition,
AccessPointetm can be licensed as a procurement application, independent of product purchasing from En Pointe. The application can be hosted or installed in a customer's data
center.

To
fully leverage the potential of AccessPointetm, The Xyphen Corporation (dba "ContentWare"), a wholly-owned subsidiary, was formed in February 2002. The subsidiary
focuses on the catalog content management aspects of eBusiness. Managing content in electronic systems is difficult for most companies, however, En Pointe has developed tools and expertise in
this area that allows content to be managed more effectively. ContentWare provides its software applications to customers through licensing agreements. To date sales from such licensing arrangements
have not been significant.

Service
management tools are built on a Clarify platform. This customer relationship management application allows complex projects to be managed efficiently. Not only can
En Pointe control and manage its services engagements, but also makes available, via the web, service information to its customers.

The
back office is built around the highly scalable SAP enterprise resource planning system that has been customized to accommodate En Pointe's needs. The system provides the kind
of detailed and complex information necessary to manage a national sales organization.

MANAGED AND PROFESSIONAL SERVICES

En Pointe provides a full range of information technology life-cycle services, including the following:



The
Company employs 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. 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 2002, net sales from the services provided 10.5%, 8.5% and 6.1% respectively of the Company's total net sales.

The
Company has historically focused more on its managed services business than its 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 the Company to make strategic
long-term investments to expand its service

4

---

offerings and organizational infrastructure. Professional services, on the other hand, tend to require higher levels of investment without the relative predictability of managed services agreements.

Managed
services are provided to large national accounts by dedicated on-site resources trained and certified to provide installations, moves, adds, changes, desktop and
server support, and break-fix services. Five large customers accounted for approximately 97% of the Company's total service revenues for the 2002 fiscal year. En Pointe does its own
technical recruiting for these positions, to better control the quality of its staff and to provide timely and cost competitive alternatives suitable for the varying skill and/or geography
requirements of its customers.

En Pointe's
enterprise help desk services are offered either on-site at the customer location or through its centralized call center. The Company maintains 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.

The
Company views professional services as an area of potential growth. These services include desktop and server support; messaging; storage; wireless, broadband and other network
support; and security. While the Company has not invested significantly in this area relative to its managed services practice, customer demand for these services appears to be increasing and the
Company will respond to opportunities when it can leverage its existing infrastructure or when it complements an existing customer support agreement.

En Pointe
uses Clarify, an industry-leading customer relationship management system, to create and track its 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 the Company can be measured against industry standards, Company objectives, and customer commitments. This enables the Company to improve its processes to achieve greater levels of
customer satisfaction.

COMPETITION

En Pointe operates in the highly competitive sales segment of the information technology industry, and competes with a large number and variety of
resellers of information technology products. Increasingly, the competition also includes hardware manufacturers and national computer retailers that have
commenced marketing directly to end-users. Many of these companies compete principally on the basis of price and may have lower costs than En Pointe, allowing them to offer the same
products and services for less. Many of En Pointe's competitors are of equal size or smaller and sell to regional markets, or are larger, and sell on a national scope with substantially greater
financial, technical, and marketing resources available.

Dell
Computer Corporation ("Dell") and Gateway, Inc.("Gateway") initially launched the manufacturer "direct" model and were successful in gaining market share. Other manufacturers
(e.g. International Business Machines Corporation ("IBM"), and Hewlett-Packard Company ("HP")) have adopted the direct model, to some degree, to actively market directly to customers. This has had the
effect of reducing the role of distributors and resellers, particularly in the enterprise accounts, which is a large percentage of the Company's traditional target market. The "direct" business model
also infringes on some of the traditional value-added reseller capabilities in the areas of multi-vendor solutions, integration and image loading, and web-enabled procurement processes,
once again reducing the available market share.

En Pointe's
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

5

---

those companies that combine face-to-face direct selling with web-based models; En Pointe believes that its dual business model will survive, as it embraces
both comprehensive and web-based types of selling venues, allowing the Company to cater to various customer preferences. The Company believes that it differentiates itself from its
competitors by its eBusiness systems, services flexibility, and scalability to customer needs. See "Factors Which May Affect Future Operating ResultsRisks Associated with Competition."

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 En Pointe believes may be
significant due to the rapid product innovation that characterizes this market. These overhead and "touch" costs require expenses that the Company believes more than offset the lower price advantages
offered for purchasing at volume discounts and holding for future sale.

En Pointe's
business model eliminates many overhead and "touch" costs and substantial risks by leveraging the operational strengths of its suppliers, who have developed extensive
warehousing, purchasing and distribution functions. As a result, the Company's continuing strategy is to limit its
product inventory and the associated capital costs, allowing it to accept lower gross profit margins than many of its competitors.

By
relying on the processing strengths of its suppliers, En Pointe is able to concentrate on developing its information systems and focus on more customer-oriented activities:
researching, specifying, and delivering solutions. After helping a customer select the most appropriate technology, En Pointe's sales staff uses the Company's information systems to determine
the best combination of price and availability for a wide variety of information technology products.

En Pointe's
ability to fill and deliver orders with a high level of speed and accuracy is a key benefit of the Company's business model. Its sophisticated systems, which include
all order processing functions, enable the Company 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. PST. The Company usually electronically obtains order delivery information the day following shipment from its major suppliers. It then uses 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.

GETTING PRODUCT FROM THE SUPPLIER

En Pointe's staff has the ability to access the current inventory and availability records of its suppliers, so it 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, En Pointe is 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. En Pointe's suppliers maintain warehouses throughout the country, and their
individual stocking levels are updated and readily available through En Pointe's systems. This allows En Pointe's staff to determine where the product is available for shipment, better
gauging the delivery time to the customer's door.

6

---

En Pointe
and its suppliers utilize various carriers, including industry giants UPS and FedEx, to deliver product. Again taking advantage of a vendor's particular expertise, the
Company integrates the carriers' tracking system facility into its own systems to closely monitor shipments and provide delivery status for its 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.

En Pointe
purchases most of its products from major distributors such as 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 Corporation ("Microsoft"). These are suppliers who have the requisite system strengths and integration
capabilities that enable En Pointe's automated systems to function efficiently. The Company has successfully implemented its business strategy due in large part to these system synergies and to
its close relationships with its suppliers. Equally significant to the success of its supplier relationships has been the volume of business En Pointe generates, as this volume has allowed
En Pointe to negotiate more favorable terms with its suppliers. See "BusinessFactors Which May Affect Future Operating ResultsRisks Associated with Dependence on
Distributors and Manufacturers."

PRODUCTS

The majority of En Pointe's sales have been information technology products. The Company currently makes available to its customers an extensive selection
of products at what it believes to be a competitive combination of price and availability. The Company currently offers over 200,000 information technology products from over 1,000 manufacturers,
including IBM, HP, Compaq, Dell, Cisco Systems, Inc, Fujitsu Limited, Apple Computer, Inc., 3Com Corporation, Microsoft, Toshiba Corporation, Kingston Technology Corporation, Lexmark
International, Inc., Sony Corporation and Nortel Networks Corporation. The Company is also one of a few Microsoft Certified Large Account Resellers. Products offered by the Company include
desktop and laptop computers, servers, monitors, memory, peripherals and accessories, operating systems, application software, consumables and supplies. Products manufactured by HP (now merged with
Compaq) and IBM accounted for approximately 28% and 14%, respectively, of the Company's product sales in fiscal 2002.

INTELLECTUAL PROPERTY

The Company's ability to effectively compete in its market will depend significantly on its ability to protect its intellectual property. The Company does not
have patents on any of its technology, which the Company believes to be material to its future success. En Pointe relies primarily on trade secrets, proprietary knowledge and confidentiality
agreements to establish and protect its rights in its intellectual property, and to maintain its competitive position. There can be no assurance that others may not independently develop similar or
superior intellectual property, gain access to the Company's trade secrets or knowledge, or that any confidentiality agreements between the Company and its employees will provide meaningful protection
for the Company in the event of any unauthorized use or disclosure of its proprietary information.

In
September 2001, SupplyAccess, Inc. ("SupplyAccess"), a former affiliate of the Company granted to En Pointe a limited, exclusive license to use its
AccessPointetm web site and content. Upon liquidation of SupplyAccess in February 2002, the Company was able to acquire full rights to AccessPointetm as well as the
intellectual property rights to all of SupplyAccess's software, copyrights, trade secrets and other proprietary.

The
Company conducts its business under the trademark and service mark "En Pointe Technologies" as well as its logo, "AccessPointetm" and other marks. It has been
issued registrations for its "En Pointe Technologies" and "Building Blocks" marks in the United States and has pending registrations in Canada, Mexico and the European Community.
En Pointe does not believe that its

7

---

operations are dependent upon any of its trademarks or service marks. It also sells products and provides services under various trademarks, service marks, and trade names that are the properties of
owners other than the Company. These owners have reserved all rights with respect to their respective trademarks, service marks, and trade names. See "BusinessFactors Which May Affect
Future Operating ResultsRisks Associated With Dependence on Technology".

SEGMENT INFORMATION

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

EMPLOYEES

As of September 30, 2002, En Pointe employed approximately 489 individuals. This included approximately 172 sales, marketing and related support
personnel, 235 service and support personnel, 16 warehousing/manufacturing/test personnel and 66 employees in administration and finance. The Company believes that its ability to recruit and retain
highly skilled technical and other management personnel will be critical to its ability to execute its business model and growth strategy. None of the Company's employees are represented by a labor
union or are subject to a collective bargaining agreement. The Company believes that its relations with its employees are good.

FACTORS WHICH MAY AFFECT FUTURE OPERATING RESULTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of
1933 and Section 21E of the Securities Exchange Act of 1934. In light of the important factors that can materially affect results, including those set forth in this paragraph and below, the
inclusion of forward-looking information herein should not be regarded as a representation by the Company or any other person that the objectives or plans for the Company will be achieved; the Company
may encounter competitive, technological, financial, economic and business challenges making it more difficult than expected to continue to sell it products and services; the Company may be unable to
retain existing key sales, technical and management personnel; there may be other material adverse changes in the information technology industry or the economy, or in the Company's operations or
business; and any or all of these factors may affect the Company's ability to continue its current sales rate or may result in lower sales volume than currently experienced.

Certain
important factors affecting the forward-looking statements made herein include, but are not limited to (i) the Company's continuing downward sales trends exacerbated by
the current prolonged downturn in capital spending, (ii) continued operating losses incurred by the Company straining capital and borrowing resources and putting the Company under risk of
breaking loan covenants related to minimal acceptable operating levels, (iii) limited availability of alternative credit facilities, (iv) low margin business and (v) a significant
portion of the Company's sales continuing to be to certain large 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 the Company to alter its marketing, capital expenditure or
other budgets, which may in turn affect the Company's business, financial position, results of operations and cash flows. The reader is therefore cautioned not to place undue reliance on
forward-looking statements contained herein, which speak as of the date of this Annual Report on Form 10-K.

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 the Company currently believes are material to its business. However, additional risks not presently known, or risks that are currently believed to be immaterial, may also impair business
operations.

8

---

RISKS RELATED TO REVERSAL OF CONTRACTION OF BUSINESS

For its first six years since inception, the Company experienced rapid growth in net sales, the number of its employees and branch offices, the amount of
administrative overhead and the type of services offered. Since then, the Company has had net sales declines of approximately 27% in each of the past three fiscal years. The effort to reverse the
contraction of net sales has and will continue to put strains on the Company's management, operational and financial resources. To execute the Company's recovery strategy, the Company expects to
require the addition of new management personnel, including sales and technical services personnel, and the development of additional expertise by existing personnel. The Company's ability to manage
its recovery effectively will require it to continue to implement and improve its operational, financial and sales systems at both the national and local level, to develop the skills of its managers
and supervisors and to hire, train, motivate, retain and effectively manage its employees. There can be no assurance that the Company will be successful in such recovery, and the failure to do so
could materially adversely affect the Company's business, financial position, results of operations and cash flows.

ECONOMIC CONDITIONS HAVE AFFECTED AND COULD CONTINUE TO NEGATIVELY IMPACT REVENUES AND PROFITS.

Revenue growth depends on the overall demand for information technology spending. The downturn in the United States has and may continue to 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 the current downturn
continues or increases in severity, the Company believes demand for its products and services, and therefore future revenues, could be further adversely impacted.

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

The Company's business requires significant capital to finance accounts receivable and, to a lesser extent, product inventories. In order to obtain necessary
working capital, the Company relies primarily on lines of credit that are collateralized by substantially all of the Company's assets. As a result, the amount of credit available to the Company may be
adversely affected by numerous factors beyond the Company's control, such as delays in collection or deterioration in the quality of the Company's accounts receivable, economic trends in the
information technology industry, interest rate fluctuations and the lending policies of the Company's creditors. Any decrease or material limitation on the amount of capital available to the Company
under its lines of credit and other financing arrangements, particularly its interest-free flooring, may limit the ability of the Company to fill existing sales orders or expand its sales
levels and, therefore, may have a material adverse effect on the Company's business, financial position, results of operations and cash flows. In addition, any significant increases in interest rates
may increase the cost of financing to the Company and have a material adverse effect on the Company's business, financial position, results of operations and cash flows. The Company is dependent on
the availability of accounts receivable financing on reasonable terms and at levels that are high relative to its equity base in order to maintain and increase its sales. There can be no assurance
that such financing will continue to be available to the Company in the future or available under terms acceptable to the Company. The inability of the Company to have continuous access to such
financing at reasonable costs could materially adversely impact the Company's business, financial position, results of operations and cash flows. As of September 30, 2002, the Company had
outstanding borrowings under its credit facilities of $12.4 million out of a total availability under its credit facilities of $30.0 million.

On
December 28, 2001, the Company entered into a $30 million line of credit agreement for three years with Foothill Capital Corporation ("Foothill"). As part of a separate
one-year agreement entered

9

---

into on the same date, as amended November 21, 2002, IBM Credit Corporation ("IBMCC") continues to provide the Company with a 30-day interest free inventory flooring financing for
up to $20.0 million. Borrowing availability on the Foothill credit facility is directly reduced by any outstanding flooring financings. The financing agreement with Foothill includes a
guarantee to IBMCC for the amount outstanding on the flooring line up to a maximum of $20.0 million. In consideration for providing the guarantee, the Foothill agreement contains a 1% annual
charge on the average outstanding balances
owing to IBMCC. Initially, the Foothill agreement provided for an interest rate of one-half of one percent over the prime rate with the future interest rate to be dependent upon the
Company meeting certain earnings targets.

In
its March 2002 fiscal quarter, the Company estimated that it was possible that if the loss trends noted in and through the March 2002 quarter continued, that the Company
would be unable to meet its EBITDA covenants under its lines of credit with Foothill Capital Corporation ("Foothill") and IBM Credit Corporation ("IBMCC"). To avert such a default, the Company
renegotiated its lines of credit and signed an amendment to the loan agreement with Foothill on July 30, 2002. In consideration for easing the EBITDA covenants, Foothill increased the margin
charged over the prime rate by 0.50% whenever EBITDA is less than $2.0 million, measured on a cumulative rolling four quarter basis, to 2.00% from 1.50% (effectively flooring the minimum
variable interest rate at 6.75% per annum). For EBITDA greater than or equal to $2.0 million but less than $4.0 million the margin charged over prime increased by 0.25% to 1.25% from
1.00%. IBMCC agreed to change its EBITDA covenants to match the revised covenants contained in the Foothill loan agreement and signed an amendment to its loan agreement to such effect on
August 6, 2002.

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

RISKS ASSOCIATED WITH LOW MARGIN BUSINESS

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

10

---

of the business to any increase in product returns and bad debt write-offs, as the impact resulting from the inability to collect the full amount for products sold will be relatively high
compared to the low amount of gross profit on the sale of such product. Any failure by the Company to maintain its gross profit margins and sales levels could have a material adverse effect on the
Company's business, financial position, results of operations and cash flows.

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

For the years ended September 30, 2002, 2001 and 2000, net sales to IBM and certain IBM customers under the Company's current contract with IBM accounted
for approximately 10%, 17% and 13% respectively, of the Company's net sales. Another major customer, Los Angeles County, accounted for 11% and 8% in net sales for years ended September 30, 2002
and 2001, respectively. For the year ended September 30, 2002, the Company's service sales were highly concentrated with two major customers accounting for 60% of service sales and the top five
customers accounting for 97% of total service sales. The Company's contracts for the provision of products or services, including its contract with IBM, are generally non-exclusive
agreements that are terminable by either party upon 30 days notice. 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 the Company's business, financial position, results of operations and cash flows.

RISKS ASSOCIATED WITH COMPETITION

The segment of the information technology industry in which the Company operates is highly competitive. The Company competes with a large number and wide variety
of resellers and providers of information technology products and services, including traditional personal computer retailers, computer superstores, consumer electronics and office supply superstores,
mass merchandisers, corporate resellers, value-added resellers, specialty retailers, distributors, franchisers, mail-order and web-order companies, national computer retailers
and manufacturers which have commenced their own direct marketing operations to end-users. Many of these companies compete principally on the basis of price and may have lower costs than
the Company, which allow them to offer the same products and services at lower prices. Many of the Company's competitors are larger, have substantially greater financial, technical, marketing and
other resources and offer a broader range of value-added services than does the Company. The Company competes with, among others, CompuCom Systems, Inc., Dell, Elcom International, Inc,
Gateway, Inc., Pomeroy Computer Resources, Inc., CDW Computer Centers, Inc., IBM, HP/Compaq, Insight Enterprises, Inc., PC Mall, Inc., GTSI Corp., and certain
distributors. The Company expects to face additional competition from new market entrants in the future.

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

11

---



RISKS ASSOCIATED WITH EXTENSIONS OF CREDIT

As a marketing enhancement, the Company offers unsecured and secured credit terms for qualified customers. While the Company evaluates customers' qualifications
for credit and closely monitors its extensions of credit, defaults by customers in timely repayment of these extensions of credit could have a material adverse effect on the Company's business,
financial position, results of operations and cash flows. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."

RISKS ASSOCIATED WITH PRODUCT RETURNS

As is typical of the information technology industry, the Company incurs expenses as a result of the return of products by customers. Such returns may result from
defective goods, inadequate performance relative to customer expectations, distributor-shipping errors and other causes that are outside the Company's control. Although the Company's distributors and
manufacturers have specific return policies that enable the Company to return certain products for credit, to the extent that the Company's customers return products which are not accepted for return
by the distributor or manufacturer of such products, the Company will be forced to bear the cost of such returns. Any significant increase in the rate of product returns, or the unwillingness by the
Company's distributors or manufacturers to accept goods for return, could have a material adverse effect on the Company's business, financial position, results of operations and cash flows.

RISKS RELATED TO VIRTUAL OFFICE MODEL

The Company's growth was driven, in part, by sales generated through expansion into new geographic markets. The Company opened sales offices in many of the
metropolitan markets that the Company believed offered the most potential for sales growth. As a part of the Company's past restructuring, some of the Company's sales offices were converted to virtual
offices. Expansion in future new markets may be partially accomplished through the virtual model utilizing the SAP/Microsoft-based e-commerce integrated business system. Under such a
model, sales representatives work out of their homes utilizing internet tools, and are supported by customer service representatives located in Southern California. This model enables En Pointe
to have face-to-face contact with customers without incurring the usual start-up costs and further expenses associated with new branch offices. There are no
assurances that this model will experience the same success as has the branch model. A failure in the virtual office model
could have a material adverse effect on the Company's business, financial position, results of operations and cash flows.

RISKS ASSOCIATED WITH DEPENDENCE ON DISTRIBUTORS AND MANUFACTURERS

A key element of the Company's past success and future business strategy involves the maintaining of alliances with certain suppliers of information technology
products and services, including, Synnex, Tech Data, Microsoft and Ingram Micro. These alliances enable the Company to make available to its customers a wide selection of products without subjecting
the Company to many of the costs and risks associated with maintaining large amounts of inventory. Products and services purchased from four suppliers, Synnex, Tech Data, Microsoft and Ingram Micro
accounted for 71% of the Company's aggregate purchases in fiscal 2002. Certain suppliers provide the Company with substantial incentives in the form of allowances passed through from manufacturers,
discounts, credits and cooperative advertising, which incentives directly affect the Company's operating income. There can be no assurance that the Company will continue to receive such incentives in
the future and any reduction in the amount of these incentives could have a material adverse effect on the Company's business, financial position, results of operations and cash flows. Furthermore,
the Company directly competes with certain suppliers for many of the same customers and therefore there can be no assurance that any such allied distributor will not use its position as a key supplier
to the Company to pressure the

12

---

Company from directly competing with it. Substantially all of the Company's contracts with its 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 the Company. The termination or interruption of the Company's 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 the Company's business, financial position, results of operations and cash flows. See "BusinessGetting
Product to the Customer."

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

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

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 the Company's
distributors. Because the Company's overall business strategy depends on the Company's relationships with the suppliers, the Company's business, financial position, results of operations and cash
flows would be materially adversely affected in the event that distributors in general and 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 the Company's
business model is dependent upon the availability of a number of information technology product distributors, any further consolidation would result in fewer distributors available to supply products
to the Company, which could have a material adverse impact on the Company's business, financial position, results of operations and cash flows.

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

The information technology industry is undergoing significant change. The industry has become more accepting of large-volume, cost-effective channels
of distribution. In addition, many traditional computer resellers are consolidating operations and acquiring or merging with other resellers in an effort to increase efficiency and gain market share.
This current industry reconfiguration has resulted in increased pricing pressures. Decreasing prices of information technology products requires the

13

---

Company to sell a greater number of products to achieve the same level of net sales and gross profit. The exacerbation of such trends could make it more difficult for the Company to continue to
increase its net sales and earnings growth. In addition, the historically high rate of growth of the information technology industry has slowed dramatically recently and if the trend continues, it may
have a material adverse effect on the Company's business, financial position, results of operations and cash flows. Furthermore, new methods of distributing and selling information technology
products, such as on-line shopping services and catalogs published on CD-ROM, have evolved and may further develop in the future. Hardware and software manufacturers have sold,
and may in the future further intensify their efforts to sell, their products directly to end-users. From time to time, certain vendors have instituted programs for the direct sale of
large orders of hardware and software to certain major corporate customers. These types of programs may continue to be developed and used by various vendors. While the Company attempts to anticipate
and influence current and future distribution trends, any of these distribution methods or competitive programs, if successful, could have a material adverse effect on the Company's business,
financial position, results of operations and cash flows.

RISKS ASSOCIATED WITH DEPENDENCE ON TECHNOLOGY

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

While
the Company upgraded its accounting software system in its 2000 fiscal year, management believes that further improvements and upgrades will be necessary. Failure to implement such
improvements may adversely affect timely availability of financial information or the ability to deliver products and services to the Company's customers on a timely basis. The Company believes that
such improvements will utilize a considerable amount of the Company's management resources. Failure to hire and retain qualified personnel would have a material adverse effect upon the Company's
ability to implement such improvements. There can be no assurance that the Company will be able to successfully implement such improvements and such failure could have a material adverse impact on the
Company's business, financial position, results of operations and cash flows.

See
"BusinessIntellectual Property."

RISKS ASSOCIATED WITH EXPANDING SERVICES CAPABILITIES

The Company is expanding the nature and scope of its value-added services. Presently approximately 97% of the Company's value-added services are concentrated in
five large customers. The loss of any one large customer would have a material impact on the Company's service revenues

14

---

and efforts to expand. There can be no assurance that the value-added services business will be successfully integrated with the Company's information technology products reselling business or that
the Company will be able to effectively compete in this market. If the Company is unable to effectively
provide value-added services, it may be unable to effectively compete for the business of certain large customers that require the provision of such services as a condition to purchasing products from
the Company. In addition, the Company will be subject to risks commonly associated with a value-added services business, including dependence on reputation, volatility of workload and dependence on
ability to recruit, retain and properly utilize qualified technical personnel. The expansion of the Company's value-added services required a significant capital investment, including a large increase
in the number of technical employees. If the Company is unable to attain sufficient customer orders for value-added services, it will then be unable to fully recover the costs of these investments.
Also, a portion of the Company's value-added service revenue may be derived from the performance of services pursuant to fixed-price contracts. As a result, cost overruns due to price increases,
unanticipated problems, inefficient project management or inaccurate estimation of costs could have a material adverse effect on the Company's business, financial position, results of operations and
cash flows. See "BusinessBusiness Model" and "Managed and Professional Services."

RISKS RELATED TO DEPENDENCE ON SENIOR MANAGEMENT AND OTHER KEY PERSONNEL

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

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

RISKS ASSOCIATED WITH ACQUISITIONS OF AND INVESTMENTS IN COMPLEMENTARY BUSINESSES

One element of the Company's growth strategy may include expanding its business through strategic acquisitions and investments in complementary businesses. The
Company has not had significant acquisition or investment experience, and there can be no assurance that the Company will be able to successfully identify suitable acquisition or investment
candidates, complete acquisitions or investments, or integrate acquired businesses into its operations. Acquisitions and investments involve numerous risks, including 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 the Company has little or no prior experience, and the potential loss of key employees, customers, or contracts
of the acquired company. Acquisition and investments could also
conflict with restrictions in the Company's agreements with existing or future lenders, distributors or manufacturers. The Company is unable to predict whether or when any prospective acquisition or
investment candidate will become available or the likelihood that any acquisition or investment will be completed or successfully integrated. The Company's failure to successfully manage

15

---

any potential acquisitions or investments in complementary businesses could have a material adverse effect on the Company's business, financial position, results of operations and cash flows.

RISKS ASSOCIATED WITH PLANNED INTERNATIONAL OPERATIONS

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

RISKS ASSOCIATED WITH BUSINESS INTERRUPTION AND DEPENDENCE ON CENTRALIZED FUNCTIONS

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

RISKS ASSOCIATED WITH DEPENDENCE ON THIRD-PARTY SHIPPERS

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

RISKS ASSOCIATED WITH POTENTIAL INFLUENCE BY EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS

The directors, executive officers and principal stockholders of the Company and their affiliates beneficially own, in the aggregate, approximately 33% of the
outstanding common stock. As a result,

16

---

these stockholders acting together will be able to exert considerable influence over the election of the Company's directors and the outcome of most corporate actions requiring stockholder approval.
Additionally, the directors and executive officers have significant influence over the policies and operations of the Company's management and the conduct of the Company's business. Such concentration
of ownership may have the effect of delaying, deferring or preventing a change of control of the Company and consequently could affect the market price of its common stock.

RISKS ASSOCIATED WITH POTENTIAL VARIABILITY IN QUARTERLY OPERATING RESULTS

Fiscal 2002 quarterly net sales compared to the respective prior fiscal year quarters have shown a consistent negative trend throughout the fiscal year.
Percentage declines commencing with the first quarter of the fiscal year were 37.1%, 36.4%, 29.3%, and 7.7%, respectively. Sequentially, net sales declined in the second and fourth quarters of fiscal
2002.

The
Company's quarterly net sales and operating results may vary significantly as a result of a variety of factors, including: the demand for information technology products and the
Company's value-added services; adoption of internet commerce models; introduction of new hardware and software technologies; introduction of new value-added services by the Company and its
competitors; changes in manufacturers' prices or price protection policies; changes in shipping rates; disruption of warehousing or shipping channels; changes in the level of operating expenses,
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 the Company's net sales in each quarter results from orders booked in such quarter. Accordingly, the
Company believes that period-to-period comparisons of its operating results are not necessarily meaningful and should not be relied upon as an indication of future performance.

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

POTENTIAL VOLATILITY OF STOCK PRICE

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

POTENTIAL EFFECT OF ANTI-TAKEOVER PROVISIONS

The Company's Board of Directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the price, rights, preferences,
qualifications, limitations and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. The

17

---

rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of
preferred stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of delaying or preventing a third party from
acquiring a majority of the outstanding voting stock of the Company. Further, Section 203 of the General Corporation Law of Delaware prohibits the Company from engaging in certain business
combinations with interested stockholders. These provisions may have the effect of delaying or preventing a change in control of the Company without action by the stockholders, and therefore could
adversely affect the market price of its common stock.

ITEM 2. PROPERTIES

The Company leases approximately 24,000 square feet of office space for its headquarters in El Segundo, California, under a lease expiring June 30, 2006.
The Company also leases an approximately 126,000 square foot facility in Ontario, California, which is primarily used for configuration and maintenance services. This facility has been operational
since July 1, 1998. At the time the Ontario configuration facility was planned, the Company believed that there would be an emerging "channel assembly" market for resellers, such as the
Company, of computer products. However, instead, certain manufacturers began requiring distributors to "co-locate" their final assembly operations at the manufacturer's facility instead of
outsourcing final assembly at separate sites. In reaction to the change in this emerging market, in January 1999, En Pointe's Board of Directors authorized the Company to sell and
leaseback the Ontario facility, while continuing the product configuration operation at that location. The sale-leaseback transaction was concluded in June 1999 and the resulting
lease expires in 2014. As a result of these shifts in the industry the Ontario facility has more capacity and space than usable for current configuration services. In consequence the Company incurred
a non-recurring charge of $6.2 million associated therewith. The charge was determined using the "held for use" model contained in SFAS No.121. The Company intended to and
eventually did in early calendar 2002 sublease approximately 45% of the facility space to an unrelated company.

As
a part of a restructuring plan in June 2001, the Company committed to the conversion of most of its leased sales offices to virtual sales offices. However, with the change in
management in March 2002, the Company abandoned the conversion of three of its eight sales offices slated for closure and continues to use four other offices. Currently the Company operates
from branch offices in New York City, New York; Chicago, Illinois; Denver, Colorado; Draper, Utah; Dallas, Texas; Atlanta, Georgia and Santa Ana, California.

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

ITEM 3. LEGAL PROCEEDINGS

On February 6, 2002 a settlement agreement and release was entered into between the Company and NovaQuest InfoSystems, now known as WebVision, Inc.
The settling parties agreed to stipulate to reverse and vacate a November 7, 2001 Superior Court judgment relating to certain litigation in which the Company owed and accrued on its books
$1,375,000 along with accrued interest of $293,000. Under the terms of the settlement agreement, the Company made various payments to representative parties of the plaintiff totaling $1,200,000 in
discharge of the litigation claim. The Company recorded the settlement of this litigation as non-recurring charge (income) less certain other litigation related income from insurance
reimbursement that resulted in a total recovery of $848,000.

On
or about September 18, 2000, a claim for arbitration was submitted by First Union Securities to the New York Stock Exchange against, among others, the Company and its President
and Chief Executive Officer, Attiazaz Din (the "En Pointe defendants"). First Union alleges that the Company

18

---

and Din violated federal and state securities laws in connection with the promotion and sale of En Pointe stock in the last half of 1999 and the first half of 2000. The En Pointe
defendants dispute jurisdiction and intend to vigorously defend the allegations. The En Pointe defendants filed a declaratory relief claim challenging the arbitarbility of First Union's claims
against Din and the Company (En Pointe Technologies, Inc., et al v. First Union, United States District Court, San Diego, Case No. 02 CV 1246 K (RBB)). The Court ruled that the
claims must be arbitrated.

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

In
February of 2001, the Company and five of the Company's directors, one current officer, and certain former officers along with seven unrelated parties were named in a shareholder
class action complaint alleging that the defendants made misrepresentations regarding the Company and that the individual defendants improperly benefited from the sales of shares of the Company's
common stock and seeking a recovery by the Company's shareholders of the damages sustained as a result of such activities (In Re En Pointe Technologies Securities Litigation, United States
District Court, Southern District of California Case No. 01 CV0205L (CGA)). On February 19, 2002, the En Pointe defendants filed a Motion to Dismiss on the grounds that the
allegations failed to state any actionable claims against the En Pointe Defendants. The motion to Dismiss was granted with leave to amend. Plaintiffs have filed their amended complaint and a
response is due in January 2003. The En Pointe defendants intend to continue to vigorously defend the allegations.

In
December, 2000 the Company and certain current and former directors and officers along with several unrelated parties were named in a complaint alleging that the defendants made
misrepresentations regarding the Company and that the individual defendants improperly benefited from the sales of shares of the Company's common stock and seeking a recovery by the Company's
shareholders of the damages sustained as a result of such activities (Crosby V. En Pointe Technologies, it al., Superior Court of California, County of San Diego, No. GIC 759905). The parties
have stipulated to a stay of the case pending the class action. The En Pointe defendants intend to vigorously defend the allegations.

On
October 5, 2001, an action was brought against the Company by Qamar Zaidi in the San Bernardino County Superior Court, Case No. RCV 058254. The plaintiff, a former employee,
alleges breach of contract, anticipatory breach and repudiation, breach of the implied covenant of good faith and fair dealing, and conversion. The claim asks for $710,000 in damages, $500,000 in
punitive damages, and penalties under the labor code of $150,000. Management, after consulting with legal counsel, has
determined that the potential for an adverse outcome in this litigation cannot be estimated as the case is set for trial in May 2003.

In
March of 2000, an action was brought against the Company in the Orange County Superior Court, Case No. 00CC03948 contending fraud and breach of contract arising from the
purchase by a former subsidiary of the Company of certain assets from a company formerly known as First Source International ("FSI"). The lawsuit is filed by RLC, Inc. Assignee for the benefit
of creditors of a defunct corporation, Paragon Solutions, Inc, formerly known as FSI. It is contended that FSI was unable to obtain their contingent earn-out under the agreement because of
faulty software provided by the Company. Damages sought range between $0.8 to $3.5 million with the plaintiff seeking punitive damages of $10 million. The Company was successful in
compelling the action to be moved to arbitration, but since November 17, 2000 when the Court of Appeals rejected the request by the plaintiff to prohibit arbitration, no arbitration proceedings
have commenced. The Company vigorously

19

---

denies the charges and contends that full disclosure was made as to any problems with the software and that the former subsidiary to this date has not produced net income. The case has remained
dormant for the past two years. Legal counsel is currently unable to predict the outcome of this litigation.

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

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

Not applicable

20

---



PART II

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

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

HIGH

LOWFiscal 2001First quarter

$
9.500

$
2.813Second quarter


5.125


1.000Third quarter


2.800


1.030Fourth quarter


3.500


1.170Fiscal 2002First quarter

$
2.990

$
1.220Second quarter


2.390


1.200Third quarter


1.390


0.860Fourth quarter


1.800


0.700Fiscal 2003First quarter (through 12/20/02)

$
1.150

$
0.320


On
December 20, 2002, the closing sale price for the Common Stock on the NASDAQ National Market was $.80 per share. As of December 20, 2002, there were 63 stockholders of
record of the Common Stock.

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

Equity Compensation Plan Information

The following table sets forth information regarding outstanding options, warrants and rights and shares reserved for future issuance under the Company's existing
equity compensation plans as of September 30, 2002. En Pointe's sole stockholder approved equity compensation plan is the 1996 Stock Incentive Plan. The Employee Stock Purchase Plan was also
approved by the Company's stockholders,

21

---

and is listed separately below. En Pointe does not have any non-stockholder approved equity compensation plans.

|Plan Category                                              |  | Number of securities
to be issued upon exercise
of outstanding options,
warrants and rights as
of September 30, 2002
(a) |  | Weighted-average
exercise price of
outstanding options,
warrants and rights
(b) |      | Number of securities
remaining available for
future issuance under equity
compensation plans as of
September 30, 2002
(excluding securities
reflected in column (a))
(c)
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------- | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Equity compensation plans approved by security holders     |  | 1,242,016                                                                                                                |  | $                                                                               | 5.64 |                                                                                                                                                                         
|Employee Stock Purchase Plan                               |  |                                                                                                                         |  |                                                                                 |     |                                                                                                                                                                         
|Equity compensation plans not approved by security holders |  |                                                                                                                         |  |                                                                                 |     |                                                                                                                                                                         
|Total                                                      |  | 1,242,016                                                                                                                |  | $                                                                               | 5.64 |                                                                                                                                                                         

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data as of September 30, 2002 and 2001 and for the years ended September 30, 2002, 2001 and 2000 have been derived
from the Company's Consolidated Financial Statements and the related notes thereto that have been audited by PricewaterhouseCoopers LLP, independent accountants, which financial statements and
report thereon appear in "Item 8. Financial Statements and Supplementary Data" of this Annual Report on Form 10-K. All other financial data included in "Item 6.
Selected Financial Data" presented in this Form 10-K have been derived from audited financial statements of the Company.

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

22

---

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

|                                                              |                                                              | Fiscal Year Ended September 30, |        
|------------------------------------------------------------- | ------------------------------------------------------------ | ------------------------------- | -------
|
|
|Statement of Operations Data:                                 |                                                              |                                 |        
|Net sales                                                     |                                                              | $                               | 257,043
|Cost of sales                                                 |                                                              |                                 | 229,505
|                                                              |                                                              |                                 |        
|                                                              | Gross profit                                                 |                                 |        
|Operating expenses:                                           |                                                              |                                 |        
|                                                              | Selling and marketing expenses                               |                                 |        
|                                                              | General and administrative expenses                          |                                 |        
|                                                              | Non-recurring (income) charges                               |                                 |        
|                                                              |                                                              |                                 |        
|                                                              |                                                              | Operating (loss) income         |        
|Interest expense                                              |                                                              |                                 | 686    
|Other income, net                                             |                                                              |                                 | (364   
|Gain on sale of assets                                        |                                                              |                                 |       
|Minority interests                                            |                                                              |                                 |       
|                                                              |                                                              |                                 |        
|                                                              | (Loss) income before taxes and income (loss) from affiliates |                                 |        
|(Benefit) provision for income taxes                          |                                                              |                                 | (2,182 
|Income (loss) from affiliates                                 |                                                              |                                 | 674    
|                                                              |                                                              |                                 |        
|                                                              | Net (loss) income                                            |                                 | $      
|                                                              |                                                              |                                 |        
|Net (loss) income per share:                                  |                                                              |                                 |        
|                                                              | Basic                                                        |                                 | $      
|                                                              |                                                              |                                 |        
|                                                              | Diluted                                                      |                                 | $      
|                                                              |                                                              |                                 |        
|Weighted average shares and share equivalents outstanding(1): |                                                              |                                 |        
|                                                              | Basic                                                        |                                 |        
|                                                              |                                                              |                                 |        
|                                                              | Diluted                                                      |                                 |        
|                                                              |                                                              |                                 |        

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

---

23

---

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

SIGNIFICANT FACTORS IN PERFORMANCE

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

CRITICAL ACCOUNTING POLICIES

Management
believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial
statements:

Revenue recognition.Product revenues are recognized upon transfer of title and risk of loss and satisfaction of significant
vendor obligations, if any. Service revenues are recognized based on contracted hourly rates, as services are rendered, or upon completion of specified contracted services. Net sales consist of
product and service revenues, less discounts and estimated allowances for sales returns.

Allowance for doubtful accounts.The Company's estimate of its allowance for doubtful accounts related to trade receivables
is based on two methods. First, the Company evaluates specific accounts over 90 days outstanding and applies 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 over 90 days outstanding, exclusive of the accounts
identified for the specific reserve, in which a percentage is applied that is supportable by historic collection patterns.

Product returns.In general, the Company follows a strict policy of duplicating the terms of its vendor or manufacturers'
product return policies. However, in certain cases the Company 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 ("RMA") 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.

Vendor returns.After product has been returned to vendors under authenticated RMAs, the Company reviews such outstanding
receivables from its vendors and establishes a reserve on product that will not qualify for refund based on a review of specific vendor receivables.

Rebates.Rebates result principally from satisfying various manufacturer sales quotas under certain incentive programs.
Rebate programs are subject to audit by the manufacturer as to whether the sales requirements were actually fulfilled. The Company establishes reserves to cover any losses resulting from subsequent
audits and the return of funds, based on historical patterns of audit results.

Inventory.Although the Company employs a virtual inventory model that generally limits its exposure to inventory losses,
with certain large customers the Company contractually obligates itself 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 the Company's inventory is product that has been returned by customers but is not
acceptable as returnable by the vendor. As a result, the Company exposes itself to losses from such inventory that requires reserves for losses to be established. The Company records reserves on all
returned product and inventory that is over six months old.

24

---

OVERVIEW

The Company initially began its operations in March of 1993 as a reseller of information technology products. In fiscal 1999, the Company began offering
value-added services to its customers. Gradually value-added services represented a larger percentage of total net sales, accounting for 10.5% and 8.5% of the Company's net sales in fiscal years 2002
and 2001, respectively. The gross profit margins on the value-added services that the Company currently offers are significantly higher than the gross profit margins on the Company's information
technology product business, but require additional overhead expense for supervision, idle time, and other expenses related to service offerings that in part offset a portion of the increased margin.

In
the Company's initial operating years, net sales increased at a compound annual growth rate of 35.1% increasing from $110.0 million in fiscal 1994 to $668.3 million in
fiscal 1999. Seasonal trends were not prominent in the Company's business, although the March quarter was historically regarded as one of the least promising quarters. The past growth in net sales was
principally driven by a robust economy and information technology market that accommodated the Company's business model and allowed it to expand geographically through the opening of sales offices.
However, in fiscal 2000 the Company experienced its first annual decline of $173.8 million in sales due to a softer information technology market and difficulties in transitioning to a new ERP
business system. Fiscal years 2002 and 2001 have continued the negative trend with declines of $108.3 and $129.1 million, respectively, in net sales. Since the December quarter of 1999,
quarterly net sales consistently declined for twelve consecutive quarters when compared to prior fiscal year quarters. The quarterly rate of decline for the four quarters of the current 2002 fiscal
year, while still negative, appears to be lessening to some degree with the percentage decline narrowing to a single-digit 7.7% in the September quarter as compared with increasing larger percentage
declines of 29.3%, 36.4%, and, 37.1% for the earlier sequential quarters.

In
fiscal years 2001 and 2000 in response to declining sales, the Company conducted two restructurings of its sales and administrative force. Some leased sales offices were converted
into virtual offices in which employees work from home-based offices with additional technical and administrative support supplied by corporate headquarters to assist field personnel in
customer support.

Operating
expenses, exclusive of non-recurring charges, were $34.4 million, a continued reduction from prior year core operating expenses of $41.0 million.
Non-recurring charges declined $1.7 million, which combined with the $6.6 million decline in other operating expenses lessened the impact of the $12.0 million gross
profits decline and resulting in an operating loss of $6.0 million.

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

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

25

---

In
June of 1998, firstsource corp. ("Firstsource", formerly firstsource.com and Purchase Pointe, Inc.), a wholly-owned subsidiary, began operations as an Internet based
business-to-business provider of products and services. From a series of private placements of equity capital, the Company's voting interest in May 2000 dropped below
50%. With the Company not otherwise having effective control over Firstsource, the Company began accounting for its investment in its former subsidiary under the equity method of accounting. On
April 10, 2001, Firstsource ceased operations entirely and all of its assets were assigned to Sherwood Partners, Inc. (unaffiliated with the Company), as an assignee for the benefit of
creditors.

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

In
a series of private placements of equity capital that began in February 2000 that were undertaken to raise additional capital, the Company's voting interest was eventually
reduced to 38.69%. With the Company's interest dropping below 50% and not otherwise having control over its former subsidiary, the Company began in April of 2000 accounting for its SupplyAccess
investment under the equity method of accounting.

On
September 21, 2001, the Company in settlement of a dispute with SupplyAccess, agreed to pay SupplyAccess $1.1 million for the assignment and transfer of the
En Pointe SAP application software and certain other listed assets. In so doing, effective October 1, 2001, the Company cancelled the balance of the note receivable from SupplyAccess of
$750,000 and agreed to assume the information technology responsibilities previously assigned to SupplyAccess.

In
January 2002, a majority of the shareholders of SupplyAccess approved the transfer of the assets of SupplyAccess to a liquidator for the benefit of creditors. At the time of
this transfer, En Pointe owned approximately 39% of the voting securities of SupplyAccess. In connection with the liquidation of SupplyAccess in February 2002, the Company acquired full
rights to AccessPointetm as well as the intellectual rights to all of SupplyAccess software, copyrights, trade secrets and other proprietary rights.

26

---

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 30,2002

2001

2000Net sales

100.0
%
100.0
%
100.0
%Cost of sales

89.3

89.2

90.2Gross profit

10.7

10.8

9.8Selling and marketing expenses

9.2

8.2

9.2General and administrative expenses

4.2

3.0

4.6Non-recurring (income) charges

(0.4
)
0.2

0.5Operating loss

(2.3
)
(0.6
)
(4.5
)Interest expense, net

0.3

0.3

0.4Other income, net

(0.1
)
(0.1
)
(0.8
)Gain on sale of assets





(0.1
)Minority interest





(0.1
)Loss before income taxes and income (losses) from affiliates

(2.5
)
(0.8
)
(3.9
)(Benefit) provision for income taxes

(0.9
)


0.1Income (losses) from affiliates

0.3

2.3

(0.1
)Net (loss) income

(1.3
)%
1.5
%
(3.9
)%


COMPARISON OF FISCAL YEARS ENDED SEPTEMBER 30, 2002 AND 2001

NET SALES.Net sales decreased $108.3 million, or 29.6%, to $257.0 million in fiscal 2002 from
$365.3 million in fiscal 2001. The decline represents a continuation of weak capital spending by business that has been noted in the quarterly reports. While the decline in net sales has been
persistent over the past eight quarters, the most severe decline of 46.1% in quarter-over-prior-year-quarter net sales occurred in the last quarter of
fiscal year 2001. Following closely on the heels of that decline, the first quarter of fiscal year 2002 registered a negative 37.1%. Since the first quarter of fiscal 2002, quarter declines have
moderated. For the March, June, and September quarters of fiscal 2002 the percentage declines were 36.4%, 29.3%, and 7.7% respectively.

Product
net sales decreased $104.5 million, or 31.3%, to $229.6 million in fiscal 2002 from $334.1 million in fiscal 2001. The $104.5 million decrease is
exclusive of $0.4 million of miscellaneous excess credits previously granted to customers that were taken to income as a part of an ongoing process to improve customer transaction processing.
Service revenues also declined $4.1 million, or 13.2%, to $27.1 million in fiscal 2002 from $31.2 million in fiscal 2001.

For
the year ended September 30, 2002, two of the Company's major customers accounted for $54.5 million or 21.2% of net sales revenues, as follows with amounts stated in
millions:

Fiscal Year 2002
Net Sales $

%

Fiscal Year 2001
Net Sales $

%Customer 1

28.7

11.2
%
28.9

7.9
%Customer 2

25.8

10.0
%
60.8

16.6
%54.5

21.2
%
89.7

24.5
%


27

---



GROSS PROFIT.The decline in net sales directly impacted gross profits, reducing gross profits by $12.0 million or
30.3% to $27.5 million in fiscal 2002 from $39.5 million for 2001. Gross profits expressed as a percentage of net sales also slid fractionally by a tenth of a percent to 10.7% in 2002
from 10.8% in 2001.

The
$12.0 million decline in gross profits can be traced to lower margins on product sales. Product gross profits decreased $10.8 million or 38.4% to $17.5 million
from $28.3 million in the prior fiscal year. Expressed as a percentage of net sales, the product gross profit percentage declined from 8.5% in the prior fiscal year to 7.6%. The decline in
product gross profit is attributable to more aggressive pricing policies employed for capturing market share, including large sales of Microsoft software licenses at relatively low margins, as well as
a lessening in rebate income that is dependent on volume sales and manufacturer/vender availability.

Service
gross profits also fell as a result of the 13.2% decline in service revenues, registering a total decline of $1.0 million or 9.5% to $10.1 million from
$11.1 million in the prior fiscal year. However, service gross profits expressed as a percentage of service revenues increased 1.5% to 37.2% from the 35.7% in the prior fiscal year.

SELLING AND MARKETING EXPENSES.Selling and marketing expenses decreased $6.4 million or 21.1% to $23.6 million
in fiscal 2002, from $30.0 million in fiscal 2001. Most of the $6.4 million decrease, $5.9 million, relates to the reduction of commissions, salaries and wage related benefits.
Since sales commissions are computed based on gross margin dollars under the Company's method of commission payment, declines in gross profits, as was experienced in the 2002 fiscal year, will
directly reduce commission expense. Because declining sales volume provides less of a base for spreading certain fixed selling and marketing expenses, selling and marketing expenses when expressed as
a percentage of net sales increased 1.0% to 9.2% in 2002 from 8.2% in 2001.

GENERAL AND ADMINISTRATIVE EXPENSES.General and administrative expenses decreased a very slight $0.2 million or 2.2%
to $10.8 million in fiscal 2002, from $11.0 million in fiscal 2001. A reduction in facilities related expense, including rent reduction from renegotiation of the headquarters lease
contributed to the reduction in general and administrative expense. As with selling and marketing expenses, when general and administrative expenses are expressed as a percentage of net sales, such
expenses show an increase of 1.2% from 3.0% to 4.2% in fiscal 2002, which can be attributable again to the decline in net sales volume.

NON-RECURRING (INCOME) CHARGES.Non-recurring income of $0.9 million in fiscal 2002 primarily
resulted from the settlement of a litigation claim, $0.8 million. In the settled litigation claim, the Company was liable for a total of $1.6 million under various Court decisions
(including accrued interest) and settled for $1.2 million. In addition, there was a recovery of $0.8 million of insurance reimbursement relating to previously expensed legal fees offset
by other legal costs of $0.4 million.

OPERATING LOSS.Operating loss increased $3.7 million, or 154.5%, to a loss of $6.0 million in fiscal 2002 from
a $2.3 million operating loss in fiscal 2001. Although total operating expenses decreased $8.3 million in fiscal 2002 to $33.5 million from $41.8 million in fiscal 2001,
the decrease was insufficient to compensate for the $12.0 million decline in gross profits. Because of declining sales volume, providing less base for spreading expenses, operating loss when
expressed as a percentage of net sales increased 1.7% to 2.3% in 2002 from 0.6% in 2001.

INTEREST EXPENSE.Interest expense is net of interest income of $0.1 million. Interest expense incurred under the
Foothill financing agreement consisted principally of 1% charges for acting as guarantor to IBMCC in order for IBMCC to provide a 30-day interest-free flooring to the Company.
In addition to the 1% guarantee charge, Foothill charged from 6% to 63/4% per annum for float and 0.3% per annum for any unused credit line. Total interest and related charges paid to
Foothill amounted to $0.2 million ($0.1 million less than the prior fiscal year). Most of the interest expense,

28

---

$0.6 million in both fiscal years 2002 and 2001, incurred by the Company represents interest expense related to the Ontario facility lease that is being treated as a financing lease and is
presently carried as a long-term liability.

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

Total
income from reversal of losses for the year amounted to $0.7 million, which includes $0.3 million of profit on past sales to affiliates, $0.2 million of
estimated costs in transitioning information technology services the related costs for which were previously incurred and reported in operations in the first quarter of the current fiscal year, and
$0.2 million for lease guarantees for one of its former affiliates. The much larger prior fiscal year income from the reversal of losses of $8.4 million included a reversal of
$7.0 million of lender guarantees provided by the Company to one of its affiliates along with the reduction of information technology reserves for the resumption of information technology
responsibilities and the reversal of a note reserve related to an affiliate.

(BENEFIT) PROVISION FOR INCOME TAXES.The Company files a consolidated federal income tax return, while for many of its state
tax returns it files separately under the name of its wholly-owned sales subsidiary (En Pointe Technologies Sales, Inc.) that is qualified to do business in all fifty states. With the
March 9, 2002 passage of the "Job Creation and Worker Assistance Act of 2002" tax law, the Company recognized an unanticipated net $1.5 million federal income tax benefit in the second
quarter of fiscal year 2002. The tax bill allowed the Company to carry back net operating losses ("NOLs") arising from the current fiscal year as well as from the prior fiscal year to recover taxes
from the two fiscal years ended September 30, 1997 and 1996 that were previously closed to such carry backs.

The
total tax benefits recognized by the Company under the new tax law were $2.8 million for the year, of which $0.9 million was from prior year NOL. Offsetting, in part,
the $2.8 million of federal tax benefits for NOLs, was $0.6 million of tax expense, most of which related to a prior year amended Federal income tax return. In carrying tax losses back
to prior years the Company has exhausted all of its benefits from recovery of taxes paid in prior years so that any future losses will have to be carried forward to apply to future income years. As of
September 30, 2002 the Company had $8.7 million of such NOLs that may be carried forward of which $4.7 million NOL will be considered an adjustment to additional
paid-in capital and will not benefit future earnings, since that portion of the NOL was attributable to the exercise of stock options by employees which had not been recognized as expense
for financial statement purposes.

NET (LOSS) INCOME.A net loss of $3.4 million was realized for the current fiscal year as compared to net income of
$5.4 million in the prior fiscal year. The net effect of the change from net income to net loss amounted to $8.8 million. A decrease in gross profits of $12.0 million, offset, in
part, by a reduction in operating expenses of $8.3 million resulted in an operating loss change to $3.7 million. However, the $3.7 million operating loss change was further
adversely impacted by $5.4 million, consisting of $7.7 million less benefits from the reversal of losses from affiliates reduced by the $2.3 million of tax benefits from the 2002
tax law change. As a percentage of net sales, the net loss was 1.3%, as compared with a net income of 1.5% in fiscal 2001.

29

---

COMPARISON OF FISCAL YEARS ENDED SEPTEMBER 30, 2001 AND 2000

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

Fiscal
2001 quarterly net sales compared to the respective prior fiscal year quarters have shown a consistent negative trend throughout the fiscal year. Percentage declines commencing
with the first quarter of the fiscal year were 13.5%, 22.4%, 23.3%, and 46.0%, respectively. Sequentially net sales declined in every quarter of fiscal 2001 except for the June quarter, which
registered a modest 0.8% increase.

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

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

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

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

30

---

reported in fiscal 2000, when a $1.5 million restructuring charge and $1.2 million charge related for plaintiff attorney fees and costs that were awarded by the court (and subsequently
on appeal reversed in 2001) were recognized.

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

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

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

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

During fiscal 2002 operating activities provided cash totaling $0.9 million compared with $31.8 million in the prior fiscal year. The major factor
for the $30.9 million reduction in cash provided from operations was from a greater $42.0 million reduction in accounts receivable experienced in fiscal 2001, than was achieved in fiscal
2002, attributable, in large part, to the sharp 46.0% decline in fiscal 2001 fourth quarter net sales from those of the prior fiscal year's quarter.

31

---

The
Company's accounts receivable balance, net of allowances for returns and doubtful accounts, at September 30, 2002 and 2001, was $31.7 million and $36.8 million,
respectively. The number of days' sales outstanding in accounts receivable increased to 45 days from 37 days, as of September 30, 2002 and 2001, respectively. However, when
computing the number of days' sales outstanding in accounts receivable on fourth quarter fiscal 2002 net sales, such number decreased to 47 days, compared to 51 days in the prior fiscal
year.

Investing
activities used cash totaling $0.9 million for fiscal 2002 which is relatively unchanged from the $0.9 million in the prior fiscal year. The cash used from
investing activities in fiscal 2002 was for the acquisition of property and equipment.

Financing
activities provided net cash totaling $3.1 million in fiscal 2002, while using cash of $31.9 million in fiscal 2001. The cash provided in fiscal 2002 was chiefly
from net borrowings of $3.0 million under the Company's lines of credit while the primary use of cash from financing activities in fiscal 2001 was to pay down $31.8 million on the
Company's lines of credit that resulted from the $42.0 million reduction in accounts receivable.

As
of September 30, 2002, the Company had approximately $4.6 million in cash and working capital of $16.8 million. The Company has a three-year
$30.0 million revolving credit facility with Foothill Capital Corporation ("Foothill") that expires on December 28, 2004. The credit facility is collateralized by accounts receivable and
all other assets of the Company. In addition, IBM Credit Corporation ("IBMCC") continued to provide the Company with a 30-day interest-free inventory flooring financing for up
to $20.0 million under a separate one-year agreement expiring on December 28, 2003. As of September 30, 2002, most of the Company's borrowings under its credit lines
were concentrated in the $12.4 million borrowings outstanding under its IBMCC 30-day interest-free flooring agreement. The Company had additional borrowing capacity of
approximately $7.6 million after taking into consideration the available collateral and borrowing limitations under its financing agreements. Borrowings under
both lending agreements are collateralized by substantially all of the Company's assets. In addition, the lines of credit contains certain financing and operating covenants relating to net worth,
liquidity, profitability, repurchase of indebtedness and prohibition on payment of dividends, as well as restrictions on the use of proceeds obtained under the line. At September 30, 2002 the
Company was in compliance with all of the loan covenants.

Borrowing
availability on the Foothill credit facility is directly reduced by any outstanding flooring financings. The financing agreement with Foothill includes a guarantee to IBMCC for
the amount outstanding on the flooring line up to a maximum of $20 million. In consideration for providing the guarantee, the Foothill agreement contains a 1% annual charge provision on the
average outstanding balances owing to IBMCC. The Foothill agreement initially provided for a maximum interest rate of one and a half percent over the prime rate with any reduction in interest rates
being dependent upon the Company meeting certain earnings targets. Under a July 30, 2002 amendment to the Foothill agreement discussed below, the maximum rate for interest, which is based on
certain targets related to "earnings before interest, taxes, depreciation and amortization ("EBITDA"), was increased by 0.5% to prime rate plus 2.00% or the LIBOR rate plus 4.25%.

In
its June fiscal 2002 quarter, the Company estimated that it was possible that if the loss trends noted in and through such quarter continued, that the Company would be unable to meet
its June 2002 quarter EBITDA covenants under its existing lines of credit with Foothill and IBMCC, respectively, and would be in default under the terms of such agreements. To avert such a
default, the Company renegotiated its lines of credit to ease the EBITDA covenant requirements and signed an amendment to the loan agreement with Foothill on July 30, 2002 and then subsequently
with IBMCC on August 6, 2002. Under the new covenants for both loan agreements, the EBITDA for the nine months ended June 30, 2002 could not exceed a negative $3.0 million.
Thereafter, EBITDA is measured on a cumulative rolling four quarter basis ending on the last day of each fiscal quarter, with the

32

---

September 30, 2002 quarter being set at a negative $3.8 million, the December 31, 2002 quarter a negative $2.3 million, the March 31, 2003 quarter a negative
$1.5 million, the June 30, 2003 quarter a positive $1.2 million, the September 30, 2003 quarter a positive $2.5 million, and all fiscal quarters thereafter remaining
at the same positive $2.5 million. Two other financial covenants that were previously in place, tangible net worth of $17.0 million and an annual limitation on maximum asset acquisitions
of $1.2 million, remained the same.

On
November 21, 2002 IBMCC extended their $20.0 million interest-free flooring financing agreement through December 28, 2003. Under terms of the
amendment, IBMCC added a provision that limits on hand inventory flooring amounts to $3.0 million, which the Company believes is adequate for its anticipated on-hand inventory
needs.

As
reflected in the financial statements contained in Part IV, Item 15, the Company has experienced declining sales and losses from operations in each of the last three
fiscal years ended September 30, 2002. Sales declines of approximately $34.2 million and operating losses of approximately $10.0 million in fiscal 2000 were attributable to the
activities of former subsidiaries which have since been deconsolidatedsee Note 2 "Investment in Affiliates." Management believes that, with the exception of
the amounts related to the deconsolidated former subsidiaries, the remainder of the Company's sales declines and losses are primarily attributable to an industry-wide decline in
information technology spending.

In
order to counter the sales and profitability declines, the Company completed two restructurings in fiscal years 2001 and 2000 in which certain fixed occupancy and payroll costs were
reduced. In addition, in the second quarter of fiscal 2002, there was a change in certain key executives. As part of that change, the Chairman and CEO returned to his former position as President of
the Company with responsibility for day-to-day operations. In addition, the Company rehired its former Senior Vice President of Sales and certain senior sales employees who had
previously worked at the Company. The new management team has taken the following actions intended to increase sales and improve profitability:



As
discussed above, the Company has a $30 million line of credit agreement with Foothill Capital Corporation ("Foothill"), which expires in December 2004. The Company also
has a $20 million inventory flooring agreement with IBM Credit Corporation ("IBMCC"), which expires on December 28, 2003. Borrowings under the inventory flooring agreement serve to
reduce the availability of financing available under the line of credit agreement. Management believes that the financing available to the Company under these credit agreements, together with its own
working capital

33

---

resources (at September 30, 2002, the Company had net working capital of approximately $16.8 million) will provide the Company with sufficient working capital to finance its operations
through at least the next fiscal year.

Also
as discussed above, both the Foothill and IBMCC agreements contain certain restrictive covenants requiring, among other things, the maintenance of specified levels of tangible net
worth and the attainment of specified amounts of profitability. Management believes that the operating plans it has implemented will enable it to maintain compliance with its covenants through at
least September 30, 2003. However, there can be no assurance that management's plans will be successful in improving the Company's sales and profitability. If the Company is unable to maintain
compliance with its loan covenants and if such noncompliance is not waived by the lenders, the working capital line of credit and flooring line could be revoked prior to their expiration dates. In
such eventuality, management believes that it has sufficient working capital to enable it to continue to operate through at least September 30, 2003. However, the Company would be required to
significantly scale down its business plans if it were unable to obtain alternative sources of financing.

RECENTLY ISSUED ACCOUNTING STANDARDS

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

In
June 2001, the FASB issued SFAS No. 143, "Accounting for Asset RetirementObligations." This statement establishes standards for accounting for obligations
associated with the retirement of tangible long-lived assets. The Company must adopt this standard on January 1, 2003. Management is currently assessing the impact of the standard.

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

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 nullifies Emerging Issues Task Force
(EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity," under which a liability for an exit cost was recognized
at the date of an entity's commitment to an exit plan. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized
at fair value when the liability is incurred. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company presently has very limited exposure to market risk from changes in interest rates from borrowings under its lines of credit. The Company's primary
working capital financing agreement is with Foothill. While Foothill's lending agreement provides for interest at a maximum rate of 2% over

34

---

prime, IBMCC, in a separate lending agreement, provides 30-day free flooring, with the stipulation that Foothill guarantees any Company borrowings. For the guarantee to IBMCC, Foothill
charges the Company a 1% on outstanding balances. Through judicious use of its IBMCC interest-free flooring, the Company has been able to largely limit its interest charges to 1% on
borrowings in fiscal year 2002. Because of the Company's ability to have available interest-free flooring, assuming interest rates increase by an assumed percentage in the next fiscal
year, there would be no financial impact upon the Company for the incremental increase, so long as the Company is successful in limiting its borrowing to its $20 million 30-day
interest-free flooring. Borrowings in excess of $20 million would, of course, be subject to Foothill's borrowing rate of 2% over prime (with the prime rate at 4.75% as of
September 30, 2002 and subsequently lowered to 4.25% effective November 7, 2002).

The
Company is also committed to 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. The Company has 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

None.

35

---

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

There is hereby incorporated by reference the information appearing under the captions "ELECTION OF DIRECTORS AND EXECUTIVE OFFICERS" and "COMPLIANCE WITH
SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934" from the Company's definitive proxy statement for the 2003 Annual Meeting of the Stockholders to be filed with the Commission on or before
January 28, 2003.

ITEM 11. EXECUTIVE COMPENSATION

There is hereby incorporated by reference information appearing under the caption "EXECUTIVE COMPENSATION" from the Company's definitive proxy statement for the
2003 Annual Meeting of Stockholders to be filed with the Commission on or before January 28, 2003.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

There is hereby incorporated by reference the information appearing under the caption "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" from the
Company's definitive proxy statement for the 2003 Annual Meeting of Stockholders to be filed with the Commission on or before January 28, 2003.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There is hereby incorporated by reference the information appearing under the caption "EXECUTIVE COMPENSATION" and "CERTAIN TRANSACTIONS" from the Company's
definitive proxy statement for the 2003 Annual Meeting of Stockholders to be filed with the Commission on or before January 28, 2003.

ITEM 14. CONTROLS AND PROCEDURES

Within 90 days prior to the date of this report, an evaluation was performed under the supervision and with the participation of the Company's management,
including the CEO and CFO, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Company's management, including the CEO
and CFO, concluded that the Company's disclosure controls and procedures were effective in timely alerting them to material information required to be included in the Company's periodic filings under
the Exchange Act of 1934. No significant changes in En Pointe's internal controls or in other factors have occurred that could significantly affect these internal controls subsequent to the
evaluation.

36

---

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K





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







37

---





En Pointe Technologies, Inc.  INDEX TO FINANCIAL STATEMENTS

|                                                                                                                   |  | Page
|------------------------------------------------------------------------------------------------------------------ |  | ----
|Report of Independent Accountants                                                                                  |  | F-2 
|Consolidated Balance Sheets as of September 30, 2002 and 2001                                                      |  | F-3 
|Consolidated Statements of Operations for each of the Three Years in the Period Ended September 30, 2002           |  | F-4 
|Consolidated Statements of Stockholders' Equity for each of the Three Years in the Period Ended September 30, 2002 |  | F-5 
|Consolidated Statements of Cash Flows for each of the Three Years in the Period Ended September 30, 2002           |  | F-6 
|Notes to Consolidated Financial Statements                                                                         |  | F-7 
|Schedule IIValuation and Qualifying Accounts                                                                      |  | F-26

F-1

---

REPORT OF INDEPENDENT ACCOUNTANTS

Board
of Directors and Stockholders
En Pointe Technologies, Inc.

In
our opinion, the consolidated financial statements listed in the accompanying index on page F-1 present fairly, in all material respects, the consolidated financial
position of En Pointe Technologies, Inc. and its subsidiaries at September 30, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the
period ended September 30, 2002, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule
listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These
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 audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/
PRICEWATERHOUSECOOPERS LLP

Los
Angeles, California
November 25, 2002

F-2

---



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

|                                                                         |                                                                                                                                                                              | September 30,                              |      
|------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | -----
|
|ASSETS:                                                                  |                                                                                                                                                                             
|Current assets:                                                          |                                                                                                                                                                              |                                            |      
|                                                                         | Cash                                                                                                                                                                         |                                            | $    
|                                                                         | Restricted cash                                                                                                                                                              |                                            |      
|                                                                         | Accounts receivable, net of allowance for returns and doubtful accounts of $1,644 and $2,602, respectively                                                                   |                                            |      
|                                                                         | Inventories, net of allowances of $147 and $1,069, respectively                                                                                                              |                                            |      
|                                                                         | Recoverable taxes                                                                                                                                                            |                                            |      
|                                                                         | Prepaid expenses and other current assets                                                                                                                                    |                                            |      
|                                                                         |                                                                                                                                                                              |                                            |      
|                                                                         |                                                                                                                                                                              | Total current assets                       |      
|Property and equipment, net of accumulated depreciation and amortization |                                                                                                                                                                              |                                            | 7,002
|Other assets                                                             |                                                                                                                                                                              |                                            | 551  
|                                                                         |                                                                                                                                                                              |                                            |      
|                                                                         |                                                                                                                                                                              | Total assets                               |      
|                                                                         |                                                                                                                                                                              |                                            |      
|LIABILITIES AND STOCKHOLDERS' EQUITY:                                    |                                                                                                                                                                             
|Current liabilities:                                                     |                                                                                                                                                                              |                                            |      
|                                                                         | Accounts payable, trade                                                                                                                                                      |                                            | $    
|                                                                         | Borrowings under lines of credit                                                                                                                                             |                                            |      
|                                                                         | Accrued legal                                                                                                                                                                |                                            |      
|                                                                         | Accrued employee compensation and benefits                                                                                                                                   |                                            |      
|                                                                         | Other accrued liabilities                                                                                                                                                    |                                            |      
|                                                                         | Deferred service revenues                                                                                                                                                    |                                            |      
|                                                                         | Other current liabilities                                                                                                                                                    |                                            |      
|                                                                         |                                                                                                                                                                              |                                            |      
|                                                                         |                                                                                                                                                                              | Total current liabilities                  |      
|Long term liability                                                      |                                                                                                                                                                              |                                            | 5,433
|Losses in excess of investment in unconsolidated affilitates             |                                                                                                                                                                              |                                            | 143  
|                                                                         |                                                                                                                                                                              |                                            |      
|                                                                         |                                                                                                                                                                              | Total liabilities                          |      
|                                                                         |                                                                                                                                                                              |                                            |      
|Commitments and contingencies (Note 9)                                   |                                                                                                                                                                              |                                            |      
|Stockholders' equity:                                                    |                                                                                                                                                                              |                                            |      
|                                                                         | Preferred stock, $.001 par value:
Shares authorized5,000,000
No shares issued or outstanding                                                                                |                                            |      
|                                                                         | Common stock, $.001 par value:
Shares authorized40,000,0002002; 6,721,827 shares issued and 6,719,875 outstanding; 2001; 6,656,708 shares issued and 6,554,708 outstanding |                                            |      
|                                                                         | Additional paid-in capital                                                                                                                                                   |                                            |      
|                                                                         | Unearned compensation                                                                                                                                                        |                                            |      
|                                                                         | Treasury stock, at cost; 1,952 shares and 102,000 shares in 2002 and 2001, respectively                                                                                      |                                            |      
|                                                                         | Accumulated deficit                                                                                                                                                          |                                            |      
|                                                                         |                                                                                                                                                                              |                                            |      
|                                                                         | Total stockholders' equity                                                                                                                                                   |                                            |      
|                                                                         |                                                                                                                                                                              |                                            |      
|                                                                         |                                                                                                                                                                              | Total liabilities and stockholders' equity |      
|                                                                         |                                                                                                                                                                              |                                            |      

See
Notes to Consolidated Financial Statements.

F-3

---

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

|                                                             |                                                            | Year Ended September 30,     |        
|------------------------------------------------------------ | ---------------------------------------------------------- | ---------------------------- | -------
|
|Net sales                                                    |                                                            |                              |        
|                                                             | Product                                                    |                              | $      
|                                                             | Service                                                    |                              |        
|                                                             |                                                            |                              |        
|                                                             |                                                            | Total net sales              |        
|                                                             |                                                            |                              |        
|Cost of sales                                                |                                                            |                              |        
|                                                             | Product                                                    |                              |        
|                                                             | Service                                                    |                              |        
|                                                             |                                                            |                              |        
|                                                             |                                                            | Total cost of sales          |        
|                                                             |                                                            |                              |        
|Gross profit                                                 |                                                            |                              |        
|                                                             | Product                                                    |                              |        
|                                                             | Service                                                    |                              |        
|                                                             |                                                            |                              |        
|                                                             |                                                            | Total gross profit           |        
|Selling and marketing expenses                               |                                                            |                              | 23,631 
|General and administrative expenses                          |                                                            |                              | 10,783 
|Non-recurring (income) charges                               |                                                            |                              | (918   
|                                                             |                                                            |                              |        
|                                                             | Operating loss                                             |                              |        
|Interest expense, net                                        |                                                            |                              | 686    
|Other income, net                                            |                                                            |                              | (364   
|Gain on sale of assets                                       |                                                            |                              |        
|Minority interest                                            |                                                            |                              |       
|                                                             |                                                            |                              |        
|Loss before income taxes and income (losses) from affiliates |                                                            |                              | (6,280 
|(Benefit) provision for income taxes                         |                                                            |                              | (2,182 
|Income (losses) from affiliates                              |                                                            |                              | 674    
|                                                             |                                                            |                              |        
|                                                             | Net (loss) income                                          |                              | $      
|                                                             |                                                            |                              |        
|                                                             |                                                            | Net (loss) income per share: |        
|                                                             |                                                            |                              | Basic  
|                                                             |                                                            |                              |        
|                                                             |                                                            |                              | Diluted
|                                                             |                                                            |                              |        
|                                                             | Weighted average shares and share equivalents outstanding: |                              |        
|                                                             |                                                            |                              | Basic  
|                                                             |                                                            |                              |        
|                                                             |                                                            |                              | Diluted
|                                                             |                                                            |                              |        

See
Notes to Consolidated Financial Statements.

F-4

---



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

|                              |                                                                      | Common Stock |     |   |   |   |   |        |       | (Accumulated
Deficit)
Retained
Earnings |      |        |  
|----------------------------- | -------------------------------------------------------------------- | ------------ | --- | - | - | - | - | ------ | ----- | --------------------------------------- | ---- | ------ | -
|
|
|Balance at September 30, 1999 |                                                                      | 6,076        |     | $ | 6 |   | $ | 36,896 |       | $                                       |     |        | $
|                              | Issuance of common stock under stock option and stock purchase plans |              | 404 |   |   | 1 |   |        | 3,375 |                                         |      |       |  
|                              | Issuance of common stock on exercise of warrants                     |              | 49  |   |   |  |   |        |      |                                         |      |       |  
|                              | Treasury stock purchased                                             |              |    |   |   |  |   |        |      |                                         |      | (1,000 | )
|                              | Treasury stock issued under stock plans                              |              |    |   |   |  |   |        | (312  | )                                       |      | 482    |  
|                              | Income tax benefits related to stock options                         |              |    |   |   |  |   |        | 883   |                                         |      |       |  
|                              | Effect of deconsolidation                                            |              |    |   |   |  |   |        | 63    |                                         |      |       |  
|                              | Net loss                                                             |              |    |   |   |  |   |        |      |                                         |      |       |  
|                              |                                                                      |              |     |   |   |   |   |        |       |                                         |      |        |  
|Balance at September 30, 2000 |                                                                      | 6,529        |     |   | 7 |   |   | 40,905 |       |                                         | (518 | )      |  
|                              | Issuance of common stock under stock option and stock purchase plans |              | 127 |   |   |  |   |        | 225   |                                         |      |       |  
|                              | Deferred compensation                                                |              |    |   |   |  |   |        | 52    |                                         |      |       |  
|                              | Amortization of deferred compensation                                |              |    |   |   |  |   |        |      |                                         |      |       |  
|                              | Treasury stock purchased                                             |              |    |   |   |  |   |        |      |                                         |      | (253   | )
|                              | Treasury stock issued under stock plans                              |              |    |   |   |  |   |        |      |                                         |      | 557    |  
|                              | Net income                                                           |              |    |   |   |  |   |        |      |                                         |      |       |  
|                              |                                                                      |              |     |   |   |   |   |        |       |                                         |      |        |  
|Balance at September 30, 2001 |                                                                      | 6,656        |     | $ | 7 |   | $ | 41,182 |       | $                                       | (214 | )      | $
|                              | Issuance of common stock under stock purchase plan                   |              | 65  |   |   |  |   |        | 59    |                                         |      |       |  
|                              | Amortization of deferred compensation                                |              |    |   |   |  |   |        |      |                                         |      |       |  
|                              | Treasury stock issued under stock plans                              |              |    |   |   |  |   |        |      |                                         |      | 210    |  
|                              | Net loss                                                             |              |    |   |   |  |   |        |      |                                         |      |       |  
|                              |                                                                      |              |     |   |   |   |   |        |       |                                         |      |        |  
|Balance at September 30, 2002 |                                                                      | 6,721        |     | $ | 7 |   | $ | 41,241 |       | $                                       | (4   | )      | $
|                              |                                                                      |              |     |   |   |   |   |        |       |                                         |      |        |  

See
Notes to Consolidated Financial Statements.

F-5

---

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

|                                                                               |                                                                       | Year Ended September 30, |       
|------------------------------------------------------------------------------ | --------------------------------------------------------------------- | ------------------------ | ------
|
|Net (loss) income                                                              |                                                                       | $                        | (3,424
|Adjustments to reconcile net income (loss) to net cash provided by operations: |                                                                       |                          |       
|                                                                               | Depreciation and amortization                                         |                          |       
|                                                                               | Gain on disposal of assets                                            |                          |       
|                                                                               | Loss on disposal of assets related to restructuring                   |                          |       
|                                                                               | Allowance for doubtful accounts                                       |                          |       
|                                                                               | (Reduction) allowance for returns and other allowances                |                          |       
|                                                                               | (Reduction) allowance for inventory obsolescense                      |                          |       
|                                                                               | Deferred taxes                                                        |                          |       
|                                                                               | Amortization of deferred compensation                                 |                          |       
|                                                                               | Minority interest in loss of subsidiary                               |                          |       
|                                                                               | Loss reversal income from affiliates                                  |                          |       
|Changes in operating assets and liabilities:                                   |                                                                       |                          |       
|                                                                               | Restricted cash                                                       |                          |       
|                                                                               | Marketable securities                                                 |                          |       
|                                                                               | Accounts receivable                                                   |                          |       
|                                                                               | Inventories                                                           |                          |       
|                                                                               | Recoverable taxes                                                     |                          |       
|                                                                               | Prepaid expenses and other current assets                             |                          |       
|                                                                               | Other assets                                                          |                          |       
|                                                                               | Accounts payable, trade                                               |                          |       
|                                                                               | Accrued expenses                                                      |                          |       
|                                                                               | Other current liabilities and deferred revenues                       |                          |       
|                                                                               | Losses in excess of investments in unconsolidated affiliates          |                          |       
|                                                                               |                                                                       |                          |       
|                                                                               | Net cash provided by operating activities                             |                          |       
|                                                                               |                                                                       |                          |       
|Proceeds from sale of property                                                 |                                                                       |                          |      
|Proceeds from sale of investment                                               |                                                                       |                          |      
|Proceeds from notes receivable from affiliates                                 |                                                                       |                          |      
|Purchase of property and equipment                                             |                                                                       |                          | (901  
|Net equity in deconsolidated subsidiaries                                      |                                                                       |                          |      
|Reduction in cash due to deconsolidation                                       |                                                                       |                          |      
|                                                                               |                                                                       |                          |       
|                                                                               | Net cash used by investing activities                                 |                          |       
|                                                                               |                                                                       |                          |       
|Net borrowings (repayments) under lines of credit                              |                                                                       |                          | 2,981 
|Net proceeds from sale of shares in subsidiary                                 |                                                                       |                          |      
|Payment on notes payable                                                       |                                                                       |                          | (91   
|Net proceeds from sale of common stock under employee plans                    |                                                                       |                          | 194   
|Treasury stock purchases                                                       |                                                                       |                          |      
|                                                                               |                                                                       |                          |       
|                                                                               | Net cash provided (used) by financing activities                      |                          |       
|                                                                               |                                                                       |                          |       
|Increase (decrease) in cash                                                    |                                                                       |                          | 3,045 
|Cash at beginning of year                                                      |                                                                       |                          | 1,584 
|                                                                               |                                                                       |                          |       
|Cash at end of year                                                            |                                                                       | $                        | 4,629 
|                                                                               |                                                                       |                          |       
|Supplemental disclosures of cash flow information:                             |                                                                       |                          |       
|                                                                               | Interest paid                                                         |                          | $     
|                                                                               |                                                                       |                          |       
|                                                                               | Income taxes (refunded) paid                                          |                          | $     
|                                                                               |                                                                       |                          |       
|Supplemental schedule of non-cash financing and investing activities:          |                                                                       |                          |       
|                                                                               | Cancellation of note receivable from affiliate in exchange for assets |                          |       
|                                                                               |                                                                       |                          |       
|                                                                               | Tax benefit related to stock options                                  |                          |       
|                                                                               |                                                                       |                          |       
|                                                                               | Unrealized gain on equity holdings by former subsidiary               |                          |       
|                                                                               |                                                                       |                          |       
|                                                                               | Securities received in exchange for stock by former subsidiary        |                          |       
|                                                                               |                                                                       |                          |       

See Notes to Consolidated Financial Statements.

F-6

---



En Pointe Technologies, Inc.        Notes to Consolidated Financial Statements

1    ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

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

LIQUIDITY AND MANAGEMENT PLANS

As reflected in the accompanying financial statements, the Company has experienced declining sales and losses from operations in each of the last three fiscal
years ended September 30, 2002. Sales declines of approximately $34.2 million and operating losses of approximately $10.0 million in fiscal 2000 were attributable to the
activities of former subsidiaries which have since been deconsolidatedsee Note 2 "Investment in Affiliates." Management believes that, with the exception of the amounts related to
the deconsolidated former subsidiaries, the remainder of the Company's sales declines and losses are primarily attributable to an industry-wide decline in information technology spending.

In
order to counter the sales and profitability declines, the Company completed two restructurings in fiscal years 2001 and 2000 in which certain fixed occupancy and payroll costs were
reduced. In addition,
in the second quarter of fiscal 2002, there was a change in certain key executives. As part of that change, the Chairman and CEO returned to his former position as President of the Company with
responsibility for day-to-day operations. In addition, the Company rehired its former Senior Vice President of Sales and certain senior sales employees who had previously
worked at the Company. The new management team has taken the following actions intended to increase sales and improve profitability:



As
of September 30, 2002, the Company had approximately $4.6 million in cash and working capital of $16.8 million. As discussed in Note 3, the Company has a three-year $30.0 million
revolving credit facility with Foothill Capital Corporation ("Foothill") that expires on December 28, 2004. The credit facility is collateralized by accounts receivable and all other assets of the
Company. In addition, IBM Credit Corporation ("IBMCC") continued to provide the Company with a 30-day interest-free

F-7

---

inventory flooring financing for up to $20.0 million under a separate one-year agreement expiring on December 28, 2003. Borrowings under the inventory flooring agreement serve to reduce the
availability of financing available under the line of credit agreement. As of September 30, 2002, most of the Company's borrowings under its credit lines were concentrated in the $12.4 million
borrowings outstanding under its IBMCC 30-day interest-free flooring agreement. The Company had additional borrowing capacity of approximately $7.6 million after taking into consideration the
available collateral and borrowing limitations under its financing agreements. Borrowings under both lending agreements are collateralized by substantially all of the Company's assets. In addition,
the lines of credit contain certain financing and operating covenants relating to net worth, liquidity, profitability, repurchase of indebtedness and prohibition on payment of dividends, as well as
restrictions on the use of proceeds obtained under the line.

In
its June fiscal 2002 quarter, the Company estimated that it was possible that if the loss trends noted in and through such quarter continued, that the Company would be unable to meet
its June 2002 quarter EBITDA covenants under its existing lines of credit with Foothill and IBMCC, respectively, and would be in default under the terms of such agreements. To avert such a default,
the Company renegotiated its lines of credit to ease the EBITDA covenant requirements and signed an amendment to the loan agreement with Foothill on July 30, 2002 and then subsequently with IBMCC on
August 6, 2002. Under the new covenants for both loan agreements, the EBITDA for the nine months ended June 30, 2002 could not exceed a negative $3.0 million. Thereafter, EBITDA is measured on a
cumulative rolling four quarter basis ending on the last day of each fiscal quarter, with the September 30, 2002 quarter being set at a negative $3.8 million, the December 31, 2002 quarter a negative
$2.3 million, the March 31, 2003 quarter a negative $1.5 million, the June 30, 2003 quarter a positive $1.2 million, the September 30, 2003 quarter a positive $2.5 million, and all fiscal quarters
thereafter remaining at the same positive $2.5 million. Two other financial covenants that were previously in place, tangible net worth of $17.0 million and an annual limitation on maximum asset
acquisitions of $1.2 million, remained the same. At September 30, 2002 the Company was in compliance with all of the loan covenants. Management believes that the operating plans it has implemented
will enable it to maintain compliance with its covenants through at least September 30, 2003.

Management
believes that the financing available to the Company under these credit agreements, together with its own working capital resources (at September 30, 2002, the Company had net
working capital of approximately $16.8 million) will provide the Company with sufficient working capital to finance its operations through at least the next fiscal year. However, there can be no
assurance that management's plans will be successful in improving the Company's sales and profitability. If the Company is unable to maintain compliance with its loan covenants and if such
noncompliance is not waived by the lenders, the working capital line of credit and flooring line could be revoked prior to their expiration dates. In such eventuality, management believes that it has
sufficient working capital to enable it to continue to operate through at least September 30, 2003. However, the Company would be required to significantly scale down its business plans if it were
unable to obtain alternative sources of financing.

PRINCIPLES OF CONSOLIDATION

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

F-8

---

DECONSOLIDATION

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

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

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

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

INVESTMENT IN UNCONSOLIDATED AFFILIATES

The Company had recognized accumulated losses in excess of the Company's ownership interest in the former subsidiaries during the periods in which the former
subsidiaries were consolidated. As of
September 30, 2002 and 2001, the Company's adjusted basis under the equity method of accounting had been reduced to zero. In accordance with the equity method of accounting, the Company
suspended recognition of equity method losses after its adjusted basis was reduced to zero. Any future losses generated were monitored but not reported. Equity method income is recognized in future
periods only after the Company's share of equity method income equals previously unreported equity method losses accumulated during periods in which recognition of equity method losses were

F-9

---

suspended. During the years ended September 30, 2002, 2001 and 2000, the Company recognized income from reversal of excess losses previously recognized and equity in (losses) from affiliates
of $674,000, $8,392,000 and ($702,000), respectively.

Both
affiliates have discontinued operations. On April 10, 2001, Firstsource ceased operations entirely and all of its assets were assigned to Sherwood Partners, Inc.,
(unaffiliated with the Company), as an assignee for the benefit of creditors. In January 2002, a majority of the shareholders of SupplyAccess approved the transfer of the assets of SupplyAccess
to a liquidator for the benefit of creditors.

USE OF ESTIMATES

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

REVENUE RECOGNITION

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

CASH AND CASH EQUIVALENTS

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

RESTRICTED CASH

Restricted cash at September 30, 2002 and 2001 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.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives
of three to seven years. Leasehold improvements

F-10

---

are amortized over the lesser of the remaining lease term or their estimated useful lives. Upon sale, any gain or loss is included in the statement of operations. Maintenance and minor replacements
are charged to operations as incurred.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

LONG-LIVED ASSETS

The carrying value of long-term assets is periodically reviewed by management and impairment losses, if any, are recognized when the expected
non-discounted future operating cash flows derived from such assets are less than their carrying value. There were no such impairment losses for the years ended September 30, 2002,
2001 and 2000.

ADVERTISING

The Company reports the costs of all advertising in the periods in which those costs are incurred.

For
the fiscal years ended September 30, 2002, 2001, and 2000 advertising expense was approximately $349,000, $299,000, $3,343,000, respectively.

INCOME TAXES

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

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS AND VENDORS

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

F-11

---

Those
customers that accounted for more than 10% of net sales were as follows with their respective percentage of outstanding accounts receivable at fiscal year end:

|           |  | Years Ended September 30, and as of September 30,
|---------- |  | -------------------------------------------------
|
|
|Customer 1 |  | 11                                               
|Customer 2 |  | 10                                               
|           |  |                                                  
|           |  | 21                                               
|           |  |                                                  

No
other single customer accounted for 10% or more of net sales.

The
Company performs ongoing credit evaluations of its customers' financial condition and generally does not require collateral. Estimated credit losses and returns, if any, have been
provided for in the financial statements and have, to date, generally been within management's expectations. For the year ended September 30, 2002 and 2001, purchases from three vendors
accounted for 63% and 48% of total purchases, respectively.

TREASURY STOCK

The Company uses the specific identification method for accounting for treasury stock. During the 2001 fiscal year, the Company purchased 120,000 shares for
$253,000, and subsequently, issued 64,000 shares for employee stock benefit plans for $163,000. During the 2002 fiscal year, the Company issued 100,000 additional shares for employee stock benefit
plans for $135,000. At September 30, 2002 and 2001, there remained approximately 2,000 and 102,000 treasury shares, respectively, with a cost of $4,000 and $214,000, respectively.

STOCK BASED COMPENSATION

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

VENDOR PROGRAMS

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

EARNINGS PER SHARE

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

F-12

---

income per share is computed by dividing the net (loss) income 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 does not have any components of comprehensive income for fiscal years ended September 30, 2002, 2001 and 2000.

SEGMENT REPORTING

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

RECENTLY ISSUED ACCOUNTING STANDARDS

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

In
June 2001, the FASB issued SFAS No. 143, "Accounting for Asset RetirementObligations." This statement establishes standards for accounting for obligations
associated with the retirement of tangible long-lived assets. The Company must adopt this standard on January 1, 2003. Management is currently assessing the impact of the standard.

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

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 nullifies Emerging Issues Task Force
(EITF) Issue No. 94-3,

F-13

---

"Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity," under which a liability for an exit cost was recognized at the date of an entity's commitment to
an exit plan. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized at fair value when the liability is incurred. The provisions of this
statement are effective for exit or disposal activities that are initiated after December 31, 2002.

2    PROPERTY AND EQUIPMENT

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

September 30,2002

2001Computer equipment and software

$
8,101

$
8,072Office equipment and other


924


1,306Leasehold improvements


434


474Capitalized lease (see Note 6)


5,073


5,07314,532


14,925Less: Accumulated depreciation and amortization


(7,530
)

(7,082
)$
7,002

$
7,843


Depreciation
and amortization expense was $1,818,000, $1,414,000 and $2,278,000 for the years ended September 30, 2002, 2001, and 2000 respectively.

3    LINES OF CREDIT

At September 30, 2002 and 2001, the Company had outstanding borrowings of $12,421,000 and $9,440,000, respectively, under lines of credit with various
financial institutions.

At
September 30, 2002 and 2001, the line of credit agreements provide financing for cash advances and flooring of up to $30 million and $35 million, respectively.
Included as a separate lending agreement within the Company's $30 million line is a $20 million flooring agreement that provides an interest-free period of approximately
30 days, depending on the product sold.

Total
borrowings under the line of credit agreements are collateralized by eligible accounts receivable (as defined in the agreements) and substantially all of the Company's assets.
Borrowings are limited to specific percentages of the Company's accounts receivable and inventory balances. The line of credit agreements contain certain financing and operating covenants relating to
net worth, liquidity, profitability, repurchase of indebtedness and prohibition on payment of dividends, as well as restrictions on the use of proceeds obtained under the line. At September 30,
2002 the Company was in compliance with the various debt covenants contained in financing agreement.

In
the prior fiscal year, the Company's $35 million dollar line of credit was with IBMCC and expired on September 30, 2001, but was extended to January 31, 2002. On
December 28, 2001, the Company entered into a $30 million line of credit agreement for three years with Foothill. As part of a separate one-year agreement entered into on the
same date, IBMCC continued to provide the Company with a 30-day interest free inventory flooring financing for up to $20.0 million. Borrowing availability on the Foothill credit
facility is directly reduced by any outstanding flooring financings. The financing agreement with Foothill includes a guarantee to IBMCC for the amount outstanding on the flooring line up to a maximum
of $20 million. In consideration for providing the guarantee, the Foothill

F-14

---

agreement contains a 1% annual charge on the average outstanding balances owing to IBMCC. The minimum variable interest rate was originally floored at 6.00% per annum and at the option of the Company
could be based on prime rate or LIBOR rate. The Foothill agreement originally provided for a maximum interest rate of 1.5% over the prime rate with lesser interest rates dependent upon the Company's
quarterly EBITDA earnings exceeding certain targets.

On
July 30, 2002, the Company renegotiated its lines of credit to ease its EBITDA covenant requirements and signed an amendment to the loan agreement with Foothill and then signed
a like amendment subsequently with IBMCC on August 6, 2002.

On
November 25, 2002 IBMCC extended their $20.0 million interest-free flooring through December 28, 2003. Under terms of the amendment, IBMCC added a
provision that limits on-hand inventory flooring amounts to $3.0 million, which the Company believes is adequate for its anticipated on-hand inventory needs.

The
prime rate of interest was 4.75%, and 6.50% at September 30, 2002 and 2001, respectively, and the weighted average interest rates incurred under line of credit borrowings for
the years ended September 30, 2002, 2001 and 2000 were 1.00%, 9.11%, and 8.49%, respectively. The 1.00% weighted average interest rate for the 2002 fiscal year, resulted from most borrowings
being financed under the IBMCC interest-free flooring agreement whereby Foothill is paid 1% for its guarantee to IBMCC of the Company's borrowings. Interest expense, the majority of which
was for the Ontario facility lease (See Note 6) for the years ended September 30, 2002, 2001 and 2000 was $823,000, $1,002,000, and $2,308,000 respectively.

4    NON-RECURRING INCOME AND CHARGES

Non-recurring income of $0.9 million primarily resulted from the settlement of a litigation claim, $0.8 million. In the settled
litigation claim, the Company was liable for a total of $1.6 million under various Court decisions (including accrued interest) and settled for $1.2 million. In addition, there was a
recovery of $0.8 million of insurance reimbursement relating to previously expensed legal fees offset by other legal costs of $0.4 million

Non-recurring
charges of $0.8 million for the fiscal year ended September 30, 2001 include restructuring charges of $1.8 million, a legal settlement of
$0.2 million, less reversal of plaintiff legal fees that were recorded in the prior year as a result of an adverse judgment of $1.2 million (See Note 13).
Non-recurring charges for the fiscal year ended September 30, 2000 include a provision for litigation of $1.1 million related to an adverse judgment received on a legal
matter (see Note 13), and restructuring charges of $1.5 million.

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

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

F-15

---

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

|                                          |  | Beginning
Accrual
October 1, 2001 |       | Expensed (Adjusted)
Through
September 30, 2002 |   | Cash
Payments |   | Remaining
Accrual
September 30, 2002
|----------------------------------------- |  | --------------------------------- | ----- | ---------------------------------------------- | - | ------------- | - | ------------------------------------
|
|Separation costs for terminated employees |  | $                                 |      |                                                | $ |              |   | $                                   
|Facilities closing and downsizing         |  |                                   | 1,263 |                                                |   | (70           | ) |                                     
|                                          |  |                                   |       |                                                |   |               |   |                                     
|                                          |  | $                                 | 1,263 |                                                | $ | (70           | ) | $                                   
|                                          |  |                                   |       |                                                |   |               |   |                                     

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

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

5    GAIN ON SALE OF ASSETS

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

6    SALE-LEASEBACK OF ONTARIO FACILITY

On June 24 1999, the Company entered into a sale-leaseback arrangement. Under the arrangement, the Company sold its Ontario facility for
$5.5 million and leased it back under a triple net lease term of 15 years. The base rent is $544,000 the first year with 3% increases in each of the following 15 years. The terms
of the lease permit the Company to terminate the lease, at no cost or penalty, at the end of the seventh and tenth year.

The
Company currently occupies approximately 55% of the facility and originally planned to sublease the remaining space. However, under SFAS No. 98 "Accounting for Leases",
subleasing space in excess of 10% is considered retaining a financial interest in the property and requires that the property remain on the financial statements. The balance sheet therefore reflects
the property and

F-16

---

equipment at its estimated fair value and related liability until the lease qualifies as a "normal leaseback" under SFAS No. 98.

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

Minimum Lease
Payments

Sublease Income2003

$
662

$
262004


675


2005


689


2006


465


Total

$
2,491

$
26


For
the year ended September 30, 2002, 2001 and 2000, Ontario facility rent expense, which is characterized as a financing lease under SFAS No. 98, was approximately
$558,000, $568,000 and $551,000, respectively.

7    EMPLOYEE BENEFIT PLAN

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

8    INCOME TAXES

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

Year Ended September 30,2002

2001

2000Current:Federal

$
(2,227
)
$


$
(368
)State


45


86


(48
)(2,182
)

86


(416
)Deferred:Federal








(119
)State














(119
)$
(2,182
)
$
86

$
(535
)


F-17

---



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

Year Ended September 30,2002

2001

2000Federal statutory rate

(35
)%
34
%
(34
)%State taxes, net of federal benefits

1

2

Expenses not deductible





22Losses providing no tax benefits

7



23Minority interest





1Net operating loss carryback





7Affilate income not subject to tax

(4
)
(52
)
Benefit from tax law change related to prior fiscal years

(8
)


Valuation allowances



18

(22
)(39
)%
2
%
(3
)%


Deferred
income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes. Due to the uncertainty surrounding the realization of the net deferred tax asset of $5.8 million, management has provided a full valuation allowance. Significant components
of deferred taxes are as follows (in thousands):

September 30,2002

2001Deferred tax assets:Accounts receivable and allowance for returns

$
836

$
1,590Expenses not currently deductible


814


1,338Depreciation


523


350Affiliate losses not currently deductible


54


310Federal net operating loss


3,062


2,565State net operating loss


550


5,839


6,153Deferred tax liabilities:Discount on receivables





(303
)Depreciation








(303
)Net deferred tax asset


5,839


5,850Valuation allowance


(5,839
)

(5,850
)Deferred tax liability/asset

$


$



F-18

---

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

Year NOL Incurred

NOL Amount

Expiration Date(in thousands)2000

$
4,713

20202002


4,036

2022$
8,749


Since
the fiscal 2000 NOL is attributable to the exercise of stock options by employees, any realization of income tax benefits from the $4.7 million NOL will be considered an
adjustment to additional paid-in capital and will not benefit future earnings.

9    COMMITMENTS AND CONTINGENCIES

The Company leases office facilities and various types of office equipment. These leases extend over a period of up to five years, many of which contain renewal
options and/or escalation clauses. These are accounted for as operating leases. Estimated future minimum lease payments under operating leases having initial or remaining non-cancelable
lease terms in excess of one year at September 30, 2002 were approximately as follows (in thousands):

2003

$
1,1142004


6922005


5312007


6272006


184$
3,148


Rent
expense for the years ended September 30, 2002, 2001, and 2000 under all operating leases was approximately $2,072,000, $1,794,000 and $2,273,000 respectively.

F-19

---

10    EARNINGS PER SHARE AND PREFERRED STOCK

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

|                                                          |                                     | Year Ended September 30,                   |       
|--------------------------------------------------------- | ----------------------------------- | ------------------------------------------ | ------
|
|Net income (loss)                                         |                                     | $                                          | (3,424
|                                                          |                                     |                                            |       
|Denominator:                                              |                                     |                                            |       
|                                                          | Weighted-average shares outstanding |                                            |       
|                                                          | Effect of dilutive securities:      |                                            |       
|                                                          |                                     | Dilutive potential of options and warrants |       
|                                                          |                                     |                                            |       
|Weighted-average shares and share equivalents outstanding |                                     |                                            | 6,666 
|                                                          |                                     |                                            |       
|Basic income (loss) per share                             |                                     | $                                          | (0.51 
|                                                          |                                     |                                            |       
|Diluted income (loss) per share                           |                                     | $                                          | (0.51 
|                                                          |                                     |                                            |       

The
dilutive potential of stock options, which include 5,819 shares and 324,004 shares, respectively, for the years ended September 30, 2002 and 2000, has been excluded from the
calculation of diluted loss per share because the effect of their inclusion would have been anti-dilutive.

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

11    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. As of September 30, 2002 and 2001, the shares available for grant under the plan were 892,606 and 512,985, respectively.

F-20

---

The
following is a summary of stock option activity:

|                                  |           | Non-Qualified |          | Incentive |          | Total
Exercise
Value
(In Thousands) |       | Price Range
Per Share
|--------------------------------- | --------- | ------------- | -------- | --------- | -------- | ----------------------------------- | ----- | ---------------------
|Outstanding at September 30, 1999 |           | 76,501        |          | 819,307   |          | $                                   | 6,741 |                      
|                                  | Granted   |               | 10,000   |           | 100,250  |                                     |       | 1,589                
|                                  | Exercised |               | (69,834  | )         | (298,909 | )                                   |       | (2,872               
|                                  | Cancelled |               |         |           | (57,136  | )                                   |       | (434                 
|                                  |           |               |          |           |          |                                     |       |                      
|Outstanding at September 30, 2000 |           | 16,667        |          | 563,512   |          |                                     | 5,024 |                      
|                                  | Granted   |               | 880,000  |           | 377,250  |                                     |       | 2,430                
|                                  | Exercised |               | (9,000   | )         | (161     | )                                   |       | (15                  
|                                  | Cancelled |               |         |           | (181,541 | )                                   |       | (1,350               
|                                  |           |               |          |           |          |                                     |       |                      
|Outstanding at September 30, 2001 |           | 887,667       |          | 759,060   |          |                                     | 6,089 |                      
|                                  | Granted   |               | 250,000  |           | 90,000   |                                     |       | 505                  
|                                  | Exercised |               |          |           | (25,000  | )                                   |       | (48                  
|                                  | Cancelled |               | (566,000 | )         | (153,711 | )                                   |       | (1,503               
|                                  |           |               |          |           |          |                                     |       |                      
|Outstanding at September 30, 2002 |           | 571,667       |          | 670,349   |          |                                     | 5,043 |                      
|                                  |           |               |          |           |          |                                     |       |                      

|                   |  | Options
Exercisable |  | Weighted
Average
Exercise Price |      | Remaining
Contractual
Life
|------------------ |  | ------------------- |  | ------------------------------- | ---- | --------------------------
|September 30, 2000 |  | 301,588             |  | $                               | 8.24 |                           
|September 30, 2001 |  | 523,099             |  | $                               | 5.64 |                           
|September 30, 2002 |  | 635,151             |  | $                               | 5.42 |                           

The
Company has adopted the disclosure-only provisions of SFAS No. 123, "Accounting for Stock Based Compensation." If compensation expense for the stock options had
been determined using "fair value" at the grant date for awards in 2002, 2001 and 2000, consistent with the provisions of SFAS No. 123, the Company's net income (loss) and net income
(loss) per share would have been reduced to the pro forma amounts indicated below (in thousands, except per share amounts):

|                                              |  | Year Ended September 30, |       
|--------------------------------------------- |  | ------------------------ | ------
|
|Net (loss) income as reported                 |  | $                        | (3,424
|Net (loss) income pro forma                   |  | $                        | (4,580
|Basic (loss) earnings per share as reported   |  | $                        | (0.51 
|Diluted (loss) earnings per share as reported |  | $                        | (0.51 
|Basic (loss) income per share pro forma       |  | $                        | (0.69 
|Diluted (loss) income per share pro forma     |  | $                        | (0.69 

F-21

---

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
2002, 2001 and 2000:

|                              |  | Expected
Dividend
Yield |   | Risk Free
Expected
Volatility |   | Interest
Rate |   | Expected
Lives
|----------------------------- |  | ----------------------- | - | ----------------------------- | - | ------------- | - | --------------
|Year ended September 30, 2000 |  | 0                       | % | 99                            | % | 6.28          | % | 5.0           
|Year ended September 30, 2001 |  | 0                       | % | 99                            | % | 3.70          | % | 5.0           
|Year ended September 30, 2002 |  | 0                       | % | 98                            | % | 3.94          | % | 5.0           

12    EMPLOYEE STOCK PLAN

The Company has an Employee Stock Purchase Plan (the "Plan") under which there remains authorized and available for sale to employees an aggregate of 350,007
shares of the Company's common stock at September 30, 2002. The Plan, which is intended to qualify under Section 423 of the Internal Revenue Code, permits eligible employees to purchase
common stock, subject to certain limitations, up to 20% of their compensation. Purchases of stock under the Plan are made twice annually from amounts withheld from payroll at 85% of the lower of the
fair market value of the common stock at the beginning or end of the six month offering period. In April 2002 the Company announced to its employees that it was suspending its Plan until
further notice.

13    LITIGATION

On February 6, 2002 a settlement agreement and release was entered into between the Company and NovaQuest InfoSystems, now known as WebVision, Inc.
The settling parties agreed to stipulate to reverse and vacate a November 7, 2001 Superior Court judgment relating to certain litigation in which the Company owed and accrued on its books
$1,375,000 along with accrued interest of $293,000. Under
the terms of the settlement agreement, the Company made various payments to representative parties of the plaintiff totaling $1,200,000 in discharge of the litigation claim. The Company recorded the
settlement of this litigation as non-recurring charge (income) less certain other litigation related income from insurance reimbursement that resulted in a total recovery of $848,000.

On
or about September 18, 2000, a claim for arbitration was submitted by First Union Securities to the New York Stock Exchange against, among others, the Company and its President
and Chief Executive Officer, Attiazaz Din (the "En Pointe defendants"). First Union alleges that the Company and Din violated federal and state securities laws in connection with the promotion and
sale of En Pointe stock in the last half of 1999 and the first half of 2000. The En Pointe defendants dispute jurisdiction and intend to vigorously defend the allegations. The En Pointe defendants
filed a declaratory relief claim challenging the arbitarbility of First Union's claims against Din and the Company (En Pointe Technologies, Inc., et al v. First Union, United States District
Court, San Diego, Case No. 02 CV 1246 K (RBB)). The Court ruled that the claims must be arbitrated.

In
January of 2001, five of the Company's directors, one current officer, and certain former officers along with four unrelated parties were named in a shareholder's derivative complaint
alleging that such persons improperly benefited form the sales of shares of the Company's common stock and seeking a recovery by the Company of the damages it sustained as a result of such activities
(Fredrick

F-22

---

V. Din, et a., Superior Court of California, County of Los Angeles Case No. YC 039456). The defendants intend to vigorously defend the allegations and believe the case is without merit.

In
February of 2001, the Company and five of the Company's directors, one current officer, and certain former officers along with seven unrelated parties were named in a shareholder
class action complaint alleging that the defendants made misrepresentations regarding the Company and that the individual defendants improperly benefited from the sales of shares of the Company's
common stock and seeking a recovery by the Company's shareholders of the damages sustained as a result of such activities (In Re En Pointe Technologies Securities Litigation, United States District
Court, Southern District of California Case No. 01 CV0205L (CGA)). On February 19, 2002, the En Pointe defendants filed a Motion to Dismiss on the grounds that the allegations failed to
state any actionable claims against the En Pointe Defendants. The motion to Dismiss was granted with leave to amend. Plaintiffs have filed their amended complaint and a response is due in
January 2003. The En Pointe defendants intend to continue to vigorously defend the allegations.

In
December, 2000 the Company and certain current and former directors and officers along with several unrelated parties were named in a complaint alleging that the defendants made
misrepresentations regarding the Company and that the individual defendants improperly benefited from the sales of shares of the Company's common stock and seeking a recovery by the Company's
shareholders of the damages sustained as a result of such activities (Crosby V. En Pointe Technologies, it al., Superior Court of California, County of San Diego, No. GIC 759905). The parties have
stipulated to a stay of the case pending the class action. The En Pointe defendants intend to vigorously defend the allegations.

On
October 5, 2001, an action was brought against the Company by Qamar Zaidi in the San Bernardino County Superior Court, Case No. RCV 058254. The plaintiff, a former employee,
alleges breach of contract, anticipatory breach and repudiation, breach of the implied covenant of good faith and fair dealing, and conversion. The claim asks for $710,000 in damages, $500,000 in
punitive damages, and penalties under the labor code of $150,000. Management, after consulting with legal counsel, has determined that the potential for an adverse outcome in this litigation cannot be
estimated as the case is set for trial in May 2003.

In
March of 2000, an action was brought against the Company in the Orange County Superior Court, Case No. 00CC03948 contending fraud and breach of contract arising from the
purchase by a former subsidiary of the Company of certain assets from a company formerly known as First Source International ("FSI"). The lawsuit is filed by RLC, Inc. Assignee for the benefit
of creditors of a defunct corporation, Paragon Solutions, Inc, formerly known as FSI. It is contended that FSI was unable to obtain their contingent earn-out under the agreement because of
faulty software provided by the Company. Damages sought range between $0.8 to $3.5 million with the plaintiff seeking punitive damages of $10 million. The Company was successful in
compelling the action to be moved to arbitration, but since November 17, 2000 when the Court of Appeals rejected the request by the plaintiff to prohibit arbitration, no arbitration proceedings
have commenced. The Company vigorously denies the charges and contends that full disclosure was made as to any problems with the software and that the former subsidiary to this date has not produced
net income. The case has remained dormant for the past two years. Legal counsel is currently unable to predict the outcome of this litigation.

F-23

---

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

14    SEGMENT INFORMATION

Before deconsolidation, the Company consisted primarily of three business units (companies), En Pointe Technologies, Firstsource and SupplyAccess. Each of the
companies had separate management teams, infrastructures and facilities. En Pointe Technologies focuses its efforts on sales of technology products and services to Fortune 1000 and government
customers. En Pointe Technologies utilizes both a traditional national sales force with sales representatives in major metropolitan areas as well as available electronic interfaces between En Pointe
and its customers and vendors. Firstsource focused its efforts on the sale of technology products and other services primarily via the Internet to consumers and small to medium sized businesses.
SupplyAccess offered a hosted business-to-business web application integrated with a customized SAP-based enterprise fulfillment engine.

During
the quarter ended June 30, 2000, the Company began to account for its investments in Firstsource and SupplyAccess under the equity method of accounting (see Note 1).
The tables below present information about reported segments for the year ended September 30, 2000. For the years ended September 30, 2002 and 2001 the Company only operated in one
segment.

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

The
Company operates in only one geographic segment.

F-24

---

15    QUARTERLY FINANCIAL DATA (UNAUDITED)

Selected financial information for the quarterly periods in the fiscal years ended September 30, 2002 and 2001 is presented below (in thousands, except per
share amounts):

|                                    |  | Fiscal 2002 Quarter Ended |       
|----------------------------------- |  | ------------------------- | ------
|
|Net sales                           |  | $                         | 61,508
|Gross profit                        |  |                           | 7,126 
|Net (loss) income                   |  |                           | (751  
|Diluted net (loss) income per share |  |                           | (0.11 

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

16    SUBSEQUENT EVENTS

On October 11, 2002, the Company purchased certain assets of Tabin Corporation, a Chicago-based regional value-added reseller. Assets purchased consisted
of $220,000 for inventory and fixed assets and $700,000 for intangible assets, primarily customer relationships. Up to an additional $300,000 may be paid if certain operating targets are achieved in
the four-month period ending February 28, 2003. The shareholders of Tabin Corporation may also receive additional earn-out payments based upon achieving certain
profitability targets over the two-year period beginning November 1, 2002. The purchase price of $920,000 was paid in cash. Along with the acquisition of these assets, the Company
hired approximately 40 former Tabin sales, service and operations personnel.

F-25

---



En Pointe Technologies, Inc.        Schedule II

VALUATION AND QUALIFYING ACCOUNTS

|                                              |                                   | Balance At
Beginning of
Period |       | Charges (Reversals)
to Cost and
Expenses |   | Deductions |       | Balance At
End of
Period
|--------------------------------------------- | --------------------------------- | ------------------------------ | ----- | ---------------------------------------- | - | ---------- | ----- | ------------------------
|Year Ended September 30, 2002 (in thousands): |                                   |                                |       |                                          |   |            |       |                         
|                                              | Allowance for doubtful accounts   |                                | $     | 2,281                                    |   | $          | 532   |                         
|                                              | Allowance for returns             |                                | $     | 303                                      |   | $          | (204  | )                       
|                                              | Allowance for price discrepancy   |                                | $     | 18                                       |   | $          | (18   | )                       
|                                              | Allowance for inventory valuation |                                | $     | 1,097                                    |   | $          | (249  | )                       
|                                              |                                   |                                |       |                                          |   |            |       |                         
|                                              |                                   | $                              | 3,699 |                                          | $ | 61         |       | $                       
|                                              |                                   |                                |       |                                          |   |            |       |                         
|Year Ended September 30, 2001 (in thousands): |                                   |                                |       |                                          |   |            |       |                         
|                                              | Allowance for doubtful accounts   |                                | $     | 2,395                                    |   | $          | 437   |                         
|                                              | Allowance for returns             |                                | $     | 484                                      |   | $          | (316  | )                       
|                                              | Allowance for price discrepancy   |                                | $     | 438                                      |   | $          | 66    |                         
|                                              | Allowance for inventory valuation |                                | $     | 647                                      |   | $          | 450   |                         
|                                              |                                   |                                |       |                                          |   |            |       |                         
|                                              |                                   | $                              | 3,964 |                                          | $ | 637        |       | $                       
|                                              |                                   |                                |       |                                          |   |            |       |                         
|Year Ended September 30, 2000 (in thousands): |                                   |                                |       |                                          |   |            |       |                         
|                                              | Allowance for doubtful accounts   |                                | $     | 1,642                                    |   | $          | 2,377 |                         
|                                              | Allowance for returns             |                                | $     | 567                                      |   | $          |      |                         
|                                              | Allowance for price discrepancy   |                                | $     | 82                                       |   | $          | 357   |                         
|                                              | Allowance for inventory valuation |                                | $     | 423                                      |   | $          | 224   |                         
|                                              |                                   |                                |       |                                          |   |            |       |                         
|                                              |                                   |                                | $     | 2,714                                    |   | $          | 2,958 |                         
|                                              |                                   |                                |       |                                          |   |            |       |                         

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 Annual Report on
Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

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

Dated:
December 23, 2002

POWER OF ATTORNEY

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

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

|Signature                               |  | Title                                                                                      |  | Date             
|--------------------------------------- |  | ------------------------------------------------------------------------------------------ |  | -----------------
|                                        |  |                                                                                            |  |                  
|/s/ATTIAZAZ "BOB" DINAttiazaz "Bob" Din |  | Chairman of the Board
Chief Executive Officer, and President
(Principal Executive Officer) |  | December 23, 2002
|/s/KEVIN D. AYERSKevin D. Ayers         |  | Chief Financial Officer
(Principal Financial and Principal
Accounting Officer)             |  | December 23, 2002
|/s/NAUREEN DINNaureen Din               |  | Director                                                                                   |  | December 23, 2002
|/s/BARRY M. ABELSONBarry M. Abelson     |  | Director                                                                                   |  | December 23, 2002
|                                        |  |                                                                                            |  |                  

S-1

---

|/s/ZUBAIR AHMEDZubair Ahmed                   |  | Director |  | December 23, 2002
|--------------------------------------------- |  | -------- |  | -----------------
|/s/MARK BRIGGSMark Briggs                     |  | Director |  | December 23, 2002
|/s/VERDELL GARROUTTEVerdell Garroutte         |  | Director |  | December 23, 2002
|/s/WALTER W. LARKINS IIIWalter W. Larkins III |  | Director |  | December 23, 2002

S-2

---

CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002:

I,
Attiazaz Din, certify that:





December 23,
2002

| |  | /s/ATTIAZAZ DINAttiazaz Din Chairman, President and Chief Executive
Officer
| |  | ---------------------------------------------------------------------------

S-3

---

I,
Kevin D. Ayers, certify that:





December 23,
2002

| |  | /s/KEVIN D. AYERSKevin D. Ayers Vice President and Chief Financial
Officer
| |  | --------------------------------------------------------------------------

S-4

---



Index to Exhibits

|Exhibit
Number |  | Description                                                                                                                                                                                                                                                                         
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            |  | Agreement and Plan of Merger between the Registrant and En Pointe Technologies, Inc., a Texas corporation, effective February 29, 1996 (incorporated by reference to the same numbered Exhibit to the
Registrant's Registration Statement on Form S-1 filed May 8, 1996).           
|3.1            |  | Certificate of Incorporation of Registrant (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                                                       
|3.2            |  | Bylaws of Registrant (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                                                                             
|3.3            |  | Certificate of Amendment to Certificate of Incorporation of Registrant filed May 16, 2000. (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form 10-K filed January 18,
2001).                                                 
|4.3            |  | Form of Common Stock Certificate (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                                                                 
|10.1           |  | En Pointe Technologies, Inc. 1996 Stock Incentive Plan (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                                           
|10.2           |  | En Pointe Technologies, Inc. Employee Stock Purchase Plan (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                                        
|10.3           |  | Form of Directors' and Officers' Indemnity Agreement (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                                             
|10.5           |  | Employment Agreement between the Registrant and Attiazaz "Bob" Din, dated, 1996 (incorporated by reference to the same numbered Exhibit to the Registrant's Registration Statement on Form S-1 filed May 8, 1996).                                                                  
|10.18          |  | Lease dated May 1999 between U.S. Real Estate Consortium and the Registrant for property located at 1040 Vintage Avenue, Ontario, California (incorporated by reference to the same numbered Exhibit to the Registrant's Form 10-K filed
January 13, 2000).                         
|10.19          |  | Lease dated April 2001 between Pacific Corporate Towers LLC and the Registrant for the property located at 100 N. Sepulveda Blvd., 19th Floor, El Segundo, California. (incorporated by reference to the same numbered Exhibit to
the Registrant's Form 10-Q filed August 14, 2001).
|10.20          |  | Employment Agreement between the Registrant and Michael R. Shabazian, dated, July 1, 2001 (incorporated by reference to the same numbered Exhibit to the Registrant's Form 10-K filed December 31, 2001).                                                                           
|10.21          |  | Separation Agreement between the Registrant and Michael R. Shabazian, dated, December 2001. (incorporated by reference to the same numbered Exhibit to the Registrant's Form 10-K filed December 31, 2001).                                                                         
|10.22          |  | Employment Agreement between the Registrant and Thomas Scott, dated, August 1, 2001. (incorporated by reference to the same numbered Exhibit to the Registrant's Form 10-K filed December 31, 2001).                                                                                
|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).                                                           
|               |  |                                                                                                                                                                                                                                                                                     

---

|10.25 |  | Loan and Security Agreement by and among En Pointe Technologies Sales, Inc., the lenders named therein and Foothill Capital Corporation, dated December 28, 2001. (incorporated by reference to the same numbered Exhibit to the
Registrant's Form 10-K filed December 31, 2001).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.26 |  | Inventory Financing Agreement between En Pointe Technologies Sales, Inc. and IBM Credit Corporation dated December 28, 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                                                                                                                                                                                            
|10.28 |  | First Amendment to Loan and Security Agreement by and among En Pointe Technologies Sales, Inc., the lenders named therein and Foothill Capital Corporation, dated July 30, 2002.                                                                                                 
|10.29 |  | Acknowledgment and Amendment to Financing Agreement by and between En Pointe Technologies Sales, Inc. and IBM Credit Corporation, dated August 6, 2002.                                                                                                                          
|10.30 |  | Second Amendment to Loan and Security Agreement and Consent by and among En Pointe Technologies Sales, Inc., the lenders named therein and Foothill Capital Corporation, dated October 9, 2002.                                                                                  
|10.31 |  | Asset Purchase Agreement entered into as of October 10, 2002 between Tabin Corporation and En Pointe Technologies Sales, Inc.                                                                                                                                                    
|10.32 |  | Amendment to Agreement for Inventory Financing by and between En Pointe Technologies Sales, Inc. and IBM Credit Corporation, dated November 21, 2002.                                                                                                                            
|10.33 |  | Amendment to Lease between Pacific Towers and the Registrant, dated April 30, 2001.                                                                                                                                                                                              
|21.1  |  | Subsidiaries of the Company                                                                                                                                                                                                                                                      
|23.1  |  | Consent of PricewaterhouseCoopers LLP.                                                                                                                                                                                                                                           
|99.1  |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).                                                                                                                                
|99.2  |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).                                                                                                                                

---

QuickLinks