EN POINTE TECHNOLOGIES INC, 424B1, 1996-05-08

EN POINTE TECHNOLOGIES INC
424B1, 1996-05-08
COMPUTERS & PERIPHERAL EQUIPMENT & SOFTWARE

Previous: NOVA CORP \GA\, 424B1, 1996-05-08

Next: DESIGNER HOLDINGS LTD, S-1/A, 1996-05-08

<PAGE>
2,250,000 SHARES

[LOGO]

COMMON STOCK
--------------

All of the shares of common stock, par value $.001 per share (the "Common
Stock"), offered hereby are being offered by En Pointe Technologies, Inc. ("En
Pointe" or the "Company"). Prior to this offering, there has been no public
market for the Common Stock and there can be no assurance that such a market
will exist after this offering. The initial public offering price of the shares
of Common Stock offered hereby was determined by negotiation between the Company
and The Boston Group, L.P. (the "Representative"), as representative of the
several underwriters (the "Underwriters"). See "Underwriting" for information
relating to the determination of the initial public offering price. The Common
Stock has been approved for listing, subject to official notice of issuance, on
the Nasdaq National Market under the symbol "ENPT."

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC COMMISSIONS (1) COMPANY (2)
<S> <C> <C> <C>
Per Share................................. $8.00 $.52 $7.48
Total (3)................................. $18,000,000 $1,170,000 $16,830,000
</TABLE>

(1) Does not include (a) a non-accountable expense allowance payable to the
Representative and (b) the value of five-year warrants granted to the
Representative to purchase up to 217,500 shares of Common Stock at 120% of
the initial public offering price per share of Common Stock (the
"Representative's Warrants"). For indemnification and contribution
arrangements with the Underwriters, see "Underwriting."

(2) Before deducting expenses payable by the Company, estimated at $1,200,000,
including the Representative's non-accountable expense allowance.

(3) A stockholder of the Company (the "Selling Stockholder") has granted to the
Underwriters a 45-day option to purchase up to 337,500 additional shares of
Common Stock, solely to cover over-allotments, if any. See "Underwriting."
If all such shares of Common Stock are purchased, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to the Selling
Stockholder will be $20,700,000, $1,345,500 and $2,524,500, respectively.

The Common Stock is offered by the Underwriters when, as and if delivered to
and accepted by them and subject to their right to withdraw, cancel or modify
the offering and reject any order in whole or in part. It is expected that
delivery of the certificates for the shares of Common Stock will be made on or
about May 13, 1996.
-------------------

THE BOSTON GROUP, L.P.

The date of this Prospectus is May 8, 1996.
<PAGE>
[GRAPHICS]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

-------------------

2
<PAGE>
SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION, INCLUDING "RISK FACTORS," AND FINANCIAL STATEMENTS AND RELATED
NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. EXCEPT AS OTHERWISE
NOTED, ALL INFORMATION IN THIS PROSPECTUS (I) REFLECTS THE 207.7004154-TO-1
STOCK SPLIT OF THE COMMON STOCK EFFECTED ON FEBRUARY 29, 1996 IN CONNECTION WITH
THE REINCORPORATION OF THE COMPANY IN DELAWARE AND (II) ASSUMES NO EXERCISE OF
THE UNDERWRITERS' OVER-ALLOTMENT OPTION OR THE REPRESENTATIVE'S WARRANTS. SEE
"DESCRIPTION OF CAPITAL STOCK" AND "UNDERWRITING."

THE COMPANY

En Pointe Technologies, Inc. ("En Pointe" or the "Company") is a provider of
computers and computer-related products and services. By utilizing its
specialized information systems, which include its newly-developed "EPIC" (En
Pointe Information Connection) system (the "EPIC System"), the Company is able
to establish on-line communications links with its sales representatives,
certain distributors of computers and computer-related products throughout the
United States ("Allied Distributors"), and certain of the Company's customers,
which enables the Company to serve as an electronic clearinghouse of computers
and computer-related products without many of the risks and costs associated
with maintaining inventory. The Company also has begun to expand the range of
value-added services which it provides to its customers. The Company has
increased its sales, solely through internal growth, from $19 million in fiscal
year 1993, the year the Company commenced operations, to $110 million in fiscal
year 1994 and $201 million in fiscal year 1995.

Through its specialized information systems, including the EPIC System, the
Company can provide its customers with access to an automated marketplace of
computers and computer-related products, which consists of the inventories of
multiple distributors, including hardware, software, peripheral, communications
and other equipment ("Computer Products"), price comparisons, detailed product
descriptions, product availability (both by type and location), available
delivery times for products to be purchased, the delivery status of products
already ordered and back-order information. Information concerning approximately
$2 billion of inventory at 22 locations nationwide is usually available at any
given time on its specialized informations systems, including the EPIC System.

En Pointe's strategy is to utilize the warehousing, purchasing and
distribution strengths of multiple Allied Distributors, rather than assuming
those roles for itself. This clearinghouse approach, while resulting in lower
gross margins, does allow the Company to eliminate many of the risks and costs
associated with inventory, including the cost of leasing warehouse space,
inventory obsolescence, the need for inventory tracking systems, as well as the
increased costs associated with the need to employ large numbers of personnel
for stocking and shipping duties. By having access to multiple Allied
Distributors, En Pointe believes it is able to offer its customers a competitive
combination of price, product availability and services and still remain
profitable. As a result of its strategy, En Pointe has been awarded a
non-exclusive national contract by International Business Machines Corporation
("IBM") to supply equipment to IBM wholly-owned subsidiaries as well as to
certain IBM customers and internal IBM operating divisions. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations." The
Company services its customers, which include several Fortune 500 companies,
through branch offices in ten locations nationwide (New York, Dallas, Austin,
Denver, Palo Alto, Portland, Bellevue, Memphis, Sacramento and Brea), as well as
its headquarters in Los Angeles.

In addition to offering Computer Products, the Company offers certain
value-added services which span the life-cycle of a customer's technology
acquisition process (which includes assembly, design, integration, software
installation, asset management (which allows customers to track computer
equipment) and systems servicing). These services help the Company attract and
retain customers and also include consultative services prior to the purchase
decision. The Company provides certain of these specialized support services by
entering into consultation agreements with independent parties with expertise in
the particular hardware and/or software purchased by the customer. The Company
intends to expand its provision of value-added services to include more
sophisticated services, such as network design, maintenance, engineering and
software programming. Certain of these additional services may be provided
through consultation contracts

3
<PAGE>
with independent parties. The Company also intends to expand its sales of
midrange systems as well as certain consultation and programming services in
connection with sales of such midrange systems through its newly-created Logic
Pointe division as well as through its existing branch offices. The Company
plans to target existing corporate and government clients which it believes may
also require midrange systems and related services. The expansion of the
provision of additional value-added services and the entry of the Company into
midrange systems sales and consulting services are new businesses of the
Company, and can be expected to utilize a significant amount of financial
resources of the Company in the near future. Furthermore, there can be no
assurance that the provision of these new value-added services will be accepted
by the Company's customers or that they can be provided on a profitable basis.

The Company also intends to continue to seek sales increases in its Computer
Products resale business by accessing new markets through geographic expansion
of its branch office system as well as through the development of new channels
of distribution. The Company has recently started a direct marketing service,
Price Pointe, which will allow existing and new customers to purchase products
using catalogs to be produced by the Company and distributed periodically
throughout the year. The first catalog was shipped in August 1995 but has not
yet generated significant sales. In addition, the Company is constructing a site
on the World Wide Web with the aim to eventually allow existing customers, small
and medium-sized businesses, government entities, and consumers the ability to
access the Company's catalog.

-------------------

The Company was incorporated in the State of Texas on January 25, 1993 under
the name Infosystems, Inc. which name was later changed to InfoTech Computer
Systems, Inc. On September 21, 1995, the Company changed its name to En Pointe
Technologies, Inc. On February 29, 1996, the Company reincorporated in the State
of Delaware. The principal executive offices of the Company are located at 5245
Pacific Concourse Drive, Suite 200, Los Angeles, California 90045, and the
Company's telephone number is (310) 725-5200. The Company's fax number is (310)
725-5289.

The Company intends to furnish to its stockholders annual reports containing
audited financial statements, with an opinion thereon expressed by an
independent certified public accounting firm, and quarterly reports containing
unaudited financial information for the first three quarters of each fiscal
year.

"En Pointe Technologies," "Logic Pointe," "Price Pointe," "EPIC" and the En
Pointe Technologies, Inc. logo are trademarks of En Pointe Technologies, Inc.
This Prospectus also includes trademarks of other companies.

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by the Company..... 2,250,000 shares (1)
Common Stock Outstanding After the 5,607,500 shares (2)
Offering................................
Use of Proceeds......................... Repayment of debt (88% of the net
proceeds), geographic expansion (6%),
working capital, and other general
corporate purposes (6%).
Alternatively, the Company may
reserve a substantial portion of the
proceeds of this offering as working
capital in order to obtain more
favorable terms and conditions under
its line of credit agreements. See
"Use of Proceeds."
Proposed Nasdaq National Market ENPT
Symbol..................................
</TABLE>

- ------------------------
(1) An additional 7,500 shares of Common Stock (the "Non-Affiliated Shares") are
being registered pursuant to the registration statement of which this
Prospectus is a part and may be sold by one non-affiliated stockholder. The
Company will not receive any of the proceeds from the sales of the Non-
Affiliated Shares. The Non-Affiliated Shares are not being underwritten by
the Underwriters.

4
<PAGE>
(2) Excludes (i) 217,500 shares of Common Stock which may be issued and sold by
the Company upon the exercise in full of the Representative's Warrants, and
(ii) an aggregate of 610,000 shares of Common Stock reserved for issuance
pursuant to the Company's stock incentive and stock purchase plans. See
"Underwriting" and "Management -- Compensation Plans."

SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, DECEMBER 31,
--------------------------------- --------------------
1993 (1) 1994 1995 1994 1995
--------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................................... $ 19,327 $ 109,987 $ 200,797 $ 43,584 $ 77,016
Gross profit............................................ 2,039 8,930 16,036 3,290 6,061
Operating expenses:
Selling and marketing expenses........................ 1,277 5,493 9,307 1,987 3,304
General and administrative expenses................... 688 2,159 3,755 869 985
Operating income........................................ 74 1,278 2,974 434 1,772
Income (loss) before income taxes....................... (41) 316 1,192 35 1,220
Net income (loss)....................................... (20) 187 703 21 702
Net income (loss) per share (2)......................... $ (.01) $ .06 $ .21 $ .01 $ .21
Number of shares used in computing per share amounts
(2).................................................... 2,137 3,197 3,410 3,410 3,410
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------------------
AS
ACTUAL PRO FORMA(4) ADJUSTED (3)
--------- ------------- -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................................................. $ 149 $ 149 $ 2,191
Restricted cash............................................................ 1,616 1,616 1,616
Working capital............................................................ 2,356 2,059 16,785
Total assets............................................................... 50,824 51,271 52,866
Current liabilities........................................................ 47,090 47,835 34,703
Non-current liabilities.................................................... 1,201 1,585 --
Total stockholders' equity................................................. 2,533 1,852 18,163
</TABLE>

- ------------------------
(1) Information provided is for the period beginning on the Company's inception
on January 25, 1993 and ending on September 30, 1993.

(2) Excludes (i) 217,500 shares of Common Stock which may be issued and sold by
the Company upon the exercise in full of the Representative's Warrants, and
(ii) an aggregate of 610,000 shares of Common Stock reserved for issuance
pursuant to the Company's stock incentive and stock purchase plans. See
"Underwriting" and "Management -- Compensation Plans."

(3) Adjusted from actual to reflect the sale of the 2,250,000 shares of Common
Stock offered by the Company hereby and the application of the net proceeds
therefrom. See "Use of Proceeds."

(4) The pro forma balance sheet data includes litigation settlement costs of
approximately $1,129,000 to reflect the effects of the agreement entered
into by the Company in April 1996 to settle certain litigation as if it had
occurred at the date of the most recent financial statements, as further
discussed in "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's financial statements and
related notes thereto.

5
<PAGE>
RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING RISK
FACTORS SHOULD BE CAREFULLY CONSIDERED IN EVALUATING THE COMPANY AND ITS
BUSINESS BEFORE PURCHASING SHARES OF THE COMMON STOCK OFFERED HEREBY. THIS
PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS OF OPERATIONS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A
RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH IN THE FOLLOWING RISK
FACTORS AND ELSEWHERE IN THIS PROSPECTUS.

DEPENDENCE ON DISTRIBUTORS AND MANUFACTURERS. A key element of the
Company's past success and future business strategy involves the establishment
of alliances with certain Allied Distributors. These alliances enable the
Company to make available to its customers a wide selection of products without
subjecting the Company to many of the risks and costs of maintaining large
amounts of inventory. Purchases from two of these Allied Distributors,
Intelligent Electronics, Inc. ("Intelligent Electronics") and Ingram Micro Inc.
("Ingram Micro"), accounted for approximately 58% and 32%, respectively, of the
Company's aggregate purchases for fiscal 1995. No other distributor accounted
for more than 10% of purchases in fiscal 1995. The Company directly competes
with certain Allied Distributors for many of the same accounts and therefore
there can be no assurance that any such Allied Distributor will not use its
position as a key supplier to the Company to pressure the Company from directly
competing with it. Certain Allied Distributors provide the Company with trade
credit as well as substantial incentives in the form of discounts, credits and
cooperative advertising. Substantially all of the Company's contracts with its
Allied Distributors are terminable upon 30 days' notice or less and several
contain minimum volume requirements as a condition to providing discounts to the
Company. Termination or interruption of the Company's relationships with any of
the Company's significant Allied Distributors, modification of the terms or
discontinuance of agreements the Company has with these Allied Distributors or
failure of the Company to meet minimum volume requirements could materially
adversely affect the Company's financial position and operating results. Certain
of the products offered by the Company are subject to manufacturer allocations,
which limit the number of units of such products available to the Allied
Distributors, which in turn may limit the number of units available to the
Company. In order to offer the products of most manufacturers, the Company is
required to obtain authorizations from the manufacturers to act as a reseller of
such products, which authorizations may be terminated at the discretion of the
manufacturers. 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 could have a
material adverse effect on the Company's financial position and operating
results. In addition, several manufacturers have agreed to provide market
development funds indirectly to the Company, through an Allied Distributor, in
order to finance portions of the Company's Price Pointe catalog publication and
distribution. Should these manufacturers or this Allied Distributor decide to
terminate this arrangement, the Company's financial position and operating
results could be materially adversely affected. See "Business -- Supply and
Distribution" and "-- Expansion of Services."
Recent changes in the computer industry, especially pressure on gross profit
margins, has adversely affected a number of Computer Products distributors,
including certain Allied Distributors. There can be no assurance that the
continuing evolution of the computer industry will not adversely affect such
distributors. Because the Company's overall business strategy depends on the
Company's relationships with Allied Distributors, the Company would be
materially adversely affected in the event that distributors in general and
Allied Distributors in particular continue to suffer adverse consequences due to
ongoing changes in the computer industry.

DEPENDENCE ON AVAILABILITY OF CREDIT. The Company is highly leveraged and
the Company's business is capital intensive in that the Company is required to
finance the purchase of Computer Products in order to fill sales orders. In
order to obtain necessary capital, the Company relies primarily on lines of
credit that are collateralized by accounts receivable. As a result, the amount
of credit available to the Company may be adversely affected by factors such as
delays in collection or deterioration in the quality of the Company's accounts
receivable, economic trends in the computer industry, interest rate fluctuations
and the lending policies of the Company's lenders. Many of these factors are
beyond the Company's control. Any decrease or material limitation on the amount
of capital available to the Company under its credit lines and other financing
arrangements will limit the ability of the Company to fill existing sales orders
or expand its sales levels and, therefore, would have a material adverse effect
on the Company's financial position and results of

6
<PAGE>
operations. In addition, any significant increases in interest rates will
increase the cost of financing to the Company and would have a material adverse
effect on the Company's financial position and results of operations. 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 be available to the Company in the future. The inability of the
Company to have continuous access to such financing at reasonable costs could
severely and adversely impact the Company's financial position and results of
operations. As a condition to waiving the noncompliance by the Company of
certain financial and nonfinancial covenants under a line of credit agreement,
IBM Credit Corporation has indicated that it may impose more stringent financial
covenants on the Company upon the completion of this offering, which
restrictions may inhibit the Company's future sales growth. In addition, there
can be no assurance that IBM Credit Corporation will continue to extend credit
to the Company in the amounts presently available to the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

RISK OF LOW MARGIN BUSINESS. The Company's past growth in net income has
been fueled primarily by sales growth rather than increased profit margins.
Given the significant levels of competition that characterize the computer
reseller market as well as the lower gross margins generated by the Company as a
result of its reliance on the inventory of its Allied Distributors, it is
unlikely that the Company will be able to substantially increase profit margins
in its core business of reselling Computer 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 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 continued sales growth or effective expansion into higher margin
business segments, neither of which can be assured. Furthermore, low margins
increase the sensitivity of the business to increases in costs of financing,
because financing costs to carry a receivable can be very high compared to the
low margin of gross profit on the sale underlying the receivable itself. Any
failure by the Company to increase its profit margins and sales levels could
have a material adverse effect on the Company's stock price and prospects for
future growth. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business -- The En Pointe Business Model."

COMPETITION. The segment of the computer industry in which the Company
operates is highly competitive. Pricing is very aggressive and the Company
expects pricing pressures to continue. The Company competes with a large number
and wide variety of resellers of personal computers and related products,
including traditional personal computer retailers, computer superstores,
consumer electronics and office supply superstores, mass merchandisers, national
direct marketers (including value-added resellers and specialty retailers,
distributors, franchisers, manufacturers and national computer retailers 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. There can be no assurance that the Company will not be
subject to increased price competition, which could have a material adverse
effect on its results of operations. Many of the Company's current and potential
competitors are larger and have substantially greater resources than the Company
and the Company believes that a number of its competitors are employing or are
contemplating adopting business models similar to that employed by the Company.
The Company believes that competition may increase in the future, which could
require the Company to reduce prices, increase marketing expenditures or take
other actions which may have a material adverse effect on the Company's
financial position and operating results. There can be no assurance that the
Company will continue to compete successfully against existing or new
competitors that may enter markets in which the Company operates. See "Business
- -- Competition."

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS. For the quarter ended
December 31, 1995, sales to International Business Machines Corporation ("IBM")
accounted for approximately 27% of the Company's net sales and approximately 31%
of the Company's accounts receivable at December 31, 1995. In addition, the
Company's top three customers (which include IBM) accounted for approximately
36% of the Company's net sales for the quarter ended December 31, 1995 and 41%
of the Company's accounts receivable at December 31, 1995. The loss of any one
of the Company's largest customers or the failure of any one of such

7
<PAGE>
customers to pay its accounts receivable on a timely basis could have a material
adverse effect on the Company's financial position and operating results. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Customers."

EFFECTS OF LITIGATION SETTLEMENT. In April 1996 the Company settled
litigation with a former employee over the Company's rights in and to one of the
Company's computerized information systems. The settlement requires the Company
to make payments to this former employee of (i) $300,000 by April 29, 1996, (ii)
$200,000 by May 19, 1996, (iii) $100,000 by April 19, 1997, (iv) $7,500 per
month for sixty months, commencing on May 1, 1996, and (v) contingent upon the
consummation of this offering, either (A) shares of Common Stock equal in value
to $150,000 or (B) $175,000, to be paid out of the proceeds received by the
Company, if any, from insurance policies in connection with this litigation. The
Company believes that cash generated by operations and proceeds from its line of
credit will be sufficient to enable it to make such payments in a timely manner
without any material adverse effect on its financial position. The Company has
filed suit against its insurance carrier in order to recoup both legal costs
incurred by the Company in connection with its defense of the litigation
described above as well as for amounts paid to the former employee pursuant to
the settlement. Although the Company has prevailed in a summary judgment motion
against its insurance carrier, in which the court held that such insurance
carrier had a duty to defend the Company in connection with the aforementioned
litigation and that the insurance carrier breached such duty, there can be no
assurance that the Company will ultimately prevail in its action to recover such
costs. In the event that the Company is unable to recover a significant portion
of its defense costs from its insurance carrier during the quarter ending June
30, 1996, if at all, the payment of the aforementioned settlement costs and
expenses will have a material adverse effect on the Company's results of
operations for such quarter, which could have a material adverse effect on the
trading price of the Company's Common Stock. Furthermore, in the event that the
Company's cash balances and lines of credit are not sufficient to allow the
Company to make such settlement payments in a timely manner, any such nonpayment
could, under the terms of the settlement, result in the acceleration of unpaid
principal amounts due, if not cured within 150 days. Any such acceleration of
settlement payments could have a material adverse effect on the financial
position of the Company. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business -- Intellectual Property" and
"-- Legal Proceedings" and the financial statements and related notes thereto.

DEPENDENCE ON PROPRIETARY TECHNOLOGY. The Company's ability to effectively
compete in its market will depend significantly on its ability to protect its
proprietary technology in general and its newly-developed EPIC System in
particular. The Company relies primarily on trade secrecy and confidentiality
agreements in order to protect its rights in its proprietary technology. There
can be no assurance that proprietary information can be maintained as
confidential or be protected from unauthorized use or that the Company will be
able to achieve or maintain a meaningful technological advantage. The Company
could incur substantial costs in seeking enforcement of its proprietary rights
against infringement or unauthorized use by others or in defending itself
against similar claims of others. The Company does not have any patents or
statutory copyrights on the proprietary technology which the Company believes is
material to the Company's future success, and 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 has begun the installation of its EPIC System, which it expects
to complete in late 1996. However, the Company may experience delays,
complications or expenses in installing, integrating and operating the EPIC
System, any of which could have an adverse effect on the Company's operations
and financial performance. In addition, interruptions or disruptions in EPIC
System operations could adversely affect the financial results of the Company.
The Company believes that its EPIC System will require modification, improvement
or replacement as the Company expands. Such modifications, improvements or
replacements may require substantial expenditures to design and implement and
may require interruptions in operations during periods of implementation, any of
which could have a material adverse effect on the Company's financial position
and operating results.

RISK OF GEOGRAPHIC EXPANSION. The Company's growth has been and will
continue to be fueled, in part, by revenues generated through expansion into new
geographic markets. The Company has already opened

8
<PAGE>
branch offices and targeted many of the metropolitan markets that the Company
believes offer the most potential for sales growth. Accordingly, to the extent
the Company attempts to open additional branch offices, there can be no
assurance that the new offices will experience the same success, if any,
experienced by the Company's existing branch offices. The failure of the Company
to expand or the failure by the Company to generate sufficient sales volumes in
new branch offices could have a material adverse effect on the Company's
financial position and operating results. See "Business -- Facilities."

RISK OF PRODUCT RETURNS. As is typical of the computer 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 which are
outside the Company's control. Although the Company's distributors and
manufacturers have specific return policies that enable the Company to return
certain types of goods 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. The Company has recently modified its return policies in an
attempt to reduce the rate and costs of product returns. There can be no
assurance that such modifications will be effective in achieving these goals.
Any significant increase in the rate of product returns coupled with the
unwillingness by the Company's distributors or manufacturers to accept goods for
return could have a material adverse effect on the Company's financial position
and operating results. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

MANAGEMENT OF GROWTH. Since its inception, the Company has experienced
rapid growth in the number of its employees and offices, the amount of
administrative overhead and the type of services offered. This growth has and,
if continued, will continue to put strains on the Company's management,
operational and financial resources. The Company's growth, if any, is expected
to require the addition of new management personnel and the development of
additional expertise by existing management personnel. The Company's ability to
manage growth effectively will require it to continue to implement and improve
its operational, financial and sales systems, to develop the skills of its
managers and supervisors and to hire, train, motivate and effectively manage its
employees. There can be no assurance that the Company will be successful in
managing any expansion, and the failure to do so could materially adversely
affect the Company's financial position and operating results. See "Management."

INDUSTRY EVOLUTION AND PRICE REDUCTIONS; CHANGING METHODS OF
DISTRIBUTION. The personal computer industry is undergoing significant change.
The industry has become more accepting of large-volume, cost-effective channels
of distribution such as computer superstores, consumer electronics and office
supply superstores, national direct marketers and mass merchants. In addition,
many traditional computer resellers are consolidating operations and acquiring
or merging with other resellers to increase efficiency. This current industry
reconfiguration has resulted in increased pricing pressures. Decreasing prices
of Computer Products require the Company to sell a greater number of products to
achieve the same level of net sales and gross profit. The continuation of such
trend could make it more difficult for the Company to continue to increase its
net sales and earnings growth, if at all. In addition, the Company believes that
the historically high rate of growth of the personal computer industry has
recently begun to slow. If the growth rate of the personal computer industry
were to continue to decrease, the Company's financial position and operating
results could be materially adversely affected. See "Business -- Industry
Background."

Furthermore, new methods of distribution and sales of Computer Products,
such as on-line shopping services and catalogs published on CD-ROM, may emerge
in the future. Hardware and software manufacturers have sold, and may in the
future 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 accounts.
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
financial position and operating results.

POSTAGE AND PAPER COSTS. Postage is expected to be a significant expense in
the operation of the Company's Price Pointe division. The Company intends to
mail its catalogs through the U.S. Postal Service. Any increases in postal rates
in the future could have an adverse effect on the Company's future operating

9
<PAGE>
results. The cost of paper is also expected to be a significant expense of the
Company in printing its catalogs. The cost of paper has increased significantly
over the last several years, and may continue to increase in the future. While
the Company currently does not incur significant amounts of paper costs in
producing catalogs, it expects that such costs will become increasingly
significant as the Company begins to invest additional resources in its Price
Pointe division. See "Business -- Expansion of Services."

RISK ASSOCIATED WITH INTERNATIONAL OPERATIONS. The Company has recently
expanded its operations into Pakistan. 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 financial position
and operating results. See "Business -- Expansion of Services."

RISKS OF CONSULTING SERVICES AND VALUE-ADDED BUSINESS. The Company has
recently begun to expand the nature and scope of its computer consulting and
value-added services. The Company has had only limited experience in providing
such consulting and value-added services. There can be no assurance that the
consulting and value-added services business will be successfully integrated
with the Company's Computer Products reselling business or that the Company will
be able to effectively compete in this market. In addition, the Company will be
subject to the risks associated with a consulting and value-added services
business, including dependence on reputation, volatility of workload and
dependence on ability to retain qualified technical personnel. Also, a portion
of the Company's consulting and value-added services 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 financial position and operating results. See "Business
- -- Expansion of Services."

TECHNOLOGICAL CHANGE; ACCESS TO NEW PRODUCTS. The Computer Products market
is characterized by rapid technological change and frequent introduction of new
products and product enhancements. Although the Company does not maintain
significant amounts of inventory, the failure of the Allied Distributors to
maintain adequate inventory levels of Computer Products demanded by the
Company's existing and potential customers and to effectively react to new
product introductions could have a material adverse effect on the Company's
financial position and operating results. In addition, because certain products
offered by the Company are subject to manufacturer or distributor allocations,
which limit the number of units of such products available to the Company, 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 to meet demand.
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 financial
position and operating results.

POTENTIAL CANCELLATION OF SHORT-TERM CONTRACTS. The Company provides
Computer Products and services to its customers pursuant to short-term contracts
that are generally non-exclusive and which do not commit the customer to minimum
sales volume. As a result, the Company is subject to the risk that its customers
will terminate or reduce the volume of purchases through the Company. In the
event that a significant number of its customers terminate their arrangements
with the Company or reduce the volume of purchases, the Company's financial
position and operating results could be materially adversely affected. See
"Business -- Customers."

NO PRIOR PUBLIC MARKET. Prior to this offering, there has been no public
market for the Common Stock of the Company, and there can be no assurance that
an active market will develop or be sustained after this offering or that the
market price of the Common Stock will not decline below the initial public
offering price. In the absence of such a market, investors may be unable to
readily liquidate their investment in the Common Stock.

STATE SALES TAX COLLECTION. The Company presently collects sales tax only
on sales of products shipped to the states of Arkansas, California, Colorado,
Illinois, Nevada, New York, Tennessee, Texas and Washington. Various states have
sought to impose on direct marketers the burden of collecting state sales taxes
on the

10
<PAGE>
sale of products shipped to those state's residents. The United States Supreme
Court has recently ruled that a state may not impose tax collection obligations
on an out-of-state mail order company whose only contact with the taxing state
is the distribution of catalogs and other advertising materials through the mail
and whose subsequent delivery of purchased goods is by U.S. mail or interstate
common carriers. In 1995, legislation was introduced in the United States Senate
that, if passed, would supersede the Supreme Court's ruling and impose state
sales tax collection obligations on out-of-state mail order companies, such as
the Company under certain conditions. If legislation of this type is enacted,
the imposition of a tax collection obligation on the Company in states to which
it ships products may result in reduced demand for the Company's products via
direct marketing and additional administrative expenses to the Company which
could have a material adverse effect on the Company's financial position and
operating results.

BUSINESS INTERRUPTION. 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 (due to a number
of possible causes, including earthquake, riot, or a material failure of the
Company's telephone or power service) could have a material adverse effect upon
the Company. In addition, the Company's success is largely dependent on the
accuracy, quality and utilization of the information generated by its
specialized information systems, including its EPIC System. Although the Company
has never experienced any significant disruptions, a substantial interruption in
these systems or in the Company's telephone communications systems could have a
material adverse effect on the Company's business. See "Business -- En Pointe
Products and Services."

MINORITY PREFERENCE PROGRAMS; RISK OF GOVERNMENT BUSINESS. A portion of the
Company's business has been and is expected to be generated from sales to
federal, state and local government agencies. Approximately 18% of the Company's
net sales were to government agencies in fiscal 1995. Because the Company, until
the completion of this offering, was a minority and woman-owned business, the
Company has benefited from government policies that give preferential treatment
to companies owned by minorities or women. The Company is not able to accurately
determine whether or not particular orders are due to the Company's status as a
minority or woman-owned business, and therefore the Company cannot determine
with any degree of accuracy how much of the Company's net sales have been
derived due to the Company's status as a minority or woman-owned business.
Recently, such preferences have come under increasing scrutiny by Congress as
well as state legislators and have been curtailed or eliminated in certain
jurisdictions. To the extent that minority or women-owned business preference
programs are curtailed or eliminated the Company's ability to generate revenues
through sales to governmental agencies could be adversely affected. In addition,
as a result of this offering, it is likely that the Company will no longer be
able to qualify as a minority and woman-owned business, and therefore may no
longer be able to compete for business on such basis. Furthermore, the Company's
ability to compete for government contracts may be materially adversely affected
by political considerations in connection with the allocation of government
contracts, many of which are outside the Company's control. In addition, the
Company's ability to generate sales to government agencies may be materially
adversely affected by budgetary constraints and other factors which are outside
the Company's control, such as decreased tax revenues, shifting governmental
spending priorities, and any trend towards downsizing of federal, state or local
governments.

POTENTIAL QUARTERLY FLUCTUATIONS. The Company experiences variability in
its net sales and net income on a quarterly basis as a result of many factors,
including the condition of the computer industry in general, seasonal shifts in
demand for Computer Products and industry announcements of new products or
upgrades. The Company's planned operating expenditures each quarter are based on
sales forecasts for the quarter. If sales do not meet expectations in any given
quarter, results of operations for the quarter may be materially adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

IMMEDIATE SUBSTANTIAL DILUTION. The purchasers of the shares of Common
Stock offered hereby will experience an immediate substantial dilution of $4.80
per share, or 60% of their investment, based upon the net tangible book value
per share of Common Stock at December 31, 1995. See "Dilution."

DEPENDENCE ON 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 key personnel. The loss of the

11
<PAGE>
services of one or more of any of its existing senior management or sales
personnel, including those of Bob Din, the Company's President and Chief
Executive Officer, Javed Latif, the Company's Executive Vice President, and
Kevin Schatzle, the Company's Senior Vice President of Sales, would have a
material adverse effect on the Company's financial position and operating
results. The Company has entered into five-year employment contracts with each
of Messrs. Din, Latif and Schatzle. Each such employment contract contains
severance provisions which require the Company to make significant severance
payments under certain circumstances. See "Management -- Employment Agreements."
In addition, Mr. Din is the beneficial owner of 1,453,902 shares of Common
Stock, which will represent approximately 25.9% of the outstanding Common Stock
upon the completion of this offering, and each of Messrs. Latif and Schatzle
have been granted options to purchase 50,000 shares of Common Stock. Although
the Company has obtained key man life insurance in the face amount of $1 million
on the life of Mr. Din, there can be no assurance that the proceeds of such
policy will be sufficient to compensate the Company for any disruptions
resulting from the loss of Mr. Din's services. See "Management."

The Company's success and plans for future growth will also depend on its
ability to attract and retain highly skilled personnel in all areas of its
business. Although competition for qualified personnel in the computer industry
is intense, the Company believes that it has thus far been, and will continue to
be, successful in attracting and retaining qualified personnel for its business.
See "Management."

POSSIBLE ADVERSE IMPACT FROM THE LACK OF STOCKHOLDER GUARANTEES IN THE
FUTURE. In the past, numerous obligations of the Company have been personally
guaranteed by Bob Din and/or Naureen Din. In the future, neither Bob Din nor
Naureen Din will be obligated to, nor do they intend to, provide such personal
guarantees. The lack of such guarantees or the withdrawal of existing guarantees
may adversely affect the Company's ability to obtain financing or other
commitments from banks, distributors or others. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

NO DIVIDENDS. It is the current policy of the Company that it will retain
earnings, if any, for continued expansion of its operations and other corporate
purposes and that it will not pay any cash dividends on its Common Stock in the
foreseeable future. The payment of cash dividends by the Company is prohibited
by certain of the Company's current credit facilities. Future borrowings may
also contain similar restrictions. See "Dividend Policy."

RECENTLY FORMED REPRESENTATIVE MAY BE UNABLE TO COMPLETE OFFERING OR MAKE A
MARKET. The Representative was formed in March 1995 and this offering is the
second public offering underwritten by the Representative. However, the
Chairman, the Vice-Chairman, the Senior Vice President of Trading and the
Director of Corporate Finance of the Representative have prior experience with
public offerings. The Chairman of the Representative has been in the securities
industry for more than 11 years. He was associated with various national
financial firms, including as a Registered Principal and a Registered
Representative. The Vice-Chairman of the Representative has been in the
securities industry for over 20 years, where he served in various capacities,
including executive officer and Registered Principal and Representative, for
various firms providing back office and related services to the securities
industry, and was employed in various capacities by the National Association of
Securities Dealers, Inc. The Senior Vice President of Trading of the
Representative has been employed in the securities trading business in Los
Angeles for over 31 years. He has been responsible for supervising the market
making operations, as well as managing the correspondent wire operations, for a
financial firm, and worked as an OTC trader at various financial firms.
Nonetheless, due to the Representative's limited history, there can be no
assurance that the offering will be completed or, if completed, that an active
trading market for the Common Stock will develop. The Representative is not
affiliated with the Company or any controlling person of the Company. See
"Underwriting."

REPRESENTATIVE'S POTENTIAL INFLUENCE ON THE MARKET. It is anticipated that
a significant number of the shares of Common Stock being offered hereby will be
sold to clients of the Representative. Although the Representative has advised
the Company that it currently intends to make a market in the Common Stock
following this offering, it has no legal obligation, contractual or otherwise,
to do so. The Representative, if it becomes a market maker, could be a
dominating influence in the market for the Common Stock, if one develops. The
prices and the liquidity of the Common Stock may be significantly affected by
the degree, if any, of the Representative's participation in such market. There
can be no assurance that any market activities of the Representative, if
commenced, will be continued.

12
<PAGE>
NO CORRELATION BETWEEN OFFERING PRICE AND VALUE OF SHARES; POTENTIAL
VOLATILITY OF STOCK PRICE. The initial public offering price of the Common
Stock has been determined by negotiation between the Company and the
Representative and does not necessarily bear any relationship to the Company's
book value, assets, past operating results, financial condition or any other
established criteria of value. See "Underwriting" for a discussion of the
factors considered in determining the initial public offering price. There can
be no assurance that the Common Stock will trade at market prices in excess of
the initial public offering price, as prices for the Common Stock in any public
market which may develop will be determined in the marketplace and may be
influenced by many factors, including the depth and liquidity of the market for
the Common Stock, investor perceptions of the Company, quarter-to-quarter
variations in operating results, changes in earnings estimates by analysts
following the Company, if any, and general factors affecting the computer
industry as well as general economic, political and market conditions. In
addition, stock prices of many companies in the computer industry fluctuate
widely for reasons which may be unrelated to operating results. Due to analysts'
expectations of continued growth, if any, and the high price/earnings ratio at
which the Common Stock may trade, any shortfall in expectations could have an
immediate and significant adverse effect on the trading price of the Common
Stock.

SHARES ELIGIBLE FOR FUTURE SALE. Sales of substantial amounts of Common
Stock in the public market following the offering made hereby could have a
materially adverse effect on the market price of the Common Stock. Upon
completion of this offering, the Company will have outstanding 5,607,500 shares
of Common Stock. Of these shares, the 2,250,000 shares offered hereby (2,587,500
shares if the Underwriters' over-allotment option is exercised in full) will be
freely tradeable without restriction or further registration under the
Securities Act of 1933, as amended (the "Securities Act"), unless purchased by
"affiliates" of the Company as that term is defined in Rule 144 under the
Securities Act. Subject to certain restrictions imposed by the National
Association of Securities Dealers, Inc., an additional 7,500 shares will be
available for resale from time to time beginning 12 months following the
completion of this offering by a non-affiliate of the Company. The remaining
3,350,000 shares of Common Stock outstanding upon completion of this offering
are "restricted securities" as that term is defined in Rule 144. Following the
expiration of lock-up agreements (which occurs six months after the
effectiveness of this offering), all such remaining shares will be eligible for
immediate resale subject to the timing, volume and manner of sale restrictions
of Rule 144. See "Description of Capital Stock," "Shares Eligible for Future
Sale" and "Underwriting."

CONTROL BY MANAGEMENT AND EXISTING STOCKHOLDERS. Upon consummation of this
offering, the present directors, executive officers and principal stockholders
of the Company and their affiliates will, in the aggregate, beneficially own
approximately 60% of the outstanding Common Stock (54% if the Underwriters'
over-allotment option is exercised in full). These stockholders, acting
together, may have the ability to control the election of the Company's
directors and most other stockholders' actions and, as a result, direct the
Company's affairs and business. Such concentration may have the effect of
delaying or preventing a change of control of the Company. See "Principal
Stockholders."

POTENTIAL EFFECT OF ANTI-TAKEOVER PROVISIONS. The Company's Board of
Directors has the authority to issue up to 5,000,000 shares of Preferred Stock
and to determine the price, rights, preferences, qualifications, limitations and
restrictions, including voting rights, of those shares without any further vote
or action by the stockholders. The rights of the holders of Common Stock will be
subject to, and may be adversely affected by, the rights of the holders of any
Preferred Stock that may be issued in the future. The issuance of Preferred
Stock could have the effect of delaying or preventing a change of control.
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 price of the Common Stock and, to the
extent tender offers for shares of the Company's Common Stock are discouraged or
prevented by these provisions, may reduce the likelihood that investors could
receive a premium for their shares of Common Stock. See "Description of Capital
Stock."

13
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the Common Stock offered
hereby at the initial public offering price of $8.00 per share, after deducting
underwriting discounts and commissions and estimated offering expenses payable
by the Company, are estimated to be approximately $15.6 million. The Company
will not receive any proceeds from the sale of shares of Common Stock by the
Selling Stockholder upon exercise of the over-allotment option granted to the
Underwriters.

The Company expects to use approximately $10.7 million (which represents 69%
of the total net proceeds) to reduce the Company's indebtedness under its lines
of credit (which indebtedness was used to finance purchases of Computer Products
in the ordinary course of the Company's business), approximately $1.0 million of
the net proceeds of this offering (which represents 6% of the total net
proceeds) to finance geographic expansion, approximately $1.0 million (which
represents 6% of the total net proceeds) for working capital and general
corporate purposes and approximately $2.9 million (which represents 19% of the
total net proceeds) to repay current and long-term portions of notes payable
indebtedness. The long-term balance of such indebtedness was $1,200,572 as of
December 31, 1995, consisting of two notes due to certain Allied Distributors
bearing interest at 8.5% and 10%, respectively, which notes require principal
and interest payments quarterly and monthly, respectively. The note proceeds
were used to finance purchases of Computer Products from certain Allied
Distributors and to repay indebtedness of the Company to another Allied
Distributor. The notes are due on August 18, 1997 and August 1, 1997,
respectively. Any remaining net proceeds may be used for strategic acquisitions
of businesses, products or technologies complementary to those of the Company.
In lieu of the foregoing, the Company may instead reserve a substantial portion
of the proceeds of this offering as working capital in order to obtain more
favorable terms and conditions under its line of credit agreements. The Company
is not currently a party to any commitments or agreements, and is not currently
involved in any negotiations with respect to any acquisitions. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."

The foregoing represents the Company's best estimate of its use of the net
proceeds of this offering based upon its present plans, the state of its
business operations and current conditions in the Computer Products industry.
The Company reserves the right to change the use of the net proceeds if
unanticipated developments in the Company's business, business opportunities, or
changes in economic, regulatory or competitive conditions, make shifts in the
allocations of net proceeds necessary or desirable. Pending any uses, the
Company intends to invest the net proceeds from this offering in short-term,
interest bearing securities or accounts.

DIVIDEND POLICY

The Company has never declared or paid any cash dividends on shares of 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. Future cash dividends, if any,
will be determined by the Board of Directors. The Company's ability to pay cash
dividends is restricted by certain of the Company's current credit facilities,
and future borrowings may contain similar restrictions.

14
<PAGE>
CAPITALIZATION

The following table sets forth (i) the actual capitalization of the Company
as of December 31, 1995 and (ii) the as adjusted capitalization of the Company
after giving effect to the sale of the 2,250,000 shares of Common Stock offered
by the Company hereby at the initial public offering price of $8.00 per share,
after deducting underwriting discounts and commissions and the estimated
offering expenses payable by the Company, and the application of the net
proceeds thereof as set forth in "Use of Proceeds." The information set forth
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the financial statements
and the related notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short Term Debt:
Lines of Credit......................................................................... $ 38,655 $ 27,925
Notes Payable........................................................................... 1,657 --
--------- -----------
$ 40,312 $ 27,925
--------- -----------
--------- -----------
Long Term Debt............................................................................ $ 1,201 $ --
--------- -----------
Stockholders' Equity:
Preferred Stock, par value $.001 per share, 5,000,000 shares authorized, none issued or
outstanding............................................................................ -- --
Common Stock, par value $.001 per share, 15,000,000 shares authorized, 3,350,000 shares
issued and outstanding, 5,607,500 shares issued and outstanding, as adjusted (1)....... 3 6
Additional Paid-in Capital.............................................................. 959 16,586
Retained Earnings....................................................................... 1,571 1,571
--------- -----------
Total Stockholders' Equity............................................................ 2,533 18,163
--------- -----------
Total Capitalization................................................................ $ 3,734 $ 18,163
--------- -----------
--------- -----------
</TABLE>

- ------------------------
(1) Excludes (i) 264,000 shares of Common Stock issuable upon exercise of
currently outstanding options, (ii) an additional 346,000 shares of Common
Stock reserved for issuance under the Company's stock incentive and stock
purchase plans, and (iii) 217,500 shares of Common Stock issuable upon
exercise of the Representative's Warrants; and includes 7,500 shares of
Common Stock issued subsequent to December 31, 1995 but prior to the date of
this Prospectus.

15
<PAGE>
DILUTION

The net tangible book value of the Company's Common Stock at December 31,
1995 was $2,294,000, or $.68 per share. Net tangible book value per share
represents the amount of the Company's total tangible assets less total
liabilities divided by the number of shares of Common Stock outstanding. After
giving effect to the sale of the 2,250,000 shares offered by the Company hereby
(at the initial public offering price of $8.00 per share) and the application of
the net proceeds therefrom (after deducting estimated offering expenses and
underwriting discounts and commissions), the pro forma, net tangible book value
of the Company at December 31, 1995 would have been approximately $17,924,000 or
$3.20 per share. This represents an immediate increase in the net tangible book
value of $2.52 per share to existing stockholders and an immediate dilution in
net tangible book value of $4.80 per share to purchasers of shares of Common
Stock offered hereby. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share....................... $ 8.00
Net tangible book value per share at December 31, 1995.............. $ .68
Increase in net tangible book value per share attributable to new
investors.......................................................... 2.52
---------
Pro forma, as adjusted, net tangible book value per share after the
offering............................................................. 3.20
---------
Dilution per share to new investors................................... $ 4.80
---------
---------
</TABLE>

The following table summarizes, at December 31, 1995, the number of shares
of Common Stock purchased from the Company, the total consideration paid and the
average price per share paid by existing stockholders and by purchasers of the
shares of Common Stock offered hereby (at the initial public offering price of
$8.00 per share before deducting the underwriting discounts and commissions and
estimated offering expenses payable by the Company):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------------ --------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders (1)................ 3,357,500 60% $ 962,120(2) 5% $ .29
New Investors............................ 2,250,000 40% 18,000,000 95% 8.00
---------- --- ------------- ---
Total................................ 5,607,500 100% $ 18,962,120 100%
---------- --- ------------- ---
---------- --- ------------- ---
</TABLE>

(2) Total consideration paid by existing stockholders includes the conversion,
as of September 30, 1995, of notes payable to stockholders of $939,862 to
additional paid-in capital.

16
<PAGE>
SELECTED FINANCIAL DATA

The selected financial data set forth below as of September 30, 1995 and 1994
and for the period from January 25, 1993 (date of inception) through September
30, 1993 and for each of the fiscal years in the two-year period ended September
30, 1995, have been derived from the Company's financial statements and the
related notes thereto that have been audited by Coopers & Lybrand L.L.P.,
independent accountants. The financial statements as of September 30, 1995 and
1994 and for the period from January 25, 1993 (date of inception) through
September 30, 1993 and for each of the fiscal years in the two-year period ended
September 30, 1995, and the report thereon are included elsewhere in this
Prospectus. The selected financial data set forth below for the three-month
periods ended December 31, 1995 and 1994, and as of December 31, 1995, are
derived from unaudited financial statements included elsewhere herein and, in
the opinion of the Company, include all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the information set forth
therein. The results for the three months ended December 31, 1995 are not
necessarily indicative of the results to be expected for the full year ending
September 30, 1996. 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 financial statements and the related notes thereto included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, DECEMBER 31,
--------------------------------- --------------------
1993 1994 1995 1994 1995
--------- ---------- ---------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales...................................... $ 19,327 $ 109,987 $ 200,797 $ 43,584 $ 77,016
Cost of sales.................................. 17,288 101,057 184,761 40,294 70,955
--------- ---------- ---------- --------- ---------
Gross profit................................. 2,039 8,930 16,036 3,290 6,061
Operating expenses:
Selling and marketing expenses............... 1,277 5,493 9,307 1,987 3,304
General and administrative expenses.......... 688 2,159 3,755 869 985
--------- ---------- ---------- --------- ---------
Operating income............................... 74 1,278 2,974 434 1,772
Interest expense............................... 192 1,121 1,843 407 579
Other income, net.............................. (77) (159) (61) (8) (27)
--------- ---------- ---------- --------- ---------
Income (loss) before income taxes............ (41) 316 1,192 35 1,220
Provision (benefit) for income taxes........... (21) 129 489 14 518
--------- ---------- ---------- --------- ---------
Net income (loss)............................ $ (20) $ 187 $ 703 $ 21 $ 702
--------- ---------- ---------- --------- ---------
--------- ---------- ---------- --------- ---------
Net income (loss) per share.................... $ (.01) $ .06 $ .21 $ .01 $ .21
--------- ---------- ---------- --------- ---------
--------- ---------- ---------- --------- ---------
Number of shares used in computing per share
amounts (1)................................... 2,137 3,197 3,410 3,410 3,410
--------- ---------- ---------- --------- ---------
--------- ---------- ---------- --------- ---------
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, PRO FORMA
------------------------------- DECEMBER 31, DECEMBER 31,
1993 1994 1995 1995 1995 (2)
--------- --------- --------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................... $ 0 $ 1 $ 290 $ 149 $ 149
Restricted cash............................. 258 616 1,116 1,616 1,616
Working capital............................. 290 1,377 2,286 2,356 2,059
Total assets................................ 9,459 24,462 36,792 50,824 51,271
Current liabilities......................... 8,803 22,334 33,227 47,090 47,835
Non-current liabilities..................... 666 1,940 1,733 1,201 1,585
Total stockholders' equity (deficit)........ (11) 189 1,832 2,533 1,852
</TABLE>

- ------------------------
(1) See Note 1 of Notes to Financial Statements.

(2) The pro forma balance sheet data includes litigation settlement costs of
approximately $1,129,000 to reflect the effects of the agreement entered
into by the Company in April 1996 to settle certain litigation as if it had
occurred at the date of the most recent financial statements, as further
discussed in "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's financial statements and
related notes thereto.

17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

OVERVIEW

The Company was incorporated in January 1993 and commenced operations in
March 1993 as a reseller of Computer Products. Because the Company's business
model involves the resale of Computer Products held in inventory by certain
distributors of computers and computer-related products, the Company does not
maintain significant amounts of inventory on hand for resale. The Company
intends to expand its provision of value-added services to include more
sophisticated services and also intends to expand its ability to provide
midrange systems as well as related consultation and programming services
through its newly-created Logic Pointe Division as well as through its existing
branch offices. These expansions of the Company's services and products are new
undertakings of the Company, and are expected to utilize a significant amount of
the Company's financial resources in the near future. See "Business -- Expansion
of Services."

Revenues are recognized upon product shipment and satisfaction of
significant vendor obligations, if any. Net sales consist of product sales, less
discounts. Cost of sales includes estimated allowances for losses from returns
that will not be accepted by the Company's distributors. The Company's return
policy previously placed major emphasis on customer accommodation at the expense
of losses arising from product that could not be returned to distributors. As a
result of this policy, the Company experienced high losses on product returns
for fiscal year 1995 of .25% of sales. During 1995, the Company recognized the
need for tighter controls of product returns and centralized the processing of
returns. In October 1995, the Company amended its return policy to more closely
align its policies with those of its distributors. In addition, a new database
that could more closely monitor the returned product authorization was initiated
and additional personnel were hired to assist in return processing. As a result
of these controls and attention to returns, loss estimates for product returns
declined to .11% of sales for the quarter ended December 31, 1995.

Because the Company does not experience significant tax differences, the
Company's tax rate has not varied significantly from the statutory rate in the
past, and the Company does not anticipate that its tax rate will vary
significantly from the statutory rate in the future.

The Company does not place an order for product purchases from distributors
until it has received a customer sales order. Inventory is then drop-shipped by
the distributor to either the customer or the Company's configuration center in
Memphis, Tennessee. The distributor typically ships its products within one to
two days of receipt of a purchase order and, consequently, substantially all of
the Company's revenues in any quarter result from orders received in that
quarter. Thus, although the Company does not maintain inventory in stock for
resale, it records as inventory merchandise being configured and merchandise
purchased from distributors, but not yet shipped to customers. As a result, the
Company generally reflects one or two days' cost of sales as inventory.

The Company finances the purchase of Computer Products to fill sales orders
through lines of credit collateralized by accounts receivable. Because the
amount of credit available to the Company is dependent upon its accounts
receivable balances, any delay in collection or deterioration of the quality of
accounts receivable could adversely affect the Company's ability to obtain
necessary credit, as could economic trends in the computer industry, interest
rate fluctuations and the lending policies of the Company's lenders, resulting
in a material adverse effect on the Company's financial position and results of
operations.

Sales to IBM accounted for approximately 27% of sales for the three months
ended December 31, 1995 and 11% of sales for the year ended September 30, 1995.
Accounts receivable from IBM amounted to 31% and 15% of the Company's accounts
receivable at December 31, 1995 and September 30, 1995, respectively. With the
addition of Price Pointe, the Company's direct marketing service division, the
Company will target corporate and government accounts which are anticipated to
be smaller in size than IBM and other customers currently served. The effect of
this strategy on the Company's overall sales mix is uncertain, and

18
<PAGE>
the Company may continue to make a significant portion of its sales to one or
more large customers. Because the Company's sales to high volume customers
typically generate lower gross profit margins, any significant increase in sales
to high volume customers, while increasing the Company's overall net sales and
profitability, may reduce the Company's overall gross profit margins.

In April 1996 the Company, Bob and Naureen Din entered into a settlement
agreement with a former employee of the Company (the "Settlement Agreement") in
connection with certain litigation involving such former employee (the "1995
Litigation"), pursuant to which the former employee has released the Company
from any and all claims with respect to the Company's use of certain
computerized information system software (the "Software") originally developed
by the former employee prior to his employment with the Company. Legal fees
incurred in conjunction with the Settlement Agreement and related litigation
have been expensed by the Company as incurred. Amounts paid by the Company
pursuant to the Settlement Agreement will be expensed in April 1996, the month
in which the Settlement Agreement was entered into by the Company.

The Company has filed suit against its insurance carrier in order to recoup
both legal costs incurred by the Company in connection with its defense of the
1995 Litigation as well as for amounts paid to the former employee pursuant to
the Settlement Agreement. Although the Company has prevailed in a summary
judgment motion against its insurance carrier, in which the court held that such
insurance carrier had a duty to defend the Company in connection with the 1995
Litigation and that the insurance carrier breached such duty, there can be no
assurance that the Company will ultimately prevail in its action to recover such
costs. In the event that the Company is unable to recover a significant portion
of its defense costs from its insurance carrier during the quarter ending June
30, 1996, if at all, the payment of the aforementioned settlement costs and
expenses will have a material adverse effect the Company's results of operations
for such quarter, which could have a material adverse effect on the trading
price of the Company's Common Stock.

RESULTS OF OPERATIONS

The following table sets forth various items as a percentage of net sales
for the two fiscal years ended September 30, 1995 and 1994, the period from
January 25, 1993 (date of inception) through September 30, 1993 and each of the
three-month periods ended December 31, 1995 and 1994.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, DECEMBER 31,
------------------------------------- ------------------------
1993 1994 1995 1994 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............................................... 89.5 91.9 92.0 92.5 92.1
----- ----- ----- ----- -----
Gross profit.............................................. 10.5 8.1 8.0 7.5 7.9
Operating expenses:
Selling and marketing expenses............................ 6.6 5.0 4.6 4.5 4.3
General and administrative expenses....................... 3.5 2.0 1.9 2.0 1.3
----- ----- ----- ----- -----
Operating income............................................ .4 1.1 1.5 1.0 2.3
Interest expense............................................ 1.0 1.0 .9 .9 .7
Other income, net........................................... (.4) (.2) 0 0 .0
----- ----- ----- ----- -----
Income (loss) before income taxes......................... (.2) .3 .6 .1 1.6
Provision (benefit) for income taxes........................ (.1) .1 .2 .0 .7
----- ----- ----- ----- -----
Net income (loss)......................................... (.1)% .2 % .4 % .1 % .9 %
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>

19
<PAGE>
COMPARISON OF THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994

NET SALES. Net sales for the three months ended December 31, 1995 were
$77.0 million, an increase of $33.4 million, or 76.7%, compared to $43.6 million
for the three months ended December 31, 1994. The increase in sales was
primarily attributable to the commencement of sales to IBM pursuant to a
three-year sales contract entered into in early fiscal 1995, and, to a lesser
extent, existing sales personnel generating new customers, as well as increased
sales to existing customers.

GROSS PROFIT. Gross profit for the three months ended December 31, 1995 was
$6.1 million, an increase of $2.8 million, or 84.2%, compared to $3.3 million
for the three months ended December 31, 1994. As a percentage of sales, gross
profit increased to approximately 7.9% for the three months ended December 31,
1995 from 7.5% for the three months ended December 31, 1994. The Company
anticipates that its gross profit percentage will be positively affected by any
significant increases in the Company's sales of higher-margin value-added
services. However, gross profit may be negatively affected by any significant
increases in the Company's sales to high-volume customers, which typically yield
a lower gross profit percentage.

SELLING AND MARKETING EXPENSES. Selling and marketing expenses for the
three months ended December 31, 1995 were $3.3 million, an increase of $1.3
million, or 66.3%, compared to $2.0 million for the three months ended December
31, 1994, primarily as a result of increased variable sales costs as a result of
increased sales volume. As a percentage of sales, however, selling and marketing
expenses decreased to 4.3% for the three months ended December 31, 1995 from
4.5% for the three months ended December 31, 1994 due to fixed costs being
spread over a higher volume of sales.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
for the three months ended December 31, 1995 were $1.0 million, an increase of
$0.1 million, or 13.4%, compared to $0.9 million in the three months ended
December 31, 1994, primarily as a result of increased staff and other
administrative functions necessary to support the increase in sales volume. As a
percentage of sales, general and administrative expenses decreased to 1.3% for
the three months ended December 31, 1995 from 2.0% for the three months ended
December 31, 1994. The decrease in general and administrative expenses as a
percentage of sales was due to the fixed costs required to support sales being
spread over a higher volume of sales.

INTEREST EXPENSE. Interest expense for the three months ended December 31,
1995 was $0.6 million, an increase of $0.2 million, or 42.3%, compared to $0.4
million for the three months ended December 31, 1994. The increase in interest
expense was primarily due to increased borrowings to support an increase in the
Company's accounts receivable balances resulting from an increase in its net
sales.

NET INCOME (LOSS). Net income for the three months ended December 31, 1995
was $0.7 million, an increase of $.68 million, or 3,265%, compared to $.02
million for the three months ended December 31, 1994. Net income increased
primarily as a result of the increase in sales and the related increase in gross
profit in 1995, as described above.

COMPARISON OF YEARS ENDED SEPTEMBER 30, 1995 AND 1994

NET SALES. Net sales for 1995 were $200.8 million, an increase of $90.8
million, or 82.6%, compared to $110.0 million for 1994. The increase in sales
was attributable to sales to new customers, increased sales to existing
customers and the addition of IBM as a customer in early fiscal 1995.

GROSS PROFIT. Gross profit for 1995 was $16.0 million, an increase of $7.1
million, or 79.6%, compared to $8.9 million for 1994, and remained consistent as
a percentage of sales at approximately 8.0% in 1995 as compared to 8.1% in 1994.

SELLING AND MARKETING EXPENSES. Selling and marketing expenses for 1995
were $9.3 million, an increase of $3.8 million, or 69.4%, compared to $5.5
million in 1994, primarily as a result of increased sales volume. As a
percentage of sales, however, this expense decreased to 4.6% in 1995 from 5.0%
in 1994, due to fixed costs being spread over a higher volume of sales and a
lower commission rate paid on sales to high-volume customers.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
for 1995 were $3.8 million, an increase of $1.6 million, or 73.9%, compared to
$2.2 million in 1994, primarily as a result of increased staff necessary to
support the increase in sales volume and other administrative activities. As a
percentage of sales, general and administrative expenses decreased slightly to
1.9% in 1995 as compared to 2.0% in 1994.

20
<PAGE>
INTEREST EXPENSE. Interest expense for 1995 was $1.8 million, an increase
of $.7 million, or 64.4%, compared to $1.1 million for 1994. The increase in
interest expense was primarily due to increased borrowings to support an
increase in the Company's accounts receivable balances resulting from growth in
its net sales and, to a lesser extent, a slight increase in interest rates.

NET INCOME (LOSS). Net income for 1995 was $.7 million, an increase of $.5
million, or 276.5%, compared to $.19 million for 1994. The increase in 1995 net
income resulted primarily from the 82.6% increase in sales and the related 79.6%
increase in gross profit in 1995, as discussed above. Additionally, although
gross profit remained relatively stable as a percentage of sales, selling and
marketing expenses and general and administrative expenses decreased as a
percentage of sales from 7.0% in 1994 to 6.5% in 1995.

COMPARISON OF YEAR ENDED SEPTEMBER 30, 1994 TO PERIOD ENDED SEPTEMBER 30,
1993

NET SALES. Net sales for 1994 were $110.0 million, an increase of $90.7
million, or 469%, compared to $19.3 million for 1993. A portion of the net sales
increase was attributable to fiscal 1993 being only a partial year, as the
Company began operations on January 25, 1993. However, the overall increase in
sales was primarily due to increased sales efforts and an expanding customer
base.

GROSS PROFIT. Gross profit for 1994 was $8.9 million, an increase of $6.9
million, or 338%, compared to $2.0 million for 1993. As a percentage of sales,
gross profit decreased to 8.1% for 1994 from 10.5% for 1993. The decrease in
gross profit percentage was primarily due to increased sales to high-volume
customers in 1994, which typically yield a lower gross profit percentage than
smaller volume accounts.

SELLING AND MARKETING EXPENSES. Selling and marketing expenses for 1994
were $5.5 million, an increase of $4.2 million, or 330%, compared to $1.3
million in 1993, primarily as a result of increased sales, expansion of the
sales and marketing function and the opening of new sales offices. As a
percentage of sales, however, this expense decreased to 5.0% in 1994 from 6.6%
in 1993, due to fixed costs being spread over a higher volume of sales and a
lower commission rate paid on sales to high-volume customers.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
for 1994 were $2.2 million, an increase of $1.5 million, or 214%, compared to
$.7 million in 1993. As a percentage of sales, general and administrative
expenses decreased to 2.0% in 1994 from 3.5% in 1993, primarily as a result of
an increase in sales volume.

INTEREST EXPENSE. Interest expense for 1994 was $1.1 million, an increase
of $.9 million, or 484%, compared to $.2 million for 1993. The increase in
interest expense was primarily a result of increased borrowings to support the
Company's growing accounts receivable balance as the Company increased its net
sales.

NET INCOME (LOSS). Net income for 1994 was $.19 million, an increase of $.2
million compared to a loss of $.02 million, for 1993. Net income increased
primarily as a result of the increase in net sales from 1993 to 1994 and because
1993 was both the year of the Company's inception and a short year, the effects
of which are discussed above.

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited quarterly financial
information for the fiscal years ended September 30, 1995 and 1994 and the three
months ended December 31, 1995. In the opinion of management, this information
has been presented on the same basis as the audited financial statements
appearing elsewhere in this Prospectus, and includes all adjustments, consisting
only of normal recurring adjustments and accruals, that the Company considers
necessary for a fair presentation. The operating results for any quarter are not
necessarily indicative of the results to be expected for any future period, and
any significant variability in orders during any period may have an adverse
impact on the Company's cash

21
<PAGE>
flow, and any significant decrease in orders could have a material adverse
impact on the Company's financial position and operating results. The unaudited
quarterly information should be read in conjunction with the audited financial
statements and the related notes thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1993 1994 1994 1994 1994 1995 1995
------------- ----------- ----------- --------------- ------------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $ 18,098 $ 23,838 $ 30,154 $ 37,897 $ 43,584 $ 41,997 $ 56,852
Cost of sales........... 16,599 22,142 27,630 34,685 40,294 38,236 52,427
------------- ----------- ----------- ------- ------------- ----------- -----------
Gross profit............ 1,499 1,696 2,524 3,212 3,290 3,761 4,425
Selling and marketing
expenses............... 898 1,107 1,582 1,906 1,987 2,169 2,416
General and
administrative
expenses............... 276 474 543 867 869 978 1,035
------------- ----------- ----------- ------- ------------- ----------- -----------
Operating income
(loss)................. $ 325 $ 115 $ 399 $ 439 $ 434 $ 614 $ 974
------------- ----------- ----------- ------- ------------- ----------- -----------
------------- ----------- ----------- ------- ------------- ----------- -----------

SEPTEMBER 30, DECEMBER 31,
1995 1995
--------------- -------------

<S> <C> <C>
Net sales............... $ 58,364 $ 77,016
Cost of sales........... 53,804 70,955
------- -------------
Gross profit............ 4,560 6,061
Selling and marketing
expenses............... 2,735 3,304
General and
administrative
expenses............... 873 985
------- -------------
Operating income
(loss)................. $ 952 $ 1,772
------- -------------
------- -------------
</TABLE>

The Company may experience significant fluctuations in future quarterly
operating results due to a number of factors, including, among other things, the
size and timing of customer orders, delays in new product or product
enhancements offered by distributors or manufacturers, product returns,
seasonality in product purchases by end-users and pricing trends in the Computer
Products industry. While the effect of these factors on the Company's operating
results has been obscured to date by the Company's growth, any of these factors
could cause quarterly operating results to vary from prior periods.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company has satisfied its cash requirements principally
through borrowings under lines of credit and to a lesser extent through notes
payable from stockholders and Allied Distributors. As the Company's sales have
grown, the Company has obtained increases in its available lines of credit and
entered into additional credit arrangements with stockholders and Allied
Distributors to enable it to finance its growth.

Operating activities used cash totaling $10.5 million, $9.3 million and
$12.3 million during the three months ended December 31, 1995 and fiscal 1995
and 1994, respectively. Net cash used in operating activities has been
significant due to the working capital requirements resulting from the rapid
growth of the Company and, more specifically, the financing of increased
accounts receivable balances that are a direct result of increased sales.
Restricted cash, representing amounts on deposit with financial institutions
pursuant to certain credit arrangements, increased $.5 million for the three
months ended December 31, 1995, $.5 million for fiscal 1995 and $.4 million for
fiscal 1994, due to lender requirements corresponding to increases in the amount
of credit made available to the Company. Accounts and other receivables
increased $12.7 million for the three months ended December 31, 1995, $10.7
million for fiscal 1995 and $13.2 for fiscal 1994. Inventory increased $.9
million for the three months ended December 31, 1995, $.6 million for fiscal
1995 and $.9 million for fiscal 1994. Accounts and other receivables and
inventory increased as a result of sales growth.

Investing activities used cash totaling $200,000, $834,000 and $555,000,
respectively during the three months ended December 31, 1995 and fiscal 1995 and
1994, respectively. The investing activities for all years primarily related to
the acquisition of additional computer equipment. The Company anticipates
investing in additional computer equipment to upgrade existing branch locations
and to equip new branch locations which may be opened in the future.

Financing activities provided net cash totaling $10.6 million, $10.5
million, and $12.8 million during the three months ended December 31, 1995 and
fiscal 1995 and 1994, respectively. The primary source of cash for each year has
been borrowings on lines of credit which have been used primarily to finance
accounts receivable balances which have grown as a result of increased sales.

22
<PAGE>
The Company's accounts receivable balance at December 31, 1995, September
30, 1995 and 1994, respectively, was $43.1 million, $30.8 million and $21.3
million. The number of days' sales outstanding in accounts receivable was 50
days, 56 days and 71 days, respectively, as of December 31, 1995, and September
30, 1995 and 1994, respectively. The reduction in days' sales outstanding was a
result of increased focus on collection activities and the adoption of financial
incentives offered to sales personnel for prompt collection of accounts
receivable.

As of December 31, 1995, the Company had approximately $1.8 million in cash,
including $1.6 million in restricted cash and $2.4 million in working capital.
The Company has several revolving credit facilities collateralized by accounts
receivable and all other assets of the Company, including a $34.6 million line
with IBM Credit Corporation ("IBM Credit"). As of December 31, 1995 and
September 30, 1995, such lines of credit provided for maximum aggregate
borrowings of approximately $38.7 million and $33.5 million, respectively, of
which approximately $38.7 million and $27.5 million was outstanding,
respectively. Because the lines of credit are primarily collateralized by
accounts receivable, the available credit and credit limit are dependent upon
the amount of accounts receivable at any given point in time. Thus, any
significant delay in collection of accounts receivable could delay the
availability of funds necessary to purchase product to fulfill sales orders,
potentially resulting in an adverse effect upon results of operations.
Outstanding borrowings on the lines of credit bear interest at up to prime plus
2.50%. The lines of credit are automatically renewable on an annual basis unless
notification of an election not to renew is made by either the Company or
creditor on or prior to the annual renewal date. Borrowings are collateralized
by substantially all of the Company's assets and are guaranteed by Bob and
Naureen Din. 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. At December 31, 1995
and September 30, 1995, the Company was not in compliance with a number of
covenants under the Company's line of credit agreement with IBM Credit,
including covenants prohibiting the incurrence or repurchase of indebtedness, as
well as covenants which require the Company to maintain certain financial ratios
relating to net worth, net sales, working capital and total liabilities, among
others. As a condition to granting the Company a waiver with respect to the
Company's noncompliance with such covenants, IBM Credit, among other actions,
increased the interest rate on outstanding balances under the line to prime plus
2.75% from prime plus 2.5%. IBM Credit has also indicated that it plans to
impose more stringent financial covenants on the Company upon the completion of
this offering. The imposition of more stringent financial covenants would likely
cause the Company to increase its working capital levels.

On May 20, 1994, the Company executed a note in the amount of $1,000,000
with an Allied Distributor (the "1994 Note"). The 1994 Note bore interest at 1%
in excess of the maximum prime rate quoted in THE WALL STREET JOURNAL, and was
due on the earlier of May 31, 1996 or the termination of the Reseller Agreement
dated May 23, 1994 with such distributor (the "Reseller Agreement"). Though the
Reseller Agreement is currently in effect, the 1994 Note was paid in full on
August 28, 1995 with the proceeds of the 1995 Loan discussed below.

On August 18, 1995, the Company and Bob and Naureen Din entered into a
Volume Purchase Agreement (the "Volume Purchase Agreement") and a Loan Agreement
(the "Loan Agreement") with an Allied Distributor. Pursuant to the Volume
Purchase Agreement, the Company is obligated to purchase approximately $100
million worth of product from this Allied Distributor during the first year of
the contract and up to $120 million in the second year of the contract. The
Volume Purchase Agreement may be terminated by either party upon the provision
of 60 days' prior notice. Pursuant to the Loan Agreement this Allied Distributor
lent Bob and Naureen Din $2,000,000 (the "1995 Loan"), $1,000,000 of which was
required to be used to repay the 1994 Note and $1,000,000 of which was required
to be used for the working capital of the Company. The 1995 Loan is secured by
assets owned by Bob and Naureen Din. As of December 31, 1995, the balance
outstanding on the 1995 Loan was $1,798,418. The 1995 Loan bears interest at
8.5% per annum and is due immediately upon termination of the Volume Purchase
Agreement or, if no such termination occurs, in quarterly installments of
$274,492, the final of which is due on August 18, 1997.

23
<PAGE>
The performance by the Company of its obligations under the Volume Purchase
Agreement is guaranteed by each of Bob and Naureen Din. The Company has
guaranteed the payment of the 1995 Loan by Bob and Naureen Din, which guarantee
is collateralized by substantially all of the assets of the Company.

On August 9, 1995, the Company entered into a Note Purchase Agreement with
another Allied Distributor (the "Note Purchase Agreement"). Pursuant to the Note
Purchase Agreement the Company is obligated to purchase $105 million worth of
product from this distributor in fiscal 1996 and $75 million in fiscal 1997.
Pursuant to the Note Purchase Agreement the Company issued a note in the amount
of $1,400,000, which bears interest at 10% per annum and is due on August 1,
1997 (the "1995 Note"). The purchase commitments contained in the Note Purchase
Agreement will expire once the 1995 Note is repaid. As of December 31, 1995, the
balance outstanding on the 1995 Note was approximately $1,059,554. The 1995 Note
contains various financial and other covenants and events of default. The 1995
Note is collateralized by substantially all of the assets of the Company.

In April 1996, the Company entered into the Settlement Agreement with a
former employee of the Company, pursuant to which the Company is obligated to
pay to the former employee, (i) $300,000 within ten (10) days of the execution
of the Settlement Agreement; (ii) $200,000 within thirty (30) days of the
execution of the Settlement Agreement; (iii) $100,000 within twelve (12) months
of the execution of the Settlement Agreement; (iv) $450,000, payable in equal
monthly installments of $7,500 for a period of sixty (60) months commencing May
1, 1996; and (v) contingent upon the consummation of this offering, either (A)
shares of Common Stock in such amount equal in value to $150,000, with such
value being calculated based on the average asked price for the Common Stock for
the sixty (60) consecutive trading days commencing upon the first trading day of
the Company's Common Stock on the Nasdaq National Market or (B) $175,000 out of
the proceeds, if any, which the Company may receive from its insurance policies
in connection with the 1995 Litigation. Because the Company's payment of amounts
owed under the Settlement Agreement would violate certain covenants, the Company
has obtained a waiver from IBM Credit with respect to the Company's execution of
the Settlement Agreement and the subsequent payment of settlement monies. The
Company believes that cash generated by operations, together with proceeds from
its line of credit, will enable it to make the payments required by the
Settlement Agreement without having a material adverse effect on its financial
position. Under the terms of the settlement, failure to make settlement payments
in a timely manner may result in the acceleration of unpaid principal amounts
due if not cured within one hundred fifty (150) days. Any such acceleration of
settlement payments due could have a material adverse effect on the financial
position of the Company.

The Company believes that the net proceeds from the sale of the Common Stock
offered hereby, together with its current working capital, available lines of
credit, and cash flow from operations, will be sufficient to meet its working
capital and capital expenditure requirements for at least the next 12 months.
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 be available on the terms or in the amounts currently made
available to the Company in the future. The inability of the Company to have
continuous access to such financing at reasonable costs could severely and
adversely impact the Company's financial position and results of operations.
Furthermore, the Company's ability to both expand geographically as well as to
expand the nature of the services it provides is dependent upon the Company's
ability to have access to sufficient amounts of working capital. Therefore, the
inability of the Company to receive adequate financing in the future would
materially adversely affect the Company's ability to expand.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 123, "Accounting for Stock-Based
Compensation." The accounting or disclosure requirements of this statement are
effective for the Company's fiscal year 1997. The Company has not yet determined
whether it will adopt the accounting requirements of this standard or whether it
will elect only the disclosure requirements and continue to measure compensation
cost using Accounting Principles Board Opinion No. 25.

24
<PAGE>
BUSINESS

En Pointe Technologies, Inc. ("En Pointe" or the "Company") is a provider of
computers and computer-related products and services. By utilizing its
specialized information systems, which include its "EPIC" (En Pointe Information
Connection) system (the "EPIC System"), the Company is able to establish on-line
communications links with its sales representatives, certain distributors of
computers and computer-related products, including hardware, software,
peripheral, communications and other equipment ("Computer Products") throughout
the United States ("Allied Distributors") and certain of the Company's
customers, which enables the Company to serve as an electronic clearinghouse of
Computer Products without many of the risks and costs associated with
maintaining inventory. The Company also has begun to expand the range of
fee-based services which it provides to its customers. The Company has increased
its sales, solely through internal growth, from $19 million in fiscal year 1993,
the year the Company commenced operations, to $110 million in fiscal year 1994
and $201 million in fiscal year 1995.

In addition to offering Computer Products, the Company offers certain
value-added services, such as specifying, researching and recommending
technology and coordinating and optimizing product distribution. En Pointe's
sales personnel help their customers manage the entire life-cycle of the
technology acquisition process (which includes assembly, design, integration,
software installation, asset management (which tracks computer equipment) and
systems servicing). In addition, the Company intends to expand its provision of
value-added services to include more sophisticated services, such as network
design, maintenance, engineering and software programming. The Company also
intends to facilitate sales of midrange systems as well as related software
design and consulting services through its recently created "Logic Pointe"
division as well as through its existing branch offices.

The Company has recently established a separate direct marketing service
division for smaller purchasers, "Price Pointe," whereby the Company offers more
than 30,000 products to corporate and government accounts through direct
response catalogs. The first catalog was shipped in August 1995 but has not yet
generated significant sales. The Company is constructing a site on the World
Wide Web with the aim of facilitating future sales growth by increasing the
Company's exposure to the small business and home user market, as well as other
potential customers interested in conducting on-line electronic commerce over
the Internet.

INDUSTRY BACKGROUND

The personal computer industry has become a multi-billion dollar industry
since its inception in the late 1970s. Businesses are increasingly relying on
the benefits of automation, data processing and other information services in
order to enhance their productivity. As a result, more and more workers are
utilizing personal computers in their work. In addition, significant ongoing
improvements in computing performance relative to price have made personal
computers more affordable and attractive to larger numbers of potential users.
Personal computer hardware and software have also become progressively more
powerful, functional and easier to use. The introduction of local-area networks
and wide-area networks has allowed end-users to supplement traditional
centralized computer systems with flexible and powerful computing systems
utilizing a number of separate personal computers. In addition, there is a
growing market for the replacement of older or obsolete personal computer
systems.

The distribution channels for personal computer products have evolved
significantly since the late 1980s. In the past, personal computer manufacturers
limited the distribution channels through which they sold products, generally
limiting their sales to "aggregators," who tended to stock and sell only
computer hardware. In addition to sales to aggregators, manufacturers usually
maintained an extensive sales force which targeted end-users. Generally,
aggregators would stock and resell personal computers from a limited number of
well-known manufacturers, such as IBM, Hewlett-Packard Co. ("Hewlett-Packard"),
Apple Computer, Inc. ("Apple") and Compaq Computer Corporation ("Compaq").
Aggregators would then sell these computers to "resellers," who in turn would
resell these products to the end-user.

Beginning in the early 1990s, many personal computer manufacturers began to
scale back their sales forces. In order to ensure the continued wide
distribution of their products, many manufacturers began for

25
<PAGE>
the first time to allow direct sales to computer distributors, such as Ingram
Micro, Merisel, Inc. ("Merisel") and Tech Data, which traditionally had sold
only software and peripheral equipment. By expanding computer sales to
distributors, manufacturers expanded the number of suppliers from which
resellers could purchase Computer Products. The increase in Computer Product
suppliers has stimulated competition among suppliers to resellers as well as
competition among resellers.

Today, the Company believes manufacturers are continuing to scale back their
sales forces and are increasing their reliance on computer resellers to provide
computer equipment and services to end-users. For example, IBM has recently
announced that it would no longer make direct sales of its personal computers to
end-users, but would rely on Computer Products resellers to enhance IBM sales.
In addition, IBM announced that it would initiate a program whereby certain
resellers would be certified by IBM to perform a range of support services in
addition to fulfillment services. The net effect of these changes has been to
streamline the distribution channel for Computer Products, which currently
consists generally of distributors, which purchase Computer Products from
manufacturers and sell Computer Products to resellers, such as the Company, and
resellers, which sell Computer Products to end-users.

The fundamental strategy of a Computer Products distributor is to offer the
broadest selection of products to resellers, which service end-users.
Distributors' areas of expertise usually include the management of large-scale
warehouse facilities on a nationwide basis, the ability to inventory thousands
of products, the ability to ship products the same day as ordered, and the
development of internal systems which link warehouse systems with ordering
systems in order to provide real-time information on product availability and
delivery.

THE EN POINTE BUSINESS MODEL

The Company provides its customers with an integrated approach to the
acquisition of computer technology, encompassing the provision of advice
regarding the selection, implementation and support of computers and the supply
of Computer Products, as well as a selection of value-added services designed to
help manage the customer's product investment throughout the entire life-cycle
of the computer technology acquisition process. An important part of the
Company's business is its ability to serve as a computerized clearinghouse of
Computer Products stocked and sold by a number of large Computer Products
distributors through its specialized information systems, including the EPIC
System. These information systems provide product pricing and availability
information, downloaded on a daily basis, from several Computer Products
distributors. Information concerning approximately $2 billion of inventory at 22
locations nationwide is usually available at any given time. The Company's sales
representatives and customers are able to access prices for a variety of
Computer Products. In addition to pricing information, users of the Company's
information systems can access information on product availability (by both type
and warehouse location), available delivery times for products to be purchased
and the delivery status of products already ordered. For example, if immediate
availability is of greatest importance to a customer, then the Company's
information systems can indicate the availability of products from several
Allied Distributors at different warehouse locations across the country, and the
order can be placed at the Allied Distributor location which will enable the
customer to receive the products in the shortest time period possible.

Because the Company does not stock significant amounts of inventory, but
instead uses the drop-shipping facilities of distributors to supply its
customers directly, the Company avoids many of the costs and risks associated
with maintaining inventory. Most distributors of Computer Products provide
discounts to resellers, such as the Company, which make volume purchases. The
reseller can then pass along all or a portion of these discounts to its
customer. As the Company's sales have grown, it has been able to take advantage
of these discounts. In addition, many manufacturers also make discounts
available from time to time to customers who place large-volume orders. The
Company seeks to participate in these discounts either directly through
agreements with the manufacturer, or indirectly as discounts are made available
to distributors, which in turn will pass a portion along to resellers,
especially those resellers which are responsible for a large portion of
purchases of a manufacturer's products. Although the Company's reliance on the
inventory of its Allied Distributors results in it paying higher prices and
receiving lower gross margins for the Computer Products it resells, the Company
believes that the costs of such reliance are outweighed by the reduced inventory
risks and costs associated with such strategy.

26
<PAGE>
The Company's customers benefit from the Company's ability to split large
orders among two or more Allied Distributors, thereby allowing orders to be
filled more conveniently than from a single distributor. As computers and
certain computer-related products become increasingly standardized and price and
availability become more important factors in customer purchasing decisions, the
Company believes its approach will allow its customers to realize increased
benefits from the Company's access to pricing and availability information among
Allied Distributors. The Company is also able to obtain additional discounts
from Allied Distributors by utilizing pricing information to negotiate with
Allied Distributors to match the best current price available for certain
products, a portion of which may, at the Company's discretion, be passed along
to customers. However, increased standardization of Computer Products and
increased price competition may adversely impact the Company's profit margins.
Therefore, a strategy that emphasizes expansion into computer-related services
may be critical to future improvements, if any, in the Company's profit margins.

BUSINESS STRATEGY

The Company's principal objective is to expand its position as a supplier of
computer-related services and as a major clearinghouse of Computer Products to
medium and large corporations as well as governmental entities. To achieve this
objective, the Company is pursuing the following strategies:

EXPAND GEOGRAPHICALLY. The Company's ability to increase its profitability
is dependent on its ability to maintain its sales growth. The Company believes
that one of the key aspects of any future growth will be its ability to
successfully expand into new metropolitan markets. It has been the Company's
experience that it is best able to capture accounts of certain customers once it
has a physical presence in the location where purchasing decisions are made. The
Company intends to increase its penetration into major metropolitan markets,
both nationally and internationally. The Company intends to open two new
branches within the next year. The Company has also sought to achieve growth by
adopting an entrepreneurial approach with respect to its branch offices. Towards
that end, branch office personnel are usually given a high degree of autonomy,
including limited pricing authority. Each branch office also has profit and loss
responsibility, with compensation of sales branch managers tied to the
performance of their branch.

PROVIDE ADDITIONAL VALUE-ADDED SERVICES. The Company intends to utilize its
position as a seller of Computer Products to larger corporate and government
entities to market the Company's provision of more sophisticated value-added
services to these customers. Services which the Company plans to offer include
wide-area and local-area network design and installation, computer maintenance
and engineering. The Company has also recently established a new division, Logic
Pointe, in order to facilitate the sale of midrange systems as well as related
consultation and programming services (which will also be offered through
existing branch offices). The expansion of the Company's provision of more
sophisticated value-added services as well as the operations of its Logic Pointe
division are new undertakings of the Company, and are expected to utilize a
significant amount of the Company's financial resources in the near future.
There can be no assurance that any of these operations will be accepted by the
Company's customers or can ever be provided on a profitable basis. See "Business
- -- Expansion of Services."

EXPAND DIRECT MARKETING OF PERSONAL COMPUTER PRODUCTS. En Pointe has
recently established a direct marketing division, Price Pointe, which offers
more than 30,000 products to corporate and government accounts across the
nation. The Company has begun to sell these products through direct response
catalogs, using a team of dedicated telemarketers to secure customer orders. The
first catalog was shipped in August 1995 but has not yet generated significant
sales. The Company has contracted with one of its Allied Distributors to provide
transparent customer service and telemarketing response. In addition, a
comprehensive catalog of Computer Products will be sent to government agencies.

USE THE INTERNET TO EXPAND CUSTOMER BASE. The Company is in the processing
of constructing a site on the World Wide Web with the aim to allow current and
new customers the ability to access information regarding available products and
pricing. Use of the Internet has increased dramatically over the past several
years, and as a result the Company expects to have the ability to market its
products and services to a larger audience than ever before. The Company
believes the market of potential customers will continue to expand as the number
of Internet users continues to grow. The Company's objective is to offer its
customers the convenience of access to product information and pricing over the
Internet. The Internet, and particularly

27
<PAGE>
the World Wide Web, represent potential markets for the Company's products and
services which have only recently begun to develop, are rapidly evolving and are
characterized by an increasing number of market entrants offering a wide variety
of products and services. As is typical in the case of a new and rapidly
evolving market, demand for products and services is subject to a high level of
uncertainty. Moreover, critical issues concerning the commercial use of the
Internet (including security, reliability, cost, ease of use and access, and
quality of service) remain unresolved and may impact the growth of the Internet
and the use of the World Wide Web. There can be no assurance that the Company
will be able to successfully use the Internet as a means of expanding its
customer base.

The Company will be dependent on the continued availability of capital in
order for any of the foregoing strategies to succeed. In order to obtain
necessary capital, the Company relies primarily on lines of credit that are
collateralized by accounts receivable. Any decrease or material limitation on
the amount of capital available to the Company under its credit lines and other
financing arrangements will limit the ability of the Company to maintain or
increase its sales or successfully pursue any of the foregoing strategies. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

EN POINTE PRODUCTS AND SERVICES

The Company currently makes available to its customers an extensive
selection of computer products at what it believes to be a competitive
combination of price and service. The Company offers over 30,000 Computer
Products from over 700 manufacturers, including IBM, Compaq, Hewlett Packard,
Apple, Digital Equipment Corp., 3Com Corp. ("3Com"), Microsoft Corp.
("Microsoft") and Novell, Inc. ("Novell"). Products include desktop and laptop
computers, monitors, servers, memory, peripherals, and operating system and
application software. Due to the Company's purchasing power with the Allied
Distributors, the Company receives volume discounts from its major suppliers.
The Company believes that its success has and will continue to be due in part to
its clearinghouse model, in which the Company utilizes its specialized
information systems, including its EPIC System, to provide its customers
up-to-date information regarding pricing and availability of a wide assortment
of Computer Products available from its Allied Distributors. By utilizing the
warehousing and distribution strengths of the Allied Distributors the Company
has lower gross margins, but is also able to avoid many of the costs and risks
associated with having to inventory large amounts of Computer Products. En
Pointe's strategy of entering into strategic alliances with its Allied
Distributors has allowed it to grow from annual sales of $19 million in the year
it commenced operations to $201 million in less than three years.

DISTRIBUTION

Many resellers of Computer Products have assumed certain of the functions of
distributors, including stocking inventory, developing and maintaining inventory
control systems and establishing distribution systems. By doing so, these
resellers have incurred capital costs associated with the warehousing of
products, including the costs of leasing warehouse space, the costs of computer
inventory and tracking systems, as well as the costs associated with the need to
employ personnel for stocking and shipping duties. Furthermore, resellers which
stock inventory incur obsolescence costs. The Company believes these
obsolescence costs are significant due to the frequent product innovation and
associated product obsolescence that characterizes the Computer Products market.
The Company believes that these overhead and "touch" costs require many
resellers to incur expenses which the Company believes more than offset the
advantages of the lower purchase prices that may be available to such resellers.

The Company's business model allows it to eliminate many of these overhead
and "touch" costs and risks. The Company has sought to take advantage of the
operational strengths of its Allied Distributors, which include Ingram Micro,
InaCom, MicroAge, Inc. and Intelligent Electronics. These Allied Distributors
have developed extensive warehousing, purchasing and distribution functions, on
which the Company has relied, rather than assuming those roles for itself. As a
result, En Pointe is able to reduce inventory and capital costs associated with
these "backroom" functions and accept lower margins than many of its

28
<PAGE>
competitors and still remain profitable. In addition, by choosing to rely on the
"backroom" strengths of its Allied Distributors, the Company is also able to
concentrate on what it believes to be its core strengths; namely:

- SPECIFYING, RESEARCHING AND RECOMMENDING TECHNOLOGY. En Pointe's sales
representatives can use its information systems, including the EPIC
System, to assist its customers in selecting the most appropriate
technology to meet their needs, as well as to determine the best
combination of pricing and availability of a wide variety of Computer
Products.

- COORDINATING AND OPTIMIZING PRODUCT DISTRIBUTION. Because En Pointe's
sales representatives have the ability to access the current inventory and
availability records of several large distributors which collectively own
approximately 3.2 million square feet of warehouse space and stock
approximately $2 billion of product, these representatives are able to
determine which distributor is in the best position to supply the
customer. Furthermore, if any one distributor is unable to supply all of a
customer's needs, En Pointe is generally able to fill a customer's order
using several Allied Distributors. In order for En Pointe to facilitate
the distribution of Computer Products to its customers, En Pointe uses
FedEx and United Parcel Service ("UPS") tracking software and tracking
numbers supplied by Allied Distributors to track customer shipments.

En Pointe has been able to successfully implement its strategy due in large
part to the close relationships which it has developed with the Allied
Distributors. The Company has been able to maintain these relationships due to
several factors, the most important of which is the increasing volume of
business that the Company generates. The volume of business which the Company
generates enables the Company to negotiate with its Allied Distributors to
receive discounts on certain products, which the Company may, at its discretion,
pass along to its customers.

En Pointe believes the future success of its Computer Product sales business
will be dependent on its ability to bridge the gap between major customers and
major distributors, while retaining sufficient margins to operate profitably.
While En Pointe believes that its sales volume and customer base give it an
advantage over new entrants into the reseller market, other companies could
duplicate the En Pointe business model and approach to Computer Product resales.
Further, Computer Products distributors and end-users can, and are expected to,
continue to put pressure on En Pointe's gross margins. It is unlikely that the
Company's Computer Product resales will generate any increases in gross margins,
and existing gross margins may decrease, especially if the Company is unable to
generate increases in sales to increase its ability to bargain for volume
discounts.

SPECIALIZED INFORMATION SYSTEMS; EPIC SYSTEM

The Company's specialized information systems provide users (including
customers, suppliers and En Pointe sales representatives) access to the
inventory and pricing information of a number of major Computer Products
distributors. The Company's information systems can be installed, if desired,
directly at a customer's designated facility, and there are currently
approximately 223 such installations in customer locations (with some customers
having multiple installations). These information systems enable the Company's
customers to look up product pricing and availability information by
manufacturer part number, product description, or by En Pointe's "intelligent
part number," and provide detailed product descriptions for most major computer
manufacturer product lines. En Pointe usually will negotiate agreements with
customers which have the Company's information systems installed on-site to
provide them with a "cost plus" pricing arrangement, pursuant to which the
customer pays the price indicated on the information systems plus an additional
percentage to En Pointe. Customers can also, if they choose, enter orders
on-line, check on the status of their orders, look up old orders and serial
numbers by purchase order numbers, check on back-ordered products as well as
verify FedEx and UPS tracking and shipping numbers.

The Company's EPIC System is designed to allow the Company to make
modifications as necessary in order to respond to changes in the reseller
marketplace as well as changes in the Company's business. The EPIC System can
also be customized to integrate with the customer's existing system. The EPIC
System has the capacity to store comments regarding each customer who has placed
an order through the Company,

29
<PAGE>
which allows it to anticipate and respond to individual customer needs and
requirements. En Pointe customers can also provide feedback to the Company
through the EPIC System regarding each purchase made, which allows the Company
to self-monitor its performance and make adjustments as necessary.

The Company is in the process of installing its EPIC System to replace a
prior computerized information system. The EPIC System is currently in use
internally by the Company in conjunction with its other systems, and is being
beta tested by three customers. The Company estimates that the EPIC System will
be made available to all of its major customers in the summer of 1996. The
Company intends for the EPIC System to be a state-of-the-art client server
application, with a graphical user interface, compatible with Microsoft's
Windows NT operating system, that will also allow information to be updated
through a modem connection through the Internet. Upon completion of expected
upgrades to the EPIC System, the Company intends for users to be able to
determine whether a distributor is offering any short-time discounts on
particular Computer Products.

VALUE-ADDED SERVICES

The Company believes it can provide value to its customers not only by
allowing them to choose products from a variety of manufacturers and
distributors, but by offering individualized, value-added services. En Pointe
believes that maintaining a direct contact and a technical support link with its
customers is an important competitive factor that promotes customer satisfaction
and is necessary in order to attract and retain customers. In addition, certain
manufacturers require their remarketers (which include resellers such as En
Pointe) to provide technical support as an ongoing condition to authorizing the
remarketers to sell their products. As of December 31, 1995, the Company
employed approximately 40 customer support personnel, in addition to the
Company's approximately 70 sales representatives who are responsible for
handling customer-related questions.

En Pointe provides a variety of technical, consulting and professional
services, including networking and connectivity consulting, telecommunications
consulting, product configuration, computer training, repair services and
installation within the United States. The Company generally provides these
specialized support services via outsourcing, allowing the Company to provide
its customers with technical support without having to bear salary and other
overhead costs. The Company is able to offer these services by entering into
consultation agreements with independent parties with expertise in the
particular hardware and/or software purchased by the customer. This strategy
enables the Company to avoid many of the costs associated with developing a
similar, in-house base of employees. The Company retains and manages consultants
and technical personnel whose services are made available to customers for
varying lengths of time to complete specific projects.

En Pointe's network integration services include local and wide area network
design and installation, telecommunications consulting and data cabling
services. To support these services, En Pointe personnel participate in software
solution provider certification and authorization programs. En Pointe currently
has attained the following certifications and designations: Novell Authorized,
Microsoft Senior Partner, Microsoft Windows NT Certified, 3Com NETBuilder II and
LinkBuilder III GH Authorized, DEC Alpha, IBM RS 6000/AIS and HP 9000.

CUSTOMERS

The Company's clearinghouse approach, together with its development of
strategic alliances with Allied Distributors, has allowed the Company to capture
the business of a number of large corporate and government accounts. Once the
Company has been approved as a supplier to a customer, the Company seeks to
capture a significant portion of a customer's order placements, which are
typically spread over a number of resellers. The Company's approach has resulted
in IBM awarding the Company a three-year non-exclusive national contract (with
two one-year extensions at IBM's option) to supply Computer Products to IBM
wholly-owned subsidiaries as well as to certain internal IBM operating
divisions. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations." In the future, the Company believes that maintaining
high customer satisfaction will enable the Company to more effectively expand
the

30
<PAGE>
range of services provided to its customers to include sales of midrange
systems, software consulting and software development work, through its Logic
Pointe division as well as through its existing branch offices. See "Business --
Expansion of Services."

The Company encourages customers to enter into long-term contracts,
typically of at least one to two years' duration. However, these contracts are
usually terminable upon 30 days' notice by either party. Purchases under these
contracts are made pursuant to individual purchase orders. The Company's policy
is to attract major customers by offering these customers "cost-plus" pricing,
whereby the Company prices Computer Products at the Company's cost plus a
certain additional percentage negotiated with the customer. While margins under
"cost-plus" pricing may be low, the Company believes that such pricing policy
enables the Company to increase its sales volume and solidifies the client
relationship. The Company intends to allow remote access to its EPIC System to
certain customers, who will then have the ability to place orders through the
EPIC System (subject to the Company's review of each remotely-placed order).
These customers can also use the EPIC System to check on the status of their
order, look up old orders and serial numbers by customer purchase order number,
check on the status of back-ordered products, check the pricing of products and
verify shipping and tracking numbers.

The entities listed below are illustrative of the wide range of customers
which have purchased Computer Products from the Company. There can be no
assurance that any of these listed entities will continue to utilize the
Company's services in the future:

<TABLE>
<S> <C> <C>
Bay Networks, Inc. Mercury Insurance State of Texas
Electronic Data Systems Southwestern Bell Mobile State of
Hillhaven Corporation Systems Washington
IBM State of Oregon Time Warner Inc.
</TABLE>

En Pointe believes that a necessary element of its future success will be
the retention of its customer base. Therefore, the Company is dedicated to
providing high levels of customer support and satisfaction. The Company attempts
to ensure that its sales employees are committed to ensuring the highest level
of customer satisfaction by providing them with financial incentives directly
tied to customer satisfaction levels. The Company believes that this approach
encourages its sales employees who interact with the Company's customers to take
innovative approaches towards ensuring that customers' needs are met.

The Company's specialized information systems, including the EPIC System,
further facilitate the Company's goal of total customer satisfaction by allowing
the Company's representatives to enter comments regarding customers' orders, as
well as comments regarding feedback, both positive and negative, which the
customer has given to the Company's representatives. These comments can then be
accessed by other employees, allowing them to quickly reference a particular
customer's preferences, needs and past ordering practices, among other
information.

SUPPLY AND DISTRIBUTION

Most of the Company's Computer Products orders are currently filled by three
Allied Distributors: Ingram Micro, InaCom and Intelligent Electronics. The
Company has entered into contracts with each of these distributors for terms of
one year, with annual one-year automatic renewals. The Company has attempted to
cultivate and develop close relationships with its Allied Distributors in order
to better implement its clearinghouse approach, in which distributor cooperation
is crucial to success.

One key feature of the Company's clearinghouse approach is the ability of
the Company to reliably deliver products purchased through the Company in a
timely fashion. The Company's information systems, which also serve as the
Company's ordering systems, allow the Company to place orders on a same-day
basis. Orders placed prior to 4:00 p.m. Pacific Time usually ship the same day.
After an order is entered, it is reviewed and approved at the Company's Los
Angeles headquarters, and sent out electronically to the distributor. Once the
order is shipped by a distributor, shipping information is downloaded by the
Company (usually done the day after the order is placed) into its information
systems. The Company will then use that information to produce an invoice, which
is sent to the customer. The standard delivery time is two days. If a customer
places an order which cannot be filled solely by a single distributor, then the
Company will split the

31
<PAGE>
order among one or more distributors. If the customer requests integration or
configuration services, then the Company will integrate the order either at its
Memphis, Tennessee integration facility (chosen due to its proximity to the
FedEx hub facility located in Memphis), or at one of four integration and
configuration locations nationwide operated by certain of the Allied
Distributors. The Company charges a premium for integrating orders, which orders
represented approximately 10-15% of the Company's total orders for the quarter
ended December 31, 1995.

EXPANSION OF SERVICES

The Company intends to broaden the range of services it provides in order to
maintain and strengthen its ability to provide comprehensive services to its
existing and new customers.

VALUE-ADDED SERVICES

The Company intends to expand its provision of value-added services to
include more sophisticated services, such as network design, maintenance,
engineering and software programming. The Company intends to provide certain of
these additional services by entering into contractual arrangements with
domestic independent contractors in order to be in a position to provide
services on a nationwide basis without the expense of maintaining a large staff
of consultants. In order to offer software programming services at competitive
prices, En Pointe has established software programming services in Pakistan, and
believes that it will be able to provide software programming at one-third to
one-half of the costs of utilizing the services of domestic programmers, due to
lower labor and operating costs in Pakistan.

The expansion of the Company's provision of more sophisticated value-added
services is expected to utilize a significant amount of the Company's financial
resources in the near future. Furthermore, there can be no assurance that these
services can ever be provided on a profitable basis.

LOGIC POINTE

The Company plans to expand its sales of midrange systems as well as related
consultation and programming services through its newly-created Logic Pointe
division as well as through its existing branch offices. The Company believes
that most customers which currently purchase Computer Products from the Company
also require midrange systems and related value-added computer services,
including software development, training and other consulting services. These
services and systems typically generate higher profit margins than does the
business of reselling Computer Products. The Company also intends to provide
certain Logic Pointe services through the use of independent contractors, and
further intends to utilize the Company's Pakistan operations for software
programming services.

The Company's Logic Pointe division intends to target existing customers of
the Company for use of its services. The Company believes that it will be able
to utilize its relationships with existing customers as it begins to invest more
heavily in the development of Logic Pointe. The Company believes that a crucial
element to success in the computer industry is the ability to develop and
maintain a positive relationship with customers. Once such a relationship has
been established, the Company believes that it will have a greater chance of
success in offering Logic Pointe's new services to its customers. However, the
operations of Logic Pointe are expected to utilize a significant amount of the
Company's financial resources in the near future, and there can be no assurance
that Logic Pointe will ever operate profitably.

PRICE POINTE

En Pointe has recently entered the mail order distribution market through
its new Price Pointe division. The Company initially plans to target the
government market, and especially the largest state, county and municipal
entities that are not currently targeted by the Company's direct sales force.
The Company eventually intends to distribute a full-color catalog to the small
and medium-sized business market. One potential benefit which the Company hopes
to realize by entering into the mail order market is to increase the sales
volume of all product lines, which the Company anticipates will enable it to
obtain more favorable pricing from its Allied Distributors.

The Company has recently developed, in association with one of its Allied
Distributors, a catalog of Computer Products available from this Allied
Distributor. This Allied Distributor will be responsible for

32
<PAGE>
producing most of the catalog, with most production costs to be defrayed through
manufacturer reimbursements. The Company also has contracted with one of its
Allied Distributors for telemarketing response services and customer support in
connection with anticipated catalog sales. The Company mailed its first catalog
in August 1995 but has not yet generated any significant sales.

The Company plans to eventually distribute catalogs to small and
medium-sized businesses, which are currently not targeted by the Company's sales
force. By placing the Company's catalog with these businesses, the Company
expects to generate incremental sales, leaving the Company's direct sales force
free to concentrate its resources on larger accounts. In addition, the Company
believes that these smaller accounts do not purchase complex computer systems
which usually require more customer support, and therefore tend to base
purchasing decisions more on pricing considerations than on the ability to
provide support and services.

COMPETITION

The segment of the computer industry in which the Company operates is highly
competitive. Pricing is very aggressive and the Company expects pricing
pressures to continue. The Company competes with a large number and wide variety
of resellers of Computer Products, including traditional personal computer
retailers, computer superstores, consumer electronics and office supply
superstores, mass merchandisers, national direct marketers (including
value-added resellers and specialty retailers, distributors, franchisers,
manufacturers and national computer retailers 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.
Many of the Company's competitors are larger, have substantially greater
resources and offer a broader range of services than does the Company, and the
Company believes that a number of its competitors are employing or are
contemplating adopting business models similar to that employed by the Company.
The Company competes with, among others, CompuCom Systems, Inc. ("CompuCom"),
CDW Computer Centers, Inc., Vanstar Corp. ("Vanstar"), Entex and Elcom
International, Inc. in the personal computer products distribution market. The
Company expects to compete with Vanstar, CompuCom and Entex in the systems
integration and network services market.

Competitive factors include price, service and support, the variety of
products 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 industry has come to be characterized by aggressive price cutting, and the
Company expects that pricing pressures will continue to increase in the
foreseeable future. In addition, the Computer Products industry is characterized
by rapid 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 continually provide
competitive prices, superior product selection and delivery response time 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 and operating
results would be adversely affected.

INTELLECTUAL PROPERTY

The Company's success to date is and will be dependent in part on its
ability to protect its proprietary technology, especially its rights in the EPIC
System. The Company relies primarily upon trade secrecy and confidentiality
agreements to establish and protect its rights in its proprietary technology.
The Company does not have any patents or statutory copyrights on any of its
proprietary technology which the Company believes to be material to its future
success, and the Company cannot be certain that others will not develop
substantially equivalent or superseding proprietary technology. Furthermore,
there can be no assurance that any confidentiality agreements between the
Company and its employees will provide meaningful protection of the Company's
proprietary information in the event of any unauthorized use or disclosure of
such proprietary information.

The Company has recently settled litigation with respect to intellectual
property rights associated with one of its computerized information systems with
a former employee of the Company. See "Business -- Legal Proceedings." There can
be no assurance that the Company will not become the subject of additional
claims of infringement involving this computerized information system, or any
other system, including the Company's EPIC System. In addition, the Company may
initiate claims or litigation against third parties for

33
<PAGE>
infringement of the Company's proprietary rights or to establish the validity of
the Company's proprietary rights. Any such claims could be time consuming,
result in costly litigation or lead the Company to enter into royalty or
licensing agreements rather than disputing the merits of such claims. See "Risk
Factors -- Dependence on Proprietary Technology."

LEGAL PROCEEDINGS

In April 1996 the Company, Bob Din and Naureen Din entered into a settlement
agreement with a former employee of the Company, pursuant to which the former
employee has released the Company from any and all claims with respect to the
Company's use of certain computerized information system software originally
developed by the former employee prior to his employment with the Company. For a
discussion of the terms of the Settlement Agreement, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
the financial statements and related notes thereto.

The Company has filed suit against its insurance carrier in order to recoup
both legal costs incurred by the Company in connection with its defense of the
foregoing litigation as well as for amounts paid to the former employee pursuant
to the settlement. Although the Company has prevailed in a summary judgment
motion against its insurance carrier, in which the court held that such
insurance carrier had a duty to defend the Company in connection with the
aforementioned litigation and that the insurance carrier breached such duty,
there can be no assurance, however, that the Company will prevail in its action
to recover such fees.

The Company and the Company's senior management is, and may in the future
be, involved in other suits and actions incidental to the Company's business.
The Company does not believe that the resolution of any of the current suits or
actions will result in any material adverse effect on the financial condition or
operations of the Company.

EMPLOYEES

As of December 31, 1995, the Company employed approximately 190 individuals,
including approximately 70 sales representatives and marketing agents,
approximately 76 persons in customer support and approximately 44 persons in
administration, finance and MIS. 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 plans. 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.

FACILITIES

The Company believes that an essential component to its past and future
success in its industry is the ability of its salespeople to personally interact
with potential and existing customers. The Company believes that having a
physical presence in close proximity to where purchasing decisions are made
within an organization has helped the Company capture significant amounts of a
customer's business. The Company currently has eleven locations nationwide, with
its headquarters facility in Los Angeles and branch locations in New York,
Dallas, Austin, Memphis, Denver, Palo Alto, Sacramento, Portland, Bellevue and
Brea. The Company plans to open two additional facilities within the next year.
The Company plans to eventually open offices in most major metropolitan areas in
the United States. While the Company prefers to establish an account with a
customer in a particular city prior to opening an office, the Company's decision
to open an office in a particular area is usually determined primarily by the
size of the potential market in that area.

34
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------- --- ---------------------------------------------------------------
<S> <C> <C>
Bob Din.............................. 43 Chairman of the Board of Directors, President and Chief
Executive Officer
Naureen Din.......................... 41 Secretary and Director
Javed Latif.......................... 47 Executive Vice President
Robert Mercer........................ 59 Chief Financial Officer
Kevin Schatzle....................... 35 Senior Vice President of Sales
Ellis M. Posner...................... 44 Vice President of Sales
Zubair Ahmed......................... 43 Director
Mansoor Ijaz (1)(2).................. 34 Director Nominee
Verdell Garroutte (1)(2)............. 52 Director Nominee
</TABLE>

- ------------------------
(1) Proposed Member of the Compensation Committee

(2) Proposed Member of the Audit Committee

ATTIAZAZ ("BOB") DIN is a founder of the Company and has served in various
capacities with the Company since March 1993. Mr. Din has served as the
Company's President and a director since April 1994, and as the Company's Chief
Executive Officer and Chairman of the Board of Directors since January 1996.
From November 1985 to January 1993, Mr. Din served as the Chairman of the Board
of Directors, President and Chief Executive Officer of InfoSystems Computer
Center, a Southern California-based reseller of Computer Products
("InfoSystems").

NAUREEN DIN is a founder of the Company and currently serves as the
Company's Secretary and as a director. Ms. Din previously served as the
Company's President from the Company's inception in January 1993 to April 1994,
as the Company's Chief Executive Officer from the Company's inception to January
1996 and as the Company's Chief Financial Officer from its inception until
October 1995. Ms. Din was not employed prior to January 1993. Naureen Din is the
wife of Bob Din.

JAVED LATIF has served as the Company's Controller from April 1993 to May
1994, and as the Company's Executive Vice President from May 1994 to the
present. Prior to January 1993, Mr. Latif served as the Controller and Chief
Financial Officer of Infosystems. Javed Latif is a first cousin to Bob Din.

ROBERT MERCER joined the Company in December 1995 as Chief Financial
Officer. Mr. Mercer headed the firm of Mercer & Woodford CPAs/P.C., the
Company's former accountants, for ten years prior to joining the Company. Mr.
Mercer has been a licensed California certified public accountant since 1968,
and worked exclusively in public accounting during that time.

KEVIN SCHATZLE served as the Company's Vice President of Sales from March
1993 until July 1995, when he was appointed Senior Vice President of Sales.
Prior to joining the Company, Mr. Schatzle was employed by Infosystems from June
1990 to January 1993, where he served as Product Manager and then Director of
Sales.

ELLIS M. POSNER served as the Company's Regional Sales Director for the
Northwest region since June 1993 until July 1995, when he was promoted to Vice
President of Sales. From May 1990 to May 1993, Mr. Posner worked for Vanstar, a
Computer Products reseller, as Area Director in Charge of West Coast Operations.

35
<PAGE>
ZUBAIR AHMED has been a director of the Company since April 1994, and
previously served as an Executive Vice President of the Company from April 1994
to December 1995 and as a Director of Development from May 1993 to April 1994.
From January 1989 to April 1993, Mr. Ahmed served as the General Manager of
Inter Equipment Establishment, a seller of heavy equipment.

MANSOOR IJAZ is a nominee to serve as a director of the Company. Mr. Ijaz
has been Chairman of the Crescent Investment Group, Inc., a global investment
advisor, since March 1993, and was the Managing Partner of Crescent Investment
Management, L.P. from October 1991 through March 1993. From January 1990 to
September 1991, Mr. Ijaz was the Vice President, Global Portfolio Management, of
the Discount Corporation of New York Advisors, a wholly-owned subsidiary of
Discount Corporation of New York, a publicly-traded primary dealer.

VERDELL GARROUTTE is a nominee to serve as a director of the Company. Mr.
Garroutte has been a corporate financial consultant from October 1994 to the
present as well as from June 1991 to December 1993. From May 1993 to October
1993, Mr. Garroutte was employed by the Company as a part-time employee and
consultant. From January 1994 until September 1994, Mr. Garroutte served as the
Chief Financial Officer of Kelly Micro Systems, Inc., a manufacturer of memory
components for personal computers. From December 1985 until May 1991, Mr.
Garroutte served in various positions at Computerland Corporation, a personal
computer retailer, including vice-president and treasurer.

Messrs. Ijaz and Garroutte have agreed to serve as directors of the Company
effective upon the consummation of this offering.

The Board of Directors of the Company will be composed of five directors
upon the completion of this offering. All directors hold office until the next
annual meeting of stockholders or until their successors are elected and
qualified. Subject to the terms of their employment agreements, if any, officers
serve at the discretion of the Board of Directors. Effective upon the
consummation of this offering, the Board of Directors will have established a
Compensation Committee that recommends salaries and incentive compensation for
executive officers of the Company, and an Audit Committee that reviews the
results and scope of the audit and other services provided by the Company's
independent accountants.

DIRECTORS' COMPENSATION

The Company's directors do not receive cash compensation for attendance at
Board of Directors or committee meetings, but may be reimbursed for certain
expenses in connection with attendance at Board and committee meetings. The
Company's 1996 Stock Incentive Plan provides that each non-employee director of
the Company shall automatically be granted a non-qualified option to purchase
5,000 shares of Common Stock upon his or her election and reelection to the
Board of Directors so long as such reelection occurs at least twelve months
after his or her initial election to the Board of Directors of the Company. The
option price of such options shall be at 80% of the fair market value of the
Common Stock on the date such director is elected or reelected, as the case may
be, and shall become exercisable with respect to one-third (1/3) of the shares
subject to such option three months after such election or reelection, an
additional one-third (1/3) of such shares nine months after such election or
reelection and the remaining one-third (1/3) of such shares twenty-seven (27)
months after such election or reelection. The term of such options shall be ten
years.

36
<PAGE>
EXECUTIVE COMPENSATION

The following table sets forth compensation earned during the fiscal year
ended September 30, 1995, by the Company's Chief Executive Officer and the four
other most highly compensated executive officers whose total salary and bonus
during such year exceeded $100,000 (collectively, the "Named Executive
Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION (1)
- ------------------------------------------------------------------------ ---------- --------- ----------------
<S> <C> <C> <C>
Bob Din
President and Chief Executive Officer (2).............................. $ 231,000 $ 22,250 --
Naureen Din
Secretary and former Chief Executive Officer (3)....................... $ 56,000 $ 1,738 $ 27,504
Javed Latif
Executive Vice President............................................... $ 168,500 $ 22,160 --
Kevin Schatzle
Senior Vice President.................................................. $ 178,000 -- --
Ellis Posner
Vice President of Sales................................................ $ 122,000 $ 8,339 --
</TABLE>

- ------------------------
(1) Except as indicated, perquisites and other personal benefits did not, in the
aggregate, reach the lesser of $50,000 or 10% of the total annual salary and
bonus paid to any Named Executive Officer.

(2) Mr. Din has served as the Company's President since April 1994 and commenced
serving as the Company's Chief Executive Officer in January 1996.

(3) Ms. Din served as the Company's Chief Executive Officer from its inception
through January 1996. Other Annual Compensation consists of a
non-accountable automobile allowance.

OPTION GRANTS. The Company did not grant options to any of the Named
Executive Officers during the fiscal year ended September 30, 1995.

OPTION EXERCISES AND FISCAL YEAR-END VALUES. None of the Named Executive
Officers exercised any options or held any options during the fiscal year ended
September 30, 1995.

EMPLOYMENT AGREEMENTS

In fiscal 1996, the Company entered into employment agreements with each of
Bob Din, Naureen Din, Javed Latif and Kevin Schatzle. Each of Ms. Din's, Mr.
Latif's and Mr. Schatzle's agreements provide for annual base salaries of
$65,000, $151,000 and $150,000, respectively. In addition, each of Ms. Din, Mr.
Latif and Mr. Schatzle is entitled to receive a minimum of four weeks annual
vacation, an automobile allowance of at least $2,750 per month, $1,500 per month
and $1,500 per month, respectively, as well as medical and disability insurance.
The Board of Directors may also, at its discretion, award each of Ms. Din, Mr.
Latif and Mr. Schatzle a bonus, with such bonus to be paid consistent with
executive bonus programs of the Company, if any, in existence during any of Ms.
Din's, Mr. Latif's or Mr. Schatzle's period of employment with the Company.
These agreements also provide for severance payments consisting of twelve
months' salary in the event that the Company terminates any of Ms. Din's, Mr.
Latif's or Mr. Schatzle's employment without "cause" (as defined in each of Ms.
Din's, Mr. Latif's or Mr. Schatzle's employment agreement) or if any of Ms. Din,
Mr. Latif or Mr. Schatzle terminates his or her employment with the Company for
"good reason" (as defined in each of Ms. Din's, Mr. Latif's and Mr. Schatzle's
employment agreement). Each of these agreements has a five-year term ending in
2001, with an automatic three-year extension. These agreements may be terminated
by the Company with or without "cause." These agreements contain additional
provisions regarding benefits and dispute resolution.

37
<PAGE>
Mr. Din's agreement, which provides for an annual base salary of $375,000,
terminates on the later of (i) the fifth anniversary of the date the agreement
was entered into, or (ii) five years following the date on which either Mr. Din
or the Company gives a notice of non-renewal or termination. Upon termination of
Mr. Din's employment agreement by the Company for a reason other than for
"cause," as defined in the employment agreement, or by Mr. Din for "good
reason," as defined in the employment agreement, Mr. Din will be entitled to
receive, as severance pay, guaranteed monthly salary payments in the amount of
Mr. Din's then current salary for a period of three years, plus the payment of
certain additional benefits, such as health insurance. However, Mr. Din's
agreement prohibits him from competing with the Company for three years
following the date of his termination. Pursuant to his employment agreement, Mr.
Din is obligated, subsequent to his termination, to offer first to the Company
any block of 50,000 shares or more of the Company's Common Stock offered by him
or his wife for sale, if offered for sale other than pursuant to an
over-the-counter or exchange transaction. Mr. Din's agreement also contains
confidentiality, intellectual property rights and dispute resolution provisions.

On August 1, 1995, the Company entered into an employment agreement with
Ellis Posner, pursuant to which Mr. Posner receives an annual salary of $120,000
plus an annual draw of $12,000 against an annual bonus, an accountable expense
allowance and certain employee benefits. The amount of such annual bonus is
based upon a percentage of the cumulative net profits earned by certain sales
branches and is payable twice annually after being reduced by any draws received
by Mr. Posner. Mr. Posner's agreement limits his maximum aggregate annual
compensation to $180,000, and provides that Mr. Posner works for the Company on
an "at will" basis.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended September 30, 1995, the Company's Board of
Directors established the levels of compensation for certain of the Company's
executive officers, as the Compensation Committee had not yet been formed during
that period. Bob Din, the Company's President and Chief Executive Officer,
Naureen Din, the Company's Secretary and former Chief Executive Officer, and
Zubair Ahmed, the Company's former Executive Vice President, participated in the
deliberations regarding executive compensation that occurred during the fiscal
year ended September 30, 1995. Effective upon the completion of this offering
the members of the Company's Compensation Committee will be Messrs. Ijaz and
Garroutte. Neither of these individuals was at any time during the fiscal year
ended September 30, 1995 an officer or director of the Company.

The Company has agreed to pay certain expenses of Mr. Ahmed which may be
incurred should the Underwriters elect to exercise the over-allotment option to
purchase 337,500 shares of Common Stock granted by Mr. Ahmed in connection with
this offering. See "Underwriting."

On September 30, 1993, the Company issued a promissory note in the amount of
$666,469 to Naureen Din, a stockholder and director of the Company and the
Company's Secretary and former Chief Executive Officer, in connection with a
loan made to the Company. The note was unsecured and subordinated to the
Company's line of credit and bank debt and paid interest at 6% per annum. Net
payments of $414,530 were made on the note. On September 30, 1994, the Company
replaced this note with a new promissory note in the amount of $251,939. The
note was unsecured, subordinated to the Company's line of credit and bank debt,
bore interest at 10% per annum and was due on January 1, 1996. On September 30,
1995, the balance outstanding on the note of $239,862 was contributed to
additional paid-in capital.

On December 1, 1993, the Company issued two notes in the amounts of $300,000
and $200,000 to Zubair Ahmed, a stockholder and director of the Company, in
connection with loans made to the Company. The notes were unsecured, bore
interest at 10% and were due on December 1, 1998. On September 30, 1995, the
balances outstanding on these notes, which were $300,000 and $200,000,
respectively, were contributed to paid-in capital. On March 14, 1994, the
Company issued another note to Mr. Ahmed, in the amount of $200,000, in
connection with another loan made to the Company. This note was unsecured, bore
interest at 10% per annum and was due on December 1, 1999. On September 30,
1995, the balance outstanding on this note was $200,000, which was also
contributed to paid-in capital at such time.

38
<PAGE>
In connection with the financing of its accounts receivable, the Company has
entered into credit agreements with AT&T Capital Corporation, Deutsche Financial
Services and IBM Credit Corporation, which permit borrowings by the Company of
up to an aggregate of $38.7 million at December 31, 1995. The agreements are
collateralized by the Company's accounts receivable and other assets and are
guaranteed by each of Bob and Naureen Din.

On August 18, 1995, the Company, Bob Din and Naureen Din entered into a loan
agreement with a distributor to the Company in the amount of $2,000,000.
Pursuant to the loan agreement, each of Bob Din and Naureen Din executed two
secured promissory notes, each in the amount of $1,000,000. The loan is
collateralized by certain assets owned by Bob and/or Naureen Din. The Company
has unconditionally guaranteed the payment of all sums due under the promissory
notes executed by Bob Din and Naureen Din and such guarantee is collateralized
by substantially all of the assets of the Company. In conjunction with the Loan
Agreement, the Company entered into a Volume Purchase Agreement which provides
for minimum purchases of products from the supplier to be made by the Company.
The performance by the Company of its obligations under the Supply Agreement is
guaranteed by each of Bob and Naureen Din.

The Company occupies its corporate office facility, located at 5245 Pacific
Concourse Drive, Los Angeles, California, through a sublease entered into by
Naureen Din. While there is no formal sublease agreement between the Company and
Naureen Din, the Company makes the monthly lease payments on the sublease to
which Naureen Din is a party. As of September 30, 1995, monthly lease payments
under this sublease were $10,400. The Company believes that the terms of the
sublease are no less favorable than those that would be available in an
arm's-length transaction.

COMPENSATION PLANS

1996 STOCK INCENTIVE PLAN

The Company's 1996 Stock Incentive Plan (the "Plan") was adopted by the
Company's Board of Directors and stockholders in March 1996 and provides for the
granting of "incentive stock options," within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), nonstatutory options and
rights to purchase Common Stock. The Plan authorizes up to 360,000 shares of the
Company's Common Stock for issuance to directors, officers and employees of the
Company, except that incentive stock options may not be granted to non-employee
directors. The Plan is administered by a committee (the "Committee"), which has
sole discretion and authority, consistent with the provisions of the Plan, to
determine which eligible participants will receive options and/or purchase
rights, the time when options and/ or purchase rights will be granted, the terms
of options and/or purchase rights granted and the number of shares which will be
subject to options and/or purchase rights granted under the Plan. Concurrently
with the effective date of this offering, there will be 264,000 options
outstanding under the Plan at an exercise price equal to the offering price per
share as to qualified options and an exercise price equal to 80% of the offering
price per share as to nonstatutory options. Of the outstanding options, 53,333
will become fully exercisable upon the effective date of this offering.

The exercise price of incentive stock options must be not less than the fair
market value of a share of Common Stock on the date the option is granted (110%
with respect to optionees who own at least 10% of the outstanding Common Stock).
Nonstatutory options shall have such exercise price as determined by the
Committee, but which shall not be less than 80% of the fair market value per
share of Common Stock on the date the option is granted. The Committee has the
authority to determine the time or times at which options granted under the Plan
become exercisable, provided that options expire no later than ten years from
the date of grant (five years with respect to holders of incentive stock options
who own at least 10% of the outstanding Common Stock). Options and purchase
rights are nontransferable, other than upon death by will and the laws of
descent and distribution, and options generally may be exercised only by an
employee while employed by the Company, as all vested and unvested options
granted under the Plan terminate with respect to such employee within 30 days of
the employee's voluntary resignation or immediately upon the

39
<PAGE>
Company's termination of the employee's employment for cause. In the event that
an employee's employment is terminated by reason of death or disability, the
employee or the employee's legal representative will be entitled to exercise
those options that were vested as of the date of termination of employment, for
a period of one year from the date of such termination of employment.

EMPLOYEE STOCK PURCHASE PLAN

The Company's Employee Stock Purchase Plan (the "Purchase Plan") was adopted
by the Board of Directors and stockholders in March 1996, covering an aggregate
of 250,000 shares of Common Stock. The Purchase Plan, which is intended to
qualify as an "employee stock purchase plan" under Section 423 of the Code, will
be implemented by six-month offerings with purchases occurring at six-month
intervals, provided, however, that the initial offering period will commence on
the effective date of this offering and conclude on August 31, 1996. The
Purchase Plan will be administered by the Board of Directors or a committee
thereof. Employees will be eligible to participate if they are employed by the
Company for at least 20 hours a week, are customarily engaged for more than five
months per calendar year and if they have been employed by the Company for at
least three months. The Purchase Plan permits eligible employees to purchase
Common Stock through payroll deductions, which may not exceed 20% of an
employee's compensation. The maximum number of shares of Common Stock that any
employee may purchase during any offering period is 2,500. The price of Common
Stock purchased under the Purchase Plan will be 85% of the lower of the fair
market value of the Common Stock at the beginning of the six-month offering
period or the applicable purchase date, with the fair market value on the date
of commencement of the initial offering period being equal to the initial public
offering price. Employees may end their participation in the offering at any
time during the offering period, and participation ends automatically upon
termination of employment. The Board of Directors or a committee thereof may at
any time amend or terminate the Purchase Plan, except that no such amendment or
termination may adversely affect shares previously purchased under the Purchase
Plan, and amendments which (i) increase the number of shares that may be issued
under the Plan, (ii) materially modify eligibility requirements or (iii)
materially increase the benefits accruing to participants, must have stockholder
approval. The Purchase Plan will terminate on February 28, 2006.

401(K) PLAN

Effective as of July 1993, the Company adopted the En Pointe Technologies,
Inc. Employee Savings Plan (the "401(k) Plan"), which is a retirement profit
sharing plan that covers all U.S. employees of the Company who are 21 years old
or older and have completed six months of service. The 401(k) Plan provides that
employees may elect to defer, in the form of contributions to the 401(k) Plan,
up to 20% of the total compensation that would otherwise be paid to the
employee. However, the administrator of the 401(k) Plan has adopted a policy of
limiting the contributions of employees whose annual total compensation is equal
to or less than $66,000 up to 15% of total compensation, and limiting the
contributions of employees whose annual total compensation is greater than
$66,000 to up to 8% of total compensation that would otherwise be paid to the
employee, in either case not to exceed $9,240 in 1995 (subject to adjustment
annually as provided in the Code). The Company may make discretionary matching
contributions to the 401(k) Plan each year up to 10% of the employee's total
compensation contributed to the 401(k) Plan, but the Company has not made any
contributions to the 401(k) Plan to date. Contributions are held under a group
annuity contract and are invested in selected eligible investments. Employee
contributions are fully vested and nonforfeitable at all times.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company's Bylaws provide that the Company will indemnify its directors
and officers and may indemnify its employees and other agents to the fullest
extent permitted by law. The Company believes that indemnification under its
Bylaws covers at least negligence and gross negligence by indemnified parties,
and permits the Company to advance litigation expenses in the case of
stockholder derivative actions or other actions, against an undertaking by the
indemnified party to repay such advances if it is ultimately determined that the
indemnified party is not entitled to indemnification. Prior to the closing of
this offering, the Company expects to have in place liability insurance for its
officers and directors.

40
<PAGE>
In addition, the Company's Certificate of Incorporation provides that,
pursuant to Delaware law, its directors shall not be liable for monetary damages
for breach of the directors' fiduciary duty as a director to the Company and its
stockholders. This provision in the Certificate of Incorporation does not
eliminate the directors' fiduciary duty, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law. In addition, each director will continue to
be subject to liability for breach of the director's duty of loyalty to the
Company for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are unlawful under Delaware law. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental laws.

The Company has entered into separate indemnification agreements with its
directors and officers. These agreements require the Company, among other
things, to indemnify them against certain liabilities that may arise by reason
of their status or service as directors or officers (other than liabilities
arising from actions not taken in good faith or in a manner the indemnitee
believed to be opposed to the best interests of the Company) to advance their
expenses incurred as a result of any proceeding against them as to which they
could be indemnified and to obtain directors' insurance if available on
reasonable terms. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable. The Company believes that its Certificate of
Incorporation and Bylaw provisions and indemnification agreements are necessary
to attract and retain qualified persons as directors and officers.

CERTAIN TRANSACTIONS

On July 26, 1995, the Company issued a note in the amount of $150,000 to
Khadija Munawar, Bob Din's mother. As of September 30, 1995, the balance
outstanding was $150,000. The note bore interest at 10%, was payable on demand,
and was repaid in full on December 1, 1995.

Robert Mercer, the Company's Chief Financial Officer, was, during fiscal
1995, a principal of Mercer & Woodford CPAs/P.C., the Company's former
independent accountants.

The Company does not presently have any formal policies with respect to
future transactions, if any, with affiliates.

Reference is hereby made to the transactions described under "Management --
Compensation Committee Interlocks and Insider Participation."

41
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth the beneficial ownership of the Common Stock
as of April 22, 1996 by (i) each person or entity known to the Company to own
beneficially 5% or more of the outstanding shares of Common Stock, (ii) each of
the Company's directors, (iii) each of the Named Executive Officers and (iv) by
all directors and executive officers of the Company as a group. The information
as to each person or entity has been furnished by such person or entity.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER OFFERING
OFFERING (1) (2)
NAME AND ADDRESS ----------------------- -----------------------
OF BENEFICIAL OWNERS NUMBER PERCENT NUMBER PERCENT
- --------------------------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Bob Din (3).......................................................... 1,453,902 43.3% 1,453,902 25.9%
Naureen Din (3)...................................................... 1,453,902 43.3% 1,453,902 25.9%
Zubair Ahmed (4)..................................................... 1,272,996 37.9% 1,272,996 22.7%
Ali Mohyuddin Din (5)................................................ 311,551 9.3% 311,551 5.6%
Mediha M. Din (5).................................................... 311,551 9.3% 311,551 5.6%
Javed Latif (6)...................................................... 16,667 * 16,667 *
Kevin Schatzle (7)................................................... 16,667 * 16,667 *
Ellis Posner (8)..................................................... 3,333 * 3,333 *
All executive officers and directors as a group (6 persons) (9)...... 2,763,565 82.3% 2,763,565 49.0%
</TABLE>

- ------------------------
* Less than 1%

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to options currently exercisable, or exercisable within 60 days of March 5,
1996, are deemed outstanding for computing the percentage of the outstanding
Common Stock beneficially owned by the person holding such options but are
not deemed outstanding for computing the percentage of any other person.
Except as indicated by footnote and subject to community property laws where
applicable, the persons named in the table have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned
by them.

(2) Mr. Ahmed has granted to the Underwriters a 45-day option to purchase
337,500 shares of Common Stock solely to cover over-allotments. If
exercised, the number and percentage of shares beneficially owned by Mr.
Ahmed after the offering would be 935,496 and 16.7%, respectively. See
"Underwriting."

(3) Consists of 726,951 shares of Common Stock owned of record by Bob Din and
726,951 shares of Common Stock owned of record by Naureen Din. Bob and
Naureen Din are married, and each may therefore be deemed to have a
beneficial interest in each other's shares of Common Stock. Does not include
311,551 shares of Common Stock owned of record by Mediha Din, Mr. and Mrs.
Din's minor child. The address of Mr. and Mrs. Din is at the Company's
principal executive offices, 5245 Pacific Concourse Drive, Suite 200, Los
Angeles, California 90545. Each of Mr. and Mrs. Din has disclaimed
beneficial ownership in each other's shares.

(4) The address of such stockholder is at the Company's principal executive
offices, 5245 Pacific Concourse Drive, Suite 200, Los Angeles, California
90545.

(5) Ali Mohyuddin Din and Mediha M. Din are the children of Bob and Naureen Din.
The address of such stockholders is at the Company's principal executive
offices, 5245 Pacific Concourse Drive, Suite 200, Los Angeles, California
90545.

(6) Consists of 16,667 shares of Common Stock which may be acquired upon
exercise of stock options which are presently exercisable or will become
exercisable within 60 days of April 22, 1996.

(7) Consists of 16,667 shares of Common Stock which may be acquired upon
exercise of stock options which are presently exercisable or will become
exercisable within 60 days of April 22, 1996.

(8) Consists of 3,333 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become exercisable
within 60 days of April 22, 1996.

(9) Includes 36,667 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become exercisable
within 60 days of April 22, 1996. See Notes (6), (7) and (8).

42
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 15,000,000 shares of
Common Stock, $.001 par value, and 5,000,000 shares of Preferred Stock, $.001
par value.

COMMON STOCK

Immediately prior to the effectiveness of this offering, there will have
been 3,357,500 shares of Common Stock outstanding held of record by six
stockholders. There will be 5,607,500 shares of Common Stock outstanding after
giving effect to the sale of the shares of Common Stock offered by the Company
hereby.

Holders of Common Stock are entitled to one vote per share on all matters to
be voted upon by the stockholders. Subject to preferences that may be applicable
to the holders of outstanding shares of Preferred Stock, if any, the holders of
Common Stock are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. See "Dividend Policy." In the event of liquidation,
dissolution or winding up of the Company, and subject to the prior distribution
rights of the holders of outstanding shares of Preferred Stock, if any, the
holders of shares of Common Stock shall be entitled to receive pro rata all of
the remaining assets of the Company available for distribution to its
stockholders. The Common Stock has no preemptive or conversion rights or other
subscription rights. There are no redemption or sinking fund provisions
applicable to the Common Stock. All outstanding shares of Common Stock are fully
paid and nonassessable, and shares of Common Stock to be issued pursuant to this
offering shall be fully paid and nonassessable.

PREFERRED STOCK

Upon the closing of this offering, no shares of Preferred Stock will be
outstanding. The Board of Directors has the authority, without further action by
the stockholders, to issue the shares of Preferred Stock in one or more series
and to fix the rights, preferences and privileges thereof, including dividend
rates and preferences, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences and the number of shares constituting
any series or the designation of such series, without further vote or action by
the stockholders. Although it presently has no intention to do so, the Board of
Directors, without stockholder approval, could issue Preferred Stock with voting
and conversion rights which could adversely affect the voting power of the
holders of Common Stock. The issuance of Preferred Stock may also have the
effect of delaying or preventing a change of control of the Company.

DELAWARE LAW AND CERTAIN CHARTER PROVISIONS

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law and anti-takeover law. In general, the statute prohibits
a publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless
either (i) prior to the date at which the person becomes an interested
stockholder, the Board of Directors approves such transaction or business
combination, (ii) the stockholder acquires more than 85% of the outstanding
voting stock of the corporation (excluding shares held by directors who are
officers or held in certain employee stock plans) upon consummation of such
transaction, or (iii) the business combination is approved by the Board of
Directors and by two-thirds of the outstanding voting stock of the corporation
(excluding shares held by the interested stockholder) at a meeting of
stockholders (and not by written consent). A "business combination" includes a
merger, asset sale or other transaction resulting in a financial benefit to such
interested stockholder. For purposes of Section 203, "interested stockholder" is
a person who, together with affiliates and associates, owns (or within three
years prior, did own) 15% or more of the corporation's voting stock.

The Company's Certificate of Incorporation includes a provision that allows
the Board of Directors to issue Preferred Stock in one or more series with such
voting rights and other provisions as the Board of Directors may determine. This
provision may be deemed to have a potential anti-takeover effect and the
issuance of Preferred Stock in accordance with such provisions may delay or
prevent a change of control of the Company. See "Preferred Stock."

43
<PAGE>
STOCK TRANSFER AGENT AND REGISTRAR

The stock transfer agent and registrar for the Company's Common Stock is
U.S. Stock Transfer Corporation, Glendale, California.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for the Common Stock
of the Company. Future sales of substantial amounts of Common Stock in the
public market could adversely affect prevailing market prices and adversely
affect the Company's ability to raise additional capital in the capital markets
at a time and price favorable to the Company.

Upon completion of this offering, the Company will have approximately
5,607,500 shares of Common Stock outstanding. Of these shares, the 2,250,000
shares sold in this offering (2,587,500 shares if the Underwriters'
over-allotment option is exercised in full) will be freely tradeable without
restriction or registration under the Securities Act of 1933, as amended (the
"Securities Act"), unless they are purchased by "affiliates" of the Company as
that term is defined under Rule 144 adopted under the Securities Act. The 7,500
Non-Affiliated Shares will be available, subject to certain restrictions imposed
by the National Association of Securities Dealers, Inc., for resale from time to
time beginning 12 months after the completion of this offering by a
non-affiliate of the Company. The remaining 3,350,000 shares will be "restricted
securities" as defined in Rule 144 ("Restricted Shares"). Holders of all such
Restricted Shares have agreed with the Underwriters not to sell or otherwise
dispose of any shares of Common Stock for a period of six months from the date
of this Prospectus (the "Lock-up Period") without the consent of the
Representative.

Upon expiration of the Lock-up Period, all 3,350,000 shares of Common Stock
will be available for immediate resale in the public market, subject to
restrictions of Rule 144. In general, under Rule 144 as currently in effect, any
person (or persons whose shares are aggregated) who has beneficially owned
Restricted Shares for at least two years is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the then outstanding shares of the Company's Common Stock or the average weekly
trading volume during the four calendar weeks preceding such sale. Sales under
Rule 144 are also subject to certain requirements as to the manner of sale,
notice and availability of current public information about the Company. A
person who is not an affiliate, has not been an affiliate within three months
prior to the sale and has beneficially owned the Restricted Shares for at least
three years is entitled to sell such shares under Rule 144(k) without regard to
any of the limitations described above.

The Company intends to file registration statements on Form S-8 under the
Act to register an aggregate of 610,000 shares of Common Stock reserved for
issuance under its 1996 Stock Incentive Plan and its Employee Stock Purchase
Plan, thus permitting the resale of shares issued under such Plans by
non-affiliates in the public market without restriction under the Securities
Act. Such registration statements are expected to be filed within 90 days after
the date of this Prospectus and will automatically become effective upon filing.
At December 31, 1995, there were 264,000 outstanding options to purchase shares
of Common Stock under the 1996 Stock Incentive Plan, 53,333 of which will become
fully exercisable upon the effective date of this offering.

Prior to this offering, there has been no public market for the Common Stock
of the Company, and any sale of substantial amounts of Common Stock in the open
market may adversely affect the market price of the Common Stock offered hereby.

In connection with this offering, the Company has agreed to sell warrants,
exercisable beginning one year from the date of this Prospectus, to the
Representative which entitle the Representative to purchase up to 217,500 shares
of Common Stock at 120% of the initial public offering price per share of Common
Stock. The holders of the shares issuable upon exercise of these warrants may
require the Company to file a registration statement under the Securities Act
with respect to such shares. In addition, if the Company registers any of its
Common Stock for its own account, the holders of the shares issuable upon
exercise of these warrants are entitled to include their shares of Common Stock
in the Registration. See "Underwriting."

44
<PAGE>
UNDERWRITING

The Underwriters named below, represented by The Boston Group, L.P. (the
"Representative"), have severally agreed, subject to the terms and conditions
contained in the Underwriting Agreement, to purchase from the Company the number
of shares of Common Stock indicated below opposite their respective names at the
initial public offering price less the underwriting discounts and commissions
set forth on the cover page of this Prospectus. The Underwriting Agreement
provides that the obligations of the Underwriters are subject to certain
conditions, and that the Underwriters are committed to purchase all of such
shares, if any are purchased.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
- --------------------------------------------------------------------------------- ----------
<S> <C>
The Boston Group, L.P............................................................ 1,450,000
EVEREN Securities, Inc........................................................... 150,000
Ladenburg, Thalmann & Co., Inc................................................... 150,000
Commonwealth Associates.......................................................... 100,000
Hill, Thompson, Magid & Co., Inc................................................. 100,000
Van Kasper & Company............................................................. 100,000
Joseph Charles & Associates, Inc................................................. 50,000
Joseph Stevens & Company, L.P.................................................... 50,000
Laidlaw Equities, Inc............................................................ 50,000
Pryor, McClendon, Counts & Co., Inc.............................................. 50,000
----------
Total........................................................................ 2,250,000
----------
----------
</TABLE>

The Representative was organized in California and its principal business
function is to underwrite and sell securities. The Representative has been
recently formed, and this is the second public offering which it will
underwrite. After interviewing various underwriters, the Company has advised the
Representative that it chose the Representative because the Company believes
that the Representative has a thorough understanding of the Company and its
business.

The Company has been advised by the Representative that the Underwriters
propose to offer the shares to the public at the initial public offering price
set forth on the cover page of this Prospectus, and to certain securities
dealers at such price less a concession of not more than $.30 per share, and
that the Underwriters and such dealers may reallot to other dealers, including
the Underwriters, a discount not in excess of $.10 per share. After the initial
public offering, the public offering price and concessions and discounts may be
changed by the Representative. No reduction in such terms shall change the
amount of proceeds to be received by the Company as set forth on the cover page
of this Prospectus.

The Selling Stockholder has granted the Underwriters an option, exercisable
within 45 days after the date of this Prospectus, to purchase up to an aggregate
of an additional 337,500 shares of Common Stock, all of which will be sold by
the Selling Stockholder to cover over-allotments, at the same price per share of
Common Stock being paid by the Underwriters for the other shares of Common Stock
offered hereby.

The Representative has informed the Company that it does not expect any
sales of the shares of Common Stock offered hereby to be made by the
Underwriters to any discretionary accounts over which they exercise
discretionary authority.

The officers, directors and stockholders of the Company before this offering
have granted to the Representative a right of first refusal to effect any sales
made under Rule 144 of the Securities Act by such persons during the one-year
period from the date of this Prospectus.

The Company has also agreed to give notice to the Representative of meetings
of the Board of Directors for a period of two years and to provide copies of all
written consents of the Board of Directors to the Representative.

The Company (and the Selling Stockholder with respect to the proceeds from
the exercise of the over-allotment option) has agreed to pay the Representative
a non-accountable expense allowance of two and

45
<PAGE>
forty-five hundreths percent of the gross proceeds from the sale of all shares
of Common Stock offered hereby. To date, the Company has paid $30,000 of the
non-accountable expense allowance to the Representative. The Representative's
expenses in excess of the non-accountable expense allowance, including its legal
expenses, will be borne by the Representative. To the extent that the expenses
of the Representative are less than the non-accountable expense allowance, the
excess shall be deemed to be compensation to the Representative.

With the exception of the holder of the Non-Affiliated Shares, the Company's
officers, directors and stockholders, including the controlling beneficial
stockholders, have agreed not to, directly or indirectly, offer, offer to sell,
sell, grant an option to purchase or sell, transfer, assign, pledge, hypothecate
or otherwise encumber any shares of Common Stock owned by them for a period of
six months from the date of this Prospectus without the prior written consent of
the Representative (other than the Selling Stockholder's shares).

The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities under the Securities Act or will
contribute to payments the Underwriters may be required to make in respect
thereof. The Company has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.

Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price was determined by negotiation between
the Company and the Representative. Among the factors considered in determining
the initial public offering price were the markets addressed by the Company's
products and services, as well as the position of the Company in such markets,
the experience of the Company's management, the market price of publicly traded
stock of comparable companies in recent periods, the sales and earnings of the
Company and comparable companies in recent periods, the Company's earnings
potential, and the general condition of the securities markets at the time of
this offering. The initial public offering price set forth on the cover page of
this Prospectus should not be considered an indication of the actual value of
the Common Stock. Such price is subject to change as a result of market
conditions and other factors and no assurance can be given that the Common Stock
can be resold at the initial public offering price.

The foregoing sets forth the material terms and conditions of the
Underwriting Agreement, but does not purport to be a complete statement of the
terms and conditions thereof, copies of which are on file at the offices of the
Representative, the Company and the United States Securities and Exchange
Commission, Washington, D.C. See "Additional Information."

The Company has agreed to sell to the Representative, for $100,
Representative's Warrants to purchase up to 217,500 shares of Common Stock at an
exercise price per share equal to 120% of the initial public offering price per
share. The Representative's Warrants are exercisable for a period of four years
beginning one year from the date of this Prospectus, and are not transferable
for a period of one year except to officers or partners of the Representative or
any successor to the Representative or any other member of the National
Association of Securities Dealers, Inc. who participated in the offering. The
Representative's Warrants include a net exercise provision permitting the
holder(s) to pay the exercise price by cancellation of a number of shares with a
fair market value equal to the exercise price of the Representative's Warrants.

The Representative's Warrants provide certain rights with respect to the
registration under the Securities Act of up to 217,500 shares of Common Stock
issuable upon exercise thereof. The holders of the shares issuable upon exercise
of the Representative's Warrants may require the Company to file a registration
statement under the Securities Act with respect to such shares. In addition, if
the Company registers any of its Common Stock for its own account, the holders
of the shares issuable upon exercise of the Representative's Warrants are
entitled to include their shares of Common Stock in the registration. The
Company has also agreed to register for resale the Non-Affiliated Shares issued
to A.M. Razo & Company Securities, Inc. in the event that the Company files a
Registration Statement covering the resale of the shares underlying the
Representative's Warrants.

46
<PAGE>
FINDERS. A.M. Razo & Company Securities, Inc. ("A.M. Razo") has acted as a
finder in connection with this offering. A.M. Razo has received $10,000 for its
services to date, and will receive 7,500 shares of Common Stock as compensation
for its services concurrently with this offering. Andrew Razo, the principal of
A.M. Razo, is a member of the National Association of Securities Dealers, Inc.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company and the Selling Stockholder by Stradling, Yocca, Carlson & Rauth, a
Professional Corporation, Newport Beach, California. Certain legal matters in
connection with this offering will be passed upon for the Underwriters by
Jeffer, Mangels, Butler & Marmaro LLP, Los Angeles, California.

EXPERTS

The balance sheets of the Company as of September 30, 1994 and 1995, and the
statements of operations, stockholders' equity and cash flows for the period
from January 25, 1993 (date of inception) through September 30, 1993 and for
each of the two years in the period ended September 30, 1995, included in this
Prospectus, have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given upon their authority as experts
in accounting and auditing.

CHANGE IN ACCOUNTANTS

In September 1995, in connection with this offering, the Company engaged
Coopers & Lybrand L.L.P. as the principal independent accountants for the
Company for the period beginning January 25, 1993. Prior to the engagement of
Coopers & Lybrand L.L.P., Mercer & Woodford CPAs/P.C. had served as the
principal independent accountants for the Company for the period from January
25, 1993 through September 30, 1994. The change to Coopers & Lybrand L.L.P. was
approved by the Board of Directors of the Company. For the period commencing on
January 25, 1993, and ending on the date of the action by the Board of Directors
of the Company, there were no disagreements between the Company and Mercer &
Woodford CPAs/P.C. on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which
disagreements if not resolved to their satisfaction would have caused them to
make reference in their opinion to the subject matter of the disagreements. The
reports of Mercer & Woodford CPAs/P.C. on the financial statements of the
Company for such periods did not contain an adverse opinion or disclaimer of
opinion, nor were such reports qualified or modified in any respect.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement
(including any amendments thereto) on Form S-1 under the Securities Act with
respect to the Common Stock offered hereby. This Prospectus, which constitutes a
part of the Registration Statement, omits certain of the information contained
in the Registration Statement and the exhibits and schedules thereto on file
with the Commission pursuant to the Securities Act and the rules and regulations
of the Commission thereunder. The Registration Statement, including exhibits and
schedules thereto, may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials may be obtained at prescribed
rates from the Public Reference Section of the Commission, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and its public reference
facilities in New York, New York and Chicago, Illinois. Statements contained in
this Prospectus as to the contents of any contract or other document referred to
are not necessarily complete and in each instance reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.

47
<PAGE>
EN POINTE TECHNOLOGIES, INC.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----

<S> <C>
Report of Independent Accountants.......................................................................... F-2
Balance Sheets as of September 30, 1994 and 1995 and December 31, 1995 (unaudited)......................... F-3
Statements of Operations for the Period from January 25, 1993 (date of inception) through September 30,
1993, for each of the Two Years in the Period Ended September 30, 1995 and for the Three Months Ended
December 31, 1994 and 1995 (unaudited).................................................................... F-4
Statements of Stockholders' (Deficit) Equity for the Period from January 25, 1993 (date of inception)
through September 30, 1993, for each of the Two Years in the Period Ended September 30, 1995 and for the
Three Months Ended December 31, 1995 (unaudited).......................................................... F-5
Statements of Cash Flows for the Period from January 25, 1993 (date of inception) through September 30,
1993, for each of the Two Years in the Period Ended September 30, 1995 and for the Three Months Ended
December 31, 1994 and 1995 (unaudited).................................................................... F-6
Notes to Financial Statements.............................................................................. F-7
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Stockholders
En Pointe Technologies, Inc.

We have audited the accompanying balance sheets of En Pointe Technologies,
Inc. as of September 30, 1994 and 1995 and the related statements of operations,
stockholders' (deficit) equity and cash flows for the period from January 25,
1993 (date of inception) through September 30, 1993 and for each of the two
years in the period ended September 30, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of En Pointe Technologies, Inc.
as of September 30, 1994 and 1995, and the results of its operations and its
cash flows for the period from January 25, 1993 (date of inception) through
September 30, 1993 and for each of the two years in the period ended September
30, 1995 in conformity with generally accepted accounting principles.

In April 1996, the Company entered into an agreement to settle certain
litigation, the results of which will be recorded in the quarter ended June 30,
1996 as further discussed in Note 8 to the financial statements.

COOPERS & LYBRAND L.L.P.
Sherman Oaks, California
December 15, 1995, except for the effects of the
stock split described in Note 1 as to which the date is
March 15, 1996; Note 3 as to which the date is April 18, 1996;
and Note 8 as to which the date is April 30, 1996.

F-2
<PAGE>
EN POINTE TECHNOLOGIES, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30, PRO FORMA
---------------------------- DECEMBER 31, DECEMBER 31,
1994 1995 1995 1995
------------- ------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents......................... $ 1,229 $ 290,181 $ 148,992 $ 148,992
Restricted cash................................... 616,000 1,116,000 1,616,000 1,616,000
Accounts receivable, net of allowance for returns
and doubtful accounts of $194,300, $511,600 and
$626,600, respectively........................... 21,277,228 30,813,965 43,114,900 43,114,900
Other receivables................................. 534,554 1,114,704 1,406,696 1,406,696
Inventories....................................... 1,013,409 1,631,709 2,512,804 2,512,804
Deferred tax asset................................ 67,548 239,945 239,945 687,276
Prepaid expenses and other current assets......... 201,205 306,869 406,759 406,759
------------- ------------- ------------- -------------
Total current assets.......................... 23,711,173 35,513,373 49,446,096 49,893,427
Property and equipment, net of accumulated
depreciation....................................... 751,151 1,278,895 1,377,887 1,377,887
------------- ------------- ------------- -------------
Total assets.................................. $ 24,462,324 $ 36,792,268 $ 50,823,983 $ 51,271,314
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Book overdraft.................................... $ 399,776 $ -- $ -- $ --
Current portion of notes payable to
stockholders..................................... 12,077 150,000 -- --
Current portion of notes payable.................. -- 1,579,471 1,657,400 1,657,400
Borrowings under lines of credit.................. 19,072,057 27,472,952 38,655,343 38,655,343
Accounts payable.................................. 1,112,930 1,097,173 3,008,987 3,008,987
Accrued liabilities............................... 1,683,028 2,314,870 3,230,739 3,230,739
Accrued litigation settlement, current............ -- -- -- 744,688
Other current liabilities......................... 54,068 612,988 537,386 537,386
------------- ------------- ------------- -------------
Total current liabilities..................... 22,333,936 33,227,454 47,089,855 47,834,543
Notes payable to stockholders....................... 939,862 -- --
Notes payable....................................... 1,000,000 1,733,186 1,200,572 1,200,572
Litigation settlement, long-term.................... -- -- -- 384,234
------------- ------------- ------------- -------------
Total liabilities............................. 24,273,798 34,960,640 48,290,427 49,419,349
------------- ------------- ------------- -------------
Commitments and contingencies
Stockholders' equity (Note 1):
Preferred stock, $.001 par value:
Shares authorized -- 5,000,000
No shares issued or outstanding................... -- -- --
Common stock, $.001 par value:
Shares authorized -- 15,000,000
Shares issued and outstanding -- 3,350,000........ 3,350 3,350 3,350 3,350
Additional paid-in capital.......................... 18,908 958,770 958,770 958,770
Retained earnings................................... 166,268 869,508 1,571,436 889,845
------------- ------------- ------------- -------------
Total stockholders' equity.................... 188,526 1,831,628 2,533,556 1,851,965
------------- ------------- ------------- -------------
Total liabilities and stockholders' equity.... $ 24,462,324 $ 36,792,268 $ 50,823,983 $ 51,271,314
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>

See accompanying notes.

F-3
<PAGE>
EN POINTE TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS

See accompanying notes.

F-4
<PAGE>
EN POINTE TECHNOLOGIES, INC.
STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

<TABLE>
<CAPTION>
(ACCUMULATED TOTAL
COMMON STOCK ADDITIONAL DEFICIT) STOCKHOLDERS'
--------------------- PAID-IN RETAINED (DEFICIT)
SHARES AMOUNT CAPITAL EARNINGS EQUITY
---------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, January 25, 1993 (date of inception)..... -- $ -- $ -- $ -- $ --
Common stock issued for cash.................... 2,077,004 2,077 7,923 -- 10,000
Net loss........................................ -- -- -- (20,514) (20,514)
---------- --------- ---------- ------------ ------------
Balance, September 30, 1993....................... 2,077,004 2,077 7,923 (20,514) (10,514)
Common stock issued for cash.................... 1,272,996 1,273 10,985 -- 12,258
Net income...................................... -- -- -- 186,782 186,782
---------- --------- ---------- ------------ ------------
Balance, September 30, 1994....................... 3,350,000 3,350 18,908 166,268 188,526
Conversion of notes payable to stockholders to
additional paid-in capital..................... -- -- 939,862 -- 939,862
Net income...................................... -- -- -- 703,240 703,240
---------- --------- ---------- ------------ ------------
Balance, September 30, 1995....................... 3,350,000 3,350 958,770 869,508 1,831,628
Net income (unaudited).......................... -- -- -- 701,928 701,928
---------- --------- ---------- ------------ ------------
Balance, December 31, 1995 (unaudited)............ 3,350,000 $ 3,350 $ 958,770 $1,571,436 $2,533,556
---------- --------- ---------- ------------ ------------
---------- --------- ---------- ------------ ------------
</TABLE>

See accompanying notes.

F-5
<PAGE>
EN POINTE TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
JANUARY 25,
1993 (DATE OF
INCEPTION) YEAR ENDED THREE MONTHS ENDED
THROUGH SEPTEMBER 30, DECEMBER 31,
SEPTEMBER 30, ------------------------ ----------------------
1993 1994 1995 1994 1995
------------- ----------- ----------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating activities:
Net (loss) income........................... $ (20,514) $ 186,782 $ 703,240 $ 20,858 $ 701,928
Adjustments to reconcile net (loss) income
to net cash used by operating activities:
Depreciation and amortization............. 31,322 169,906 306,207 49,546 101,340
Allowance for doubtful accounts........... 10,965 53,600 90,500 -- 30,000
Allowance for returns..................... -- 134,300 490,900 95,100 85,000
Deferred taxes............................ (75,907) 8,359 (172,397) -- --
Changes in operating assets and
liabilities:
Restricted cash......................... (257,599) (358,401) (500,000) (500,000) (500,000)
Accounts receivable..................... (8,528,264) (12,947,829) (10,118,137) (6,503,811) (12,415,935)
Other receivables....................... (297,954) (236,600) (580,150) (199,451) (291,992)
Inventories............................. (162,138) (851,271) (618,300) 397,146 (881,095)
Prepaid expenses and other current
assets................................. (107,190) (94,015) (105,664) (38,800) (99,890)
Accounts payable........................ 317,381 795,549 (15,757) 746,478 1,911,814
Accrued expenses........................ 610,513 1,072,515 631,842 1,276,925 915,869
Other current liabilities............... 243,294 (189,226) 558,920 494,912 (75,602)
------------- ----------- ----------- --------- -----------
Net cash used by operating
activities........................... (8,236,091) (12,256,331) (9,328,796) (4,161,097) (10,518,563)
------------- ----------- ----------- --------- -----------
Investing activities:
Purchase of property and equipment.......... (397,249) (555,130) (833,951) (61,227) (200,332)
------------- ----------- ----------- --------- -----------
Net cash used in investing
activities........................... (397,249) (555,130) (833,951) (61,227) (200,332)
------------- ----------- ----------- --------- -----------
Financing activities:
Book overdraft.............................. 114,063 285,713 (399,776) (399,776) --
Net borrowings on lines of credit........... 7,843,162 11,228,895 8,400,895 5,396,042 11,182,391
Proceeds from issuance of notes payable to
stockholders............................... 909,849 900,000 150,000 -- --
Proceeds from issuance of notes payable..... -- 1,000,000 3,312,657 -- --
Payments on notes payable to stockholders... (243,380) (614,530) (12,077) (5,915) (150,000)
Payments on notes payable................... -- -- (1,000,000) -- (454,685)
Proceeds from issuance of common stock...... 10,000 12,258 -- -- --
------------- ----------- ----------- --------- -----------
Net cash provided by financing
activities........................... 8,633,694 12,812,336 10,451,699 4,990,351 10,577,706
------------- ----------- ----------- --------- -----------
Net increase in cash and cash
equivalents.......................... 354 875 288,952 768,027 (141,189)
Cash and cash equivalents at beginning of
period....................................... -- 354 1,229 1,229 290,181
------------- ----------- ----------- --------- -----------
Cash and cash equivalents at end of period.... $ 354 $ 1,229 $ 290,181 $ 769,256 $ 148,992
------------- ----------- ----------- --------- -----------
------------- ----------- ----------- --------- -----------
Supplemental disclosures of cash flow
information:
Interest paid............................... $ 190,303 $ 1,036,954 $ 1,838,511 $ 393,645 $ 550,130
------------- ----------- ----------- --------- -----------
------------- ----------- ----------- --------- -----------
Income taxes paid........................... $ 33,524 $ 222,232 $ 151,486 $ 47,208 $ 583,139
------------- ----------- ----------- --------- -----------
------------- ----------- ----------- --------- -----------
Supplemental schedule of non-cash financing
activities:
Conversion of notes payable to stockholders
to additional paid-in capital.............. $ -- $ -- $ 939,862 $ -- $ --
------------- ----------- ----------- --------- -----------
------------- ----------- ----------- --------- -----------
</TABLE>

See accompanying notes.

F-6
<PAGE>
EN POINTE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF DECEMBER 31, 1995 AND FOR THE
THREE MONTHS ENDED DECEMBER 31, 1994 AND 1995 IS UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION

The Company was incorporated under the laws of the State of Texas on January
25, 1993 under the name Infosystems, Inc., which name was later changed to
InfoTech Systems, and commenced operations in March 1993. On September 21, 1995,
the Company changed its name to En Pointe Technologies, Inc.

In February 1996, the Company's Board of Directors (the "Board") authorized
the reincorporation of the Company in the State of Delaware with total
authorized shares of all classes of stock to be 20,000,000 shares, consisting of
15,000,000 shares of common stock, $.001 par value per share, and 5,000,000
shares of preferred stock, $.001 par value per share, to be effected on or
before the effective date of a registration statement for an initial public
offering ("IPO") of common stock. In connection with such reincorporation, the
Company authorized a forward stock split of 207.7 shares for each share of
issued and outstanding common stock of the Company. The stock split was effected
on February 29, 1996. All share and per-share amounts have been adjusted to
retroactively reflect this stock split.

The Company is a reseller of computers and computer-related products and
services and currently has sales offices in ten locations.

INTERIM AND PRO FORMA UNAUDITED FINANCIAL INFORMATION

The financial statements and related notes as of December 31, 1995 and for
the three months ended December 31, 1994 and 1995 are unaudited but include all
adjustments (consisting solely of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of the financial
position and results of operations for the interim period. The results of
operations for the three months ended December 31, 1995 are not necessarily
indicative of the operating results for the full fiscal year.

The unaudited pro forma balance sheet at December 31, 1995 includes
litigation settlement costs of approximately $1,129,000 to reflect the effects
of the agreement entered into by the Company in April 1996 to settle certain
litigation as if it had occurred at the date of the most recent financial
statements, as further discussed in Note 8 to the financial statements.

REVENUE RECOGNITION

Revenues are recognized upon product shipment and satisfaction of
significant vendor obligations, if any. Net sales consist of product sales, less
discounts. An estimated allowance for returns is provided to the extent such
returns will not be accepted by the Company's vendors. At September 30, 1994 and
1995 and December 31, 1995, the allowance for returns was $134,300, $386,600 and
$441,600, respectively.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all time
deposits and highly liquid investments with acquired maturities of three months
or less to be cash equivalents.

INVENTORIES

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

PROPERTY AND EQUIPMENT

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

F-7
<PAGE>
EN POINTE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(INFORMATION AS OF DECEMBER 31, 1995 AND FOR THE
THREE MONTHS ENDED DECEMBER 31, 1994 AND 1995 IS UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
amortized over the lessor 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.

ADVERTISING

The Company reports the costs of all advertising in the periods in which
those costs are incurred. Advertising expense was approximately $18,000,
$13,000, $54,000, $5,000 and $24,000 for the period from January 23, 1993 (date
of inception) through September 30, 1993, for the years ended September 30, 1994
and 1995 and for the three months ended December 31, 1994 and 1995,
respectively.

OTHER INCOME

In March 1993, the Company entered into a consulting agreement, for a period
of twelve months, with a corporation of which the president of the Company was a
prior shareholder. As consideration, the Company received a prepaid fee of
approximately $300,000 for general advisory and consulting services, which was
initially recorded as deferred income and recognized as other income over the
term of the agreement.

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.

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

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.

For the period from January 25, 1993 (date of inception) through September
30, 1993 three of the Company's customers accounted for 31%, 15% and 14%,
respectively, of net sales; for the year ended September 30, 1995, one of the
Company's customers (not previously a major customer), International Business
Machines Corporation ("IBM") accounted for approximately 11% of net sales; and
for the three months ended December 31, 1995, IBM accounted for approximately
27% of net sales. As of September 30, 1995 and December 31, 1995, IBM accounted
for approximately 15% and 31% of accounts receivable, respectively.

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
generally been within management's expectations.

NET (LOSS) INCOME PER SHARE

Net (loss) income per share is based on the weighted average number of
common and common equivalent shares outstanding during each period, using the
treasury stock method. Common equivalent shares related to stock options are
excluded from the computation when their effect is antidilutive, except that,
pursuant to the Securities and Exchange Commission Staff Accounting Bulletins,
common and common equivalent shares issued by the Company at prices below the
assumed initial public offering price during the twelve months immediately
preceding the offering date have been included in the calculation of earnings
per share as if they were outstanding for all periods presented at the assumed
initial public offering price.

F-8
<PAGE>
EN POINTE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(INFORMATION AS OF DECEMBER 31, 1995 AND FOR THE
THREE MONTHS ENDED DECEMBER 31, 1994 AND 1995 IS UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
RECENTLY ISSUED ACCOUNTING STANDARD

2. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------------
1994 1995
----------- ------------ DECEMBER 31,
1995
------------
(UNAUDITED)
<S> <C> <C> <C>
Computer equipment.................................. $ 855,996 $ 1,553,966 $1,751,307
Office equipment.................................... 36,487 115,594 118,725
Furniture and fixtures.............................. 59,876 116,750 116,610
----------- ------------ ------------
952,359 1,786,310 1,986,642
Less: Accumulated depreciation.................... (201,208) (507,415) (608,755)
----------- ------------ ------------
$ 751,151 $ 1,278,895 $1,377,887
----------- ------------ ------------
----------- ------------ ------------
</TABLE>

3. LINES OF CREDIT:
At September 30, 1994 and 1995 and at December 31, 1995, the Company had
outstanding borrowings of $19,072,057, $27,472,952 and $38,655,343,
respectively, under lines of credit with various financial institutions.

The line of credit agreements provide for total financing of up to
$23,000,000, $33,500,000 and $38,650,000 at September 30, 1994 and 1995 and
December 31, 1995, respectively, at annual interest rates of up to prime plus
2.5%. 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, including certificates of deposit of $616,000,
$1,116,000 and $1,616,000, classified as restricted cash, at September 30, 1994
and 1995 and December 31, 1995, respectively. Borrowings are limited to specific
percentages of the Company's accounts receivable and inventory balances. In
addition, the credit lines are guaranteed by certain stockholders of the
Company. The line of credit agreements contain various covenants which provide,
among other things, a restriction on dividend payments and the requirement for
the maintenance of certain financial ratios. At September 30 and December 31,
1995, the Company was not in compliance with certain covenants under one of its
line of credit agreements and subsequently received a waiver from its lender. As
a condition to granting the Company such waiver, the interest rate on the line
of credit was increased to prime plus 2.75%. The lender has also indicated that
it may impose more stringent financial covenants on the Company in the future in
connection with this line of credit. The prime rate of interest was 7.75%, 8.75%
and 8.75% at September 30, 1994 and 1995 and December 31, 1995, respectively,
and the weighted average interest rates for the years ended September 30, 1994
and 1995 and the three months ended December 31, 1995 were 8.74%, 10.76% and
11.25%, respectively.

The lines of credit are automatically renewable on an annual basis unless
notification of an election not to renew is made by either the Company or
creditor on or prior to the annual renewal date.

F-9
<PAGE>
EN POINTE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(INFORMATION AS OF DECEMBER 31, 1995 AND FOR THE
THREE MONTHS ENDED DECEMBER 31, 1994 AND 1995 IS UNAUDITED)

4. NOTES PAYABLE:
Notes payable consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------------
1994 1995
------------ ------------- DECEMBER 31,
1995
-------------
(UNAUDITED)
<S> <C> <C> <C>
Note payable to a vendor with interest at the prime rate
(7.75% at September 30, 1994) plus 1%, payable the earlier
of May 31, 1996 or upon termination of the reseller
agreement. Repaid in August 1995........................... $ 1,000,000 $ -- $ --

Notes payable to a vendor with interest at 8.5%, payments of
principal and interest of $274,492 due quarterly with any
unpaid balance due August 18, 1997......................... -- 2,000,000 1,798,418

Note payable to a vendor with interest at 10%, payments of
principal and interest of $65,000 due monthly with any
unpaid balance due August 1,
1997....................................................... -- 1,312,657 1,059,554
------------ ------------- -------------
1,000,000 3,312,657 2,857,972

Less, current portion....................................... -- (1,579,471) (1,657,400)
------------ ------------- -------------
$ 1,000,000 $ 1,733,186 $ 1,200,572
------------ ------------- -------------
------------ ------------- -------------
</TABLE>

The above notes are collateralized by substantially all assets of the
Company and certain notes are guaranteed by certain stockholders of the Company.
Certain of the above notes also require the Company to maintain specified
financial ratios. The notes with one of the vendors have been entered into
directly between the vendor and certain stockholders, however, the notes are
guaranteed by the Company and are collateralized by substantially all assets of
the Company. All principal and interest payments on these notes are made by the
Company.

F-10
<PAGE>
EN POINTE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(INFORMATION AS OF DECEMBER 31, 1995 AND FOR THE
THREE MONTHS ENDED DECEMBER 31, 1994 AND 1995 IS UNAUDITED)

4. NOTES PAYABLE, CONTINUED
Notes payable to stockholders consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------
1994 1995
---------- -----------
<S> <C> <C>
Note payable with interest at 10% per annum, interest payable annually, due
January 1, 1996; converted to paid-in capital as of September 30, 1995........ $ 251,939 $ --

Notes payable with interest at 10% per annum, payable quarterly interest only
for the first two years, then interest and principal of $16,134 for the next
three years with any unpaid balance due December 1, 1998; converted to paid-in
capital as of September 30, 1995.............................................. 500,000 --

Note payable with interest at 10% per annum, payable quarterly interest only
for the first two years, then interest and principal of $6,453 for the next
three years with any unpaid balance due December 1, 1999; converted to paid-in
capital as of September 30, 1995.............................................. 200,000 --

Note payable with interest at 10%, due on demand, repaid December 1, 1995...... -- 150,000
---------- -----------
951,939 150,000

Less, current portion.......................................................... (12,077) (150,000)
---------- -----------
$ 939,862 $ --
---------- -----------
---------- -----------
</TABLE>

Interest expense on notes payable to stockholders for the period from
January 25, 1993 (date of inception) through September 30, 1993, for the years
ended September 30, 1994 and 1995 and for the three months ended December 31,
1994 and 1995 was $16,500, $88,600, $94,200, $24,200 and $2,500, respectively.

Maturities of long-term debt as of September 30, 1995 are as follows:

5. EMPLOYEE BENEFIT PLAN:
The Company has an employee savings plan (the "401(k) Plan") that covers
substantially all full-time employees who are twenty-one years of age or older.
Company contributions to the 401(k) Plan are at the discretion of the Board of
Directors and vest over 7 years of service. No contributions were made by the
Company to the 401(k) Plan during fiscal years 1993, 1994, and 1995 and the
three months ended December 31, 1995.

F-11
<PAGE>
EN POINTE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(INFORMATION AS OF DECEMBER 31, 1995 AND FOR THE
THREE MONTHS ENDED DECEMBER 31, 1994 AND 1995 IS UNAUDITED)

6. INCOME TAXES:
The components of the income tax (benefit) provision are as follows:

<TABLE>
<CAPTION>
JANUARY 25, 1993
(DATE OF YEAR ENDED SEPTEMBER
INCEPTION) 30,
THROUGH SEPTEMBER -----------------------
30, 1993 1994 1995
----------------- ---------- -----------
<S> <C> <C> <C>
Current:
Federal................................................... $ 43,402 $ 97,450 $ 523,780
State..................................................... 11,844 23,093 137,799
-------- ---------- -----------
55,246 120,543 661,579
-------- ---------- -----------
Deferred:
Federal................................................... (60,934) 5,150 (137,627)
State..................................................... (14,973) 3,209 (34,770)
-------- ---------- -----------
(75,907) 8,359 (172,397)
-------- ---------- -----------
$ (20,661) $ 128,902 $ 489,182
-------- ---------- -----------
-------- ---------- -----------
</TABLE>

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

<TABLE>
<CAPTION>
JANUARY 25, 1993 YEAR ENDED SEPTEMBER 30,
(DATE OF INCEPTION)
THROUGH SEPTEMBER 30, ------------------------
1993 1994 1995
--------------------- ----- -----
<S> <C> <C> <C>
Federal statutory rate................................................ (34)% 34% 34%
State taxes, net of federal benefits.................................. 5 6 6
Non-deductible expenses............................................... -- 1 1
Graduated tax benefit................................................. (21) -- --
-- -- --
(50)% 41% 41%
-- -- --
-- -- --
</TABLE>

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. Based on the level of
taxable income generated by the Company in prior periods, management believes it
is more likely than not that the Company will realize the benefit of its
recorded net deferred tax asset.

F-12
<PAGE>
EN POINTE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(INFORMATION AS OF DECEMBER 31, 1995 AND FOR THE
THREE MONTHS ENDED DECEMBER 31, 1994 AND 1995 IS UNAUDITED)

6. INCOME TAXES, CONTINUED
Significant components of deferred taxes were as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------
1994 1995
---------- ----------
<S> <C> <C>
Deferred tax assets:
Accounts receivable allowance................................................. $ 46,321 $ 209,171
Expenses not currently deductible............................................. 44,839 76,366
State income taxes............................................................ 5,491 23,822
---------- ----------
96,651 309,359
---------- ----------
Deferred tax liabilities:
Prepaid sales commissions..................................................... (21,790) (25,867)
Depreciation.................................................................. (7,313) (43,547)
---------- ----------
(29,103) (69,414)
---------- ----------
Net deferred tax asset.......................................................... $ 67,548 $ 239,945
---------- ----------
---------- ----------
</TABLE>

7. COMMITMENTS AND CONTINGENCIES:
The Company leases office facilities and various office equipment. One
office facility is subleased from one of the Company's stockholders. These
leases extend over a period of up to five years and are accounted for as
operating leases. Estimated future minimum lease payments under operating leases
having initial or remaining noncancellable lease terms in excess of one year at
September 30, 1995 were as follows:

Rent expense for the period from January 25, 1993 (date of inception)
through September 30, 1993 and for the years ended September 30, 1994 and 1995
and for the three months ended December 31, 1994 and 1995 under all operating
leases was approximately $161,000, $578,000, $966,000, $153,000 and $193,000,
respectively.

The Company has entered into employment contracts with certain of its
officers. The agreements provide for annual base salary with annual increases
and provide for annual bonuses as determined by the Board of Directors. The
agreements have five-year terms ending at various times in fiscal 2001 and
provide for guaranteed severance payments upon termination of employment.

In connection with notes payable to two vendors, the Company has entered
into purchase agreements with those vendors which obligate it to make minimum
purchases aggregating $205,000,000 and $195,000,000 for the years ending
September 30, 1996 and 1997, respectively.

8. LITIGATION SETTLEMENT:
On October 3, 1994, Samuel S. Lam, a computer programmer and former officer
of the Company, filed suit against the Company and Bob and Naureen Din in the
United States District Court for the Central District of California. Lam
developed the original form of one of the Company's computerized information

F-13
<PAGE>
EN POINTE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(INFORMATION AS OF DECEMBER 31, 1995 AND FOR THE
THREE MONTHS ENDED DECEMBER 31, 1994 AND 1995 IS UNAUDITED)

8. LITIGATION SETTLEMENT, CONTINUED
systems software (the "Software") prior to his employment with the Company. Lam,
as part of his employment agreement with the Company, licensed the Software to
the Company and assigned to the Company all improvements made to the Software
beginning from the commencement of Lam's employment with the Company.

Lam's complaint asserts causes of action for declaratory relief, copyright
infringement, statutory and common law misappropriation of trade secrets, breach
of contract and other related claims. In his complaint, Lam alleges, among other
claims, that Section 2870 of the California Labor Code invalidated the license
and assignment made by Lam in favor of the Company with respect to the rights
held by Lam in the Software, and that the Company fraudulently induced Lam to
enter into the license and assignment and an employment agreement with the
Company. Damages sought by Lam include injunctive relief to prevent the Company
from using the Software, an award of money for all gains and profits realized by
the Company through its use of the Software, the establishment of a constructive
or statutory trust, punitive damages and costs of suit and attorneys' fees.

On February 17, 1995, the Court issued an Order holding that the license and
assignment of rights by Lam pertaining to the Software and any enhancements and
modifications to the Software did not violate Section 2870 of the California
Labor Code.

In mid-1995, Lam filed an amended complaint, charging the Company and the
Dins with violations of federal and California corporate securities laws. In the
amended complaint, Lam claims, in part, that the Company breached an agreement
to pay Lam $1.5 million in securities of the Company. The Company and the Dins
have responded by denying the material allegations of Lam's amended complaint.

On March 7, 1996, the Company issued financial statements for inclusion in
its registration statement on Form S-1. On April 1, 1996 the Company, together
with Bob and Naureen Din, entered into a memorandum of settlement with Lam,
which was later formalized in a settlement agreement on April 19, 1996.

The settlement requires the Company to make payments to Lam of (i) $300,000
by April 29, 1996, (ii) $200,000 by May 19, 1996, (iii) $100,000 by April 19,
1997, (iv) $7,500 per month for sixty months, commencing on May 1, 1996, and (v)
contingent upon the consummation of the offering contemplated by the Company's
Registration Statement, either (A) shares on Common Stock equal in value to
$150,000 or (B) $175,000, to be paid out of the proceeds received by the
Company, if any, from insurance policies in connection with the litigation.

The Company has filed suit against its insurance carrier in order to recoup
both legal costs incurred by the Company in connection with its defense of the
foregoing litigation as well as for amounts paid out by the Company pursuant to
the settlement. On April 30, 1996 the Company prevailed in a summary judgement
motion against its insurance carrier in which the court held that such insurance
carrier had a duty to defend the Company in connection with this litigation and
that the insurance company breached such duty. However, there can be no
assurance that the Company will ultimately be successful in recovering any
amounts from the insurance company including its legal costs incurred to date.

The financial statements included in Amendment No. 1 to the Company's
Registration Statement dated April 23, 1996, included a non-recurring charge of
approximately $1,129,000 in fiscal year 1995 to reflect the effects of the
settlement. However, because the settlement occurred subsequent to the date the
financial statements were deemed to have been issued (March 7, 1996), and it was
not probable at the date of issuance of those financial statements that a
liability had been incurred, it has subsequently been determined that the

F-14
<PAGE>
EN POINTE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(INFORMATION AS OF DECEMBER 31, 1995 AND FOR THE
THREE MONTHS ENDED DECEMBER 31, 1994 AND 1995 IS UNAUDITED)

8. LITIGATION SETTLEMENT, CONTINUED
settlement should not be reflected in the 1995 financial statements but should
be recorded in the period of settlement. Accordingly, the effects of the
settlement and recoveries, if any, from the insurance company will be reflected
in the Company's financial statements as of June 30, 1996 and for the nine
months then ended.

The Company and the Company's senior management are also involved in other
suits and actions incidental to the Company's business. The Company does not
believe, on the advice of counsel, that the resolution of any of the current
suits or actions will result in a material adverse effect on the Company's
financial condition and results of operations.

9. SUBSEQUENT EVENTS (UNAUDITED):
The Company's Board of Directors (the "Board") authorized the filing of a
registration statement for an initial public offering ("IPO") of common stock
and authorized and adopted the 1996 Stock Incentive Plan and the Employee Stock
Purchase Plan. In connection with the IPO, the underwriter will receive warrants
to purchase 217,500 shares of common stock exercisable at 120% of the IPO price
over a five-year period. In addition, in connection with the IPO, a financial
advisor will be issued 7,500 shares of common stock.

The 1996 Stock Incentive Plan authorizes the Board of Directors to grant
incentive stock options and non-qualified stock options to employees, officers,
directors and consultants, except that incentive stock options may not be issued
to non-employee directors or consultants. A maximum of 360,000 shares of Common
Stock are authorized and reserved for issuance under the Plan. Under the Plan,
incentive stock options are granted at a price that is not less than 100% of the
fair value of the stock at the date of grant, as determined by the Board of
Directors. Non-qualified stock options are granted at a price that is not less
than 80% of the fair value of the stock at the date of grant, as determined by
the Board of Directors. Options vest as determined by the Plan administrator and
are generally exercisable over a period not to exceed ten years.

In March 1996, the Company granted options, to be effective with the closing
of an initial public offering, to purchase 264,000 shares of common stock. The
incentive options will have an exercise price equal to the IPO price and the
nonqualified options will have an exercise price equal to 80% of the IPO price.
Of the outstanding options, 53,333 will become exercisable immediately on the
effective date of the Company's IPO. The remaining options are exercisable on a
pro rata basis beginning on the third month, ninth month and twenty-seventh
month following consummation of the Company's IPO. After the above grant,
options to purchase 96,000 shares of common stock remain available for grant.

The Employee Stock Purchase Plan enables substantially all employees to
purchase shares of Common Stock during annual offering periods at a purchase
price of 85% of the fair market value of the shares on the grant date or, if
lower, 85% of the fair market value of the shares on the purchase date. A
maximum of 250,000 shares are authorized and reserved for issuance under the
terms of the Plan.

F-15
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES BY ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

-------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary............................................. 3
Risk Factors........................................ 6
Use of Proceeds..................................... 14
Dividend Policy..................................... 14
Capitalization...................................... 15
Dilution............................................ 16
Selected Financial Data............................. 17
Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 18
Business............................................ 25
Management.......................................... 35
Certain Transactions................................ 41
Principal Stockholders.............................. 42
Description of Capital Stock........................ 43
Shares Eligible for Future Sale..................... 44
Underwriting........................................ 45
Legal Matters....................................... 47
Experts............................................. 47
Change in Accountants............................... 47
Additional Information.............................. 47
Index to Financial Statements....................... F-1
</TABLE>

---------------------

UNTIL JUNE 2, 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

2,250,000 SHARES

[LOGO]

COMMON STOCK

------------------

PROSPECTUS

------------------

THE BOSTON GROUP, L.P.

MAY 8, 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------