4
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___ to ___.
Commission file number: 0-28926
ePlus inc.
(Exact name of registrant as specified in its charter)
Delaware 54-1817218
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Herndon Parkway, Herndon, VA 20170
(Address, including zip code, of principal offices)
Registrant's telephone number, including area code: (703) 834-5710
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
The number of shares of Common Stock outstanding as of August 14, 2000, was
9,671,828.
<TABLE>
<CAPTION>
<PAGE>
TABLE OF CONTENTS
ePlus inc. AND SUBSIDIARIES
Part I. Financial Information:
Item 1. Financial Statements - Unaudited:
<S> <C>
Condensed Consolidated Balance Sheets as of March 31, 2000
and June 30, 2000 2
Condensed Consolidated Statements of Earnings, Three Months
Ended June 30, 1999 and 2000 3
Condensed Consolidated Statements of Cash Flows, Three Months
Ended June 30, 1999 and 2000 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
Part II. Other Information:
Item 1. Legal Proceedings 19
Item 2. Changes in Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
</TABLE>
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<PAGE>
EPLUS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
As of March 31, 2000 As of June 30, 2000
-------------------- -------------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 21,909,784 $ 10,787,803
Accounts receivable 60,166,596 67,207,993
Notes receivable 1,195,263 1,368,582
Employee advances 94,693 124,436
Inventories 2,445,425 3,071,417
Investment in direct financing and sales type leases - net 221,884,864 223,046,902
Investment in operating lease equipment - net 10,114,392 8,822,130
Property and equipment - net 2,895,711 3,079,113
Other assets 24,628,020 28,428,522
---------- ----------
TOTAL ASSETS $345,334,748 $345,936,898
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable - equipment $ 22,975,545 $ 28,962,152
Accounts payable - trade 29,451,907 27,215,493
Salaries and commissions payable 956,762 960,199
Accrued expenses and other liabilities 8,519,353 7,045,907
Income Taxes Payable 3,685,870 3,660,476
Recourse notes payable 39,017,168 19,298,030
Nonrecourse notes payable 182,845,152 172,115,811
Deferred taxes 762,139 762,139
------- -------
Total Liabilities 288,213,896 260,020,207
=========== ===========
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 2,000,000 shares authorized;
none issued or outstanding -- --
Common stock, $.01 par value; 25,000,000 authorized;
7,958,433 and 9,673,358 issued and outstanding at
March 31, 2000 and June 30, 2000, respectively 79,584 96,734
Additional paid-in capital 29,926,168 56,219,972
Retained earnings 27,115,100 29,599,985
---------- ----------
Total Stockholders' Equity 57,120,852 85,916,691
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $345,334,748 $345,936,898
============ ============
See Notes to Condensed Consolidated Financial Statements
</TABLE>
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<PAGE>
EPLUS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
June 30,
1999 2000
---- ----
REVENUES
<S> <C> <C>
Sales of equipment $ 33,175,781 $ 55,689,994
Sales of leased equipment 14,385,824 16,422,062
---------- ----------
47,561,605 72,112,056
Lease revenues 5,537,740 8,554,985
Fee and other income 856,436 1,829,626
ePlusSuite revenues - 1,116,439
--------- ----------
6,394,176 11,501,050
--------- ----------
TOTAL REVENUES 53,955,781 83,613,106
---------- ----------
COSTS AND EXPENSES
Cost of sales, equipment 29,391,516 47,734,206
Cost of sales, leased equipment 14,125,432 16,003,734
---------- ----------
43,516,948 63,737,940
Direct lease costs 949,010 3,005,445
Professional and other fees 423,671 439,687
Salaries and benefits 3,949,326 6,806,208
General and administrative expenses 1,294,373 1,934,300
Interest and financing costs 1,318,356 3,547,999
--------- ---------
7,934,736 15,733,639
--------- ----------
TOTAL COSTS AND EXPENSES 51,451,684 79,471,579
---------- ----------
EARNINGS BEFORE PROVISION FOR INCOME TAXES 2,504,097 4,141,527
--------- ---------
PROVISION FOR INCOME TAXES 1,001,642 1,656,611
--------- ---------
NET EARNINGS $ 1,502,455 $ 2,484,916
=========== ===========
NET EARNINGS PER COMMON SHARE - BASIC $ 0.20 $ 0.26
=========== ===========
NET EARNINGS PER COMMON SHARE - DILUTED $ 0.20 $ 0.24
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 7,477,532 9,397,157
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 7,492,780 10,263,498
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
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<PAGE>
EPLUS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1999 2000
---- ----
Cash Flows From Operating Activities:
<S> <C> <C>
Net earnings $ 1,502,455 $ 2,484,916
Adjustments to reconcile net earnings to net cash used by
operating activities:
Depreciation and amortization 827,539 2,341,617
Provision for credit losses 100,000 183,000
Gain on sale of operating lease equipment (369,069)
Adjustment of basis to fair market value of equipment and inventories 3,000 545,000
Payments from lessees directly to lenders (184,444) (2,898,496)
Changes in:
Accounts receivable (23,812,675) (6,928,707)
Other receivables 245,836 (573,945)
Employee advances (45,200) (30,834)
Inventories (806,920) (484,381)
Other assets (2,951,845) (4,722,224)
Accounts payable - equipment 16,063,283 4,467,606
Accounts payable - trade 4,462,455 (148,801)
Salaries and commissions payable, accrued
expenses and other liabilities 61,336 (4,758,450)
---------- -----------
Net cash used by operating activities (4,535,180) (10,892,768)
---------- ------------
Cash Flows From Investing Activities:
Proceeds from sale of operating equipment -- 922,549
Purchases of operating lease equipment -- (1,088,510)
Increase in investment in direct financing and sales-type leases (23,612,530) (8,113,633)
Purchases of property and equipment (202,962) (464,448)
Increase in other assets (24,121) (680,291)
------------ -----------
Net cash used in investing activities (23,839,613) (9,424,333)
------------ -----------
Cash Flows From Financing Activities:
Borrowings:
Nonrecourse 17,125,538 5,347,698
Recourse 321,599 5,283,658
Repayments:
Nonrecourse (1,824,682) (8,029,475)
Recourse (426,253) (183,931)
Proceeds from issuance of capital stock, net of expenses 83,094 26,085,953
Issuance of common stock purchase warrants -- 225,000
Proceeds from lines of credit 11,149,879 (19,533,783)
---------- ------------
Net cash provided by financing activities 26,429,175 9,195,120
---------- ------------
Net Decrease in Cash and Cash Equivalents (1,945,618) (11,121,981)
Cash and Cash Equivalents, Beginning of Period 7,891,661 21,909,784
---------- ------------
Cash and Cash Equivalents, End of Period $ 5,946,043 $ 10,787,803
=========== =============
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest $ 375,560 $ 238,074
=========== ============
Cash paid for income taxes $ 1,496,069 $ 1,578,993
=========== ============
See Notes To Condensed Consolidated Financial Statements.
</TABLE>
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<PAGE>
ePlus inc. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed consolidated interim financial statements of ePlus inc. and
subsidiaries (the "Company") included herein have been prepared by the Company
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission and reflect all adjustments that are, in the opinion of
management, necessary for a fair statement of results for the interim periods.
All adjustments made were normal, recurring accruals. Certain prior year amounts
have been reclassified to conform to the current year's presentation.
These interim financial statements should be read in conjunction with the
financial statements and notes thereto contained in the Company's Annual Report
on Form 10-K (No. 0-28926) for the year ended March 31, 2000 (the "Company's
2000 Form 10-K"). Operating results for the interim periods are not necessarily
indicative of results for an entire year.
2. INVESTMENT IN DIRECT FINANCING AND SALES TYPE LEASES
The Company's investment in direct financing and sales type leases consists of
the following components:
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<CAPTION>
March 31, June 30,
2000 2000
-------- --------
(In Thousands)
<S> <C> <C>
Minimum lease payments $ 213,284 $ 214,476
Estimated unguaranteed residual value 33,584 33,810
Initial direct costs, net of amortization (1) 2,958 3,227
Less: Unearned lease income (26,093) (26,650)
Reserve for credit losses (1,848) (1,816)
---------- ---------
Investment in direct finance and sales
type leases, net $ 221,885 $ 223,047
========= =========
(1) Initial direct costs are shown net of amortization of $3,686 and $3,898 at March
31, 2000 and June 30, 2000, respectively.
</TABLE>
3. INVESTMENT IN OPERATING LEASE EQUIPMENT
Investment in operating leases primarily represents equipment leased for two to
three years and leases that are short term renewals on month-to-month status.
The components of the net investment in operating lease equipment are as
follows:
<TABLE>
<CAPTION>
March 31, June 30,
2000 2000
---- ----
(In Thousands)
<S> <C> <C>
Cost of equipment under operating leases $ 26,979 $ 23,906
Initial direct costs 19 18
Less: Accumulated depreciation and
amortization (16,884) (15,102)
---------- ---------
Investment in operating lease equipment, net $ 10,114 $ 8,822
========== =========
</TABLE>
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<PAGE>
4. BUSINESS COMBINATION
On September 30, 1999, the Company purchased all of the stock of CLG, Inc., a
technology equipment leasing business, from Centura Bank. This business
acquisition has been accounted for as a purchase.
The following pro forma financial information presents the combined results of
operations of CLG, Inc. as if the acquisition had occurred as of the beginning
of the three months ended June 30, 1999 and 2000, after giving effect to certain
adjustments, including amortization of goodwill. The pro forma financial
information does not necessarily reflect the results of operations that would
have occurred had the Company and CLG, Inc. constituted a single entity during
such periods.
(Unaudited)
Three Months Ended June 30,
1999 2000
-------------------------------------
(In thousands, except per share data)
Total Revenues $ 61,400 $ 83,613
Net Earnings 1,415 2,485
Net Earnings per Common Share - Basic 0.18 0.26
Net Earnings per Common Share - Diluted 0.18 0.24
5. ISSUANCES OF COMMON STOCK AND WARRANTS
On October 23, 1998, the Company sold 1,111,111 shares of common stock to TC
Leasing LLC, a Delaware limited liability company, for a price of $9.00 per
share. In addition, the Company granted to TC Leasing LLC, a stock purchase
warrant granting the right to purchase an additional 1,090,909 shares of common
stock at a price of $11.00 per share, subject to certain anti-dilution
adjustments. The warrant was exercisable through December 31, 2001, unless
extended pursuant to the terms of the warrant. On February 25, 2000, the Company
entered into an agreement, which was amended April 11, 2000, which allowed TC
Plus LLC (formerly TC Leasing LLC) to exercise the warrants on a cashless basis
at an exercise price of $11.00 per share, contingent upon the Company's
completion of a secondary offering, which occurred on April 17, 2000. On April
11, 2000, TC Plus LLC exercised their options on a cashless basis and were
issued 709,956 shares of common stock. Pursuant to the terms of this private
placement, the Company agreed to expand its Board of Directors to six persons,
four of whom shall be appointed, in whole or in part, by TC Plus LLC.
Additionally, the terms of the private placement restricted the Company's
ability to pay dividends until October 23, 1999 without the consent of TC Plus
LLC.
On April 17, 2000 the Company completed a secondary offering of 1,000,000 shares
of its common stock at a price of $28.50 per share. Net proceeds to the Company
were $25,999,884.
On May 25, 2000, the Company issued a common stock purchase warrant to a
business partner which allows the holder to purchase up to 50,000 shares of the
Company's common stock at a price of $18.75 per share over a two year period
beginning July 1, 2000
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<PAGE>
6. SEGMENT REPORTING
The Company manages its business segments on the basis of the products and
services offered. The Company's reportable segments consist of its traditional
financing and technology business units (previously known as the lease financing
and value added re-selling segments), as well as its newly created electronic
commerce ("e-commerce") business unit. The financing business unit offers lease
financing solutions to corporations and governmental entities nationwide. The
technology business unit sells information technology equipment and related
services primarily to corporate customers in the eastern United States. The
e-commerce business unit provides Internet-based business-to-business supply
chain management solutions for information technology and other operating
resources. The Company evaluates segment performance on the basis of segment net
earnings.
Sales of equipment for the e-commerce business unit represent customer equipment
purchases executed through Procure+, an element of the Company's e-commerce
business solution. The amounts charged for using Procure+ are presented as
ePlusSuite revenues in the statement of earnings. The e-commerce business unit's
assets consist primarily of capitalized software costs.
The accounting policies of the financing and technology business units are the
same as those described in Note 1, "Organization and Summary of Significant
Accounting Policies" in the Company's 2000 Form 10-K. Corporate overhead
expenses are allocated to the three segments on the basis of revenue volume,
estimates of actual time spent by corporate staff, and asset utilization,
depending on the type of expense.
<TABLE>
<CAPTION>
Financing Technology E-commerce
Business Business Business
Unit Unit Unit Total
---- ---- ---- -----
Three months ended June 30, 1999
<S> <C> <C> <C> <C>
Sales of equipment $ 160,559 $ 33,015,222 $ - $ 33,175,781
Sales of leased equipment 14,385,824 - - 14,385,824
Lease revenues 5,537,740 - - 5,537,740
Fee and other income 148,849 707,587 856,436
ePlusSuite revenues - - - -
------------- ------------ ----------- ------------
Total Revenues 20,232,972 33,722,809 - 53,955,781
Cost of sales 14,239,729 29,277,219 - 43,516,948
Direct lease costs 949,010 - - 949,010
Selling, general and administrative
expenses 2,464,944 3,202,426 - 5,667,370
--------- --------- ----------- -----------
Segment earnings 2,579,289 1,243,164 - 3,822,453
Interest expense 1,272,000 46,356 - 1,318,356
--------- --------- ----------- -----------
Earnings before income taxes 1,307,289 1,196,808 - 2,504,097
========= ========= =========== ===========
Assets $ 165,789,297 $ 30,707,012 $ - $196,496,309
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Financing Technology E-commerce
Business Business Business
Unit Unit Unit Total
------------ ------------ ---------- -----
Three months ended June 30, 2000
Sales of equipment $ 1,582,311 $ 44,309,912 $ 9,797,771 $ 55,689,994
Sales of leased equipment 16,422,062 - - 16,422,062
Lease revenues 8,554,985 - - 8,554,985
Fee and other income 443,741 1,385,885 - 1,829,626
ePlusSuite revenues - - 1,116,439 1,116,439
------------- ------------ ----------- ------------
Total Revenues 27,003,099 45,695,797 10,914,210 83,613,106
Cost of sales 16,747,470 38,482,897 8,507,573 63,737,940
Direct lease costs 3,005,445 - - 3,005,445
Selling, general and administrative -
expenses 3,419,948 4,335,400 1,424,847 9,180,195
--------- --------- --------- ---------
Segment earnings 3,830,236 2,877,500 981,790 7,689,526
Interest expense 3,471,468 76,531 - 3,547,999
--------- --------- --------- ---------
Earnings before income taxes 358,768 2,800,969 981,790 4,141,527
============= ============ =========== =============
Assets $ 294,379,247 $ 50,838,888 $ 718,763 $ 345,936,898
</TABLE>
7. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The statement
requires companies to recognize all derivatives as either assets or liabilities,
with the instruments measured at fair value. The accounting for changes in fair
value and gains and losses depends on the intended use of the derivative and its
resulting designation. The statement was originally effective for fiscal years
beginning after June 15, 1999. In June 1999, FASB delayed implementation of this
statement by one year, to June 15, 2000. The company will adopt SFAS No. 133 in
the first quarter of fiscal year 2002 and is evaluating the impact that
implementation of this statement will have on its conslidated financial
statements.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements," which provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements. The guidelines in SAB No. 101 must be adopted by the fourth quarter
of 2000. We are in the process of evaluating the potential impact of this
statement on our financial position and results of operations.
In March 2000, the FASB issued interpretation No. 44, "Accounting for Certain
Transactions involving Stock Compensation, an Interpretation of APB Opinion No.
25," which clarifies the application of APB Opinion No. 25 for certain issues
including: (1) the definition of an employee for purposes of applying APB
Opinion No. 25, (2) the criteria for determining whether a plan qualifies as a
noncompensatory plan, (3) the accounting consequences of various modifications
to the terms of a previously fixed stock option or award and (4) the accounting
for an exchange of stock compensation awards in a business combination.
Interpretation No. 44 is effective July 1, 2000, but certain conclusions cover
specific events that occur either after December 15, 1998 or January 12, 2000.
We do not expect or anticipate that the adoption of this interpretation will
have a material impact on our financial position or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following discussion and analysis of results of operations and financial
condition of the Company should be read in conjunction with the Condensed
Consolidated Financial Statements and the related Notes thereto included
elsewhere in this report, and the Company's 2000 Form 10-K.
Overview
Certain statements contained herein are not based on historical fact, but are
forward-looking statements that are based upon numerous assumptions about future
conditions that may not occur. Actual events, transactions and results may
materially differ from the anticipated events, transactions, or results
described in such statements. Our ability to consummate such transactions and
achieve such events or results is subject to certain risks and uncertainties.
Such risks and uncertainties include, but are not limited to, the existence of
demand for and acceptance of the Company's services, economic conditions, the
impact of competition and pricing, results of financing efforts and other
factors affecting the Company's business that are beyond our control. The
Company undertakes no obligation and does not intend to update, revise or
otherwise publicly release the result of any revisions to these forward-looking
statements that may be made to reflect future events or circumstances.
Our results of operations are susceptible to fluctuations for a number of
reasons, including, without limitation, customer demand for our products and
services, supplier costs, interest rate fluctuations and differences between
estimated residual values and actual amounts realized related to the equipment
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<PAGE>
we lease. Operating results could also fluctuate as a result of the sale of
equipment in our lease portfolio prior to the expiration of the lease term to
the lessee or to a third party. Such sales of leased equipment prior to the
expiration of the lease term may have the effect of increasing revenues and net
earnings during the period in which the sale occurs, and reducing revenues and
net earnings otherwise expected in subsequent periods.
In November 1999, we introduced ePlusSuite, a comprehensive business-to-business
electronic commerce supply chain management solution for information technology
and other operating resources. We currently derive the majority of our revenue
from sales and financing of information technology and other assets. The
introduction of ePlusSuite reflects our transition to a business-to-business
electronic commerce solutions provider from our historical sales and financing
business. Our strategy is to reduce or eliminate our balance sheet risk over
time by outsourcing lease and other financing to third-party financial
institutions, while charging a transaction fee and arranging the sales of
information technology and other assets for a transaction fee, rather than
purchasing and reselling such assets ourselves.
We expect our electronic commerce revenues to be derived primarily from (1)
amounts charged to customers with respect to procurement activity executed
through Procure(+), (2) fees from third-party financing sources that provide
leasing and other financing for transactions that we arrange through Procure(+)
on behalf of our customers, (3) fees from third-party vendors for sales in
transactions that we arrange through Procure(+) on behalf of our customers and
(4) amounts charged to customers for the Manage(+) service. We expect to
generate increased revenues from our electronic commerce business unit, while
revenues from our leasing and sales business may decrease over time. Because
revenues for the sale of leased and other equipment include the full purchase
price of the item sold, total revenues may decline to the extent leasing and
sales revenues begin to represent a smaller portion of our total revenues.
However, in the near term, as we seek to implement our electronic commerce
business strategy, we will continue to derive most of our revenues from our
traditional businesses.
We expect to incur substantial increases in the near term in our sales and
marketing, research and development, and general and administrative expenses. In
particular, we expect to significantly expand the marketing of our electronic
commerce business solution and increase spending on advertising and marketing.
To implement this strategy, we plan to hire additional sales personnel, open new
sales locations and hire additional staff for advertising, marketing and public
relations. We also plan to hire additional technical personnel and third parties
to assist in the implementation and upgrade of ePlusSuite and to develop
complementary electronic commerce business solutions. As a result of these
increases in expenses, we expect to incur significant losses in our ePlusSuite
business which may, in the near term, have a material adverse effect on
operating results for the company as a whole.
To the extent the Company successfully implements this strategy, it expects the
business to become less capital intensive over time. As a result, management
expects total assets and total liabilities will decrease. The Company expects to
significantly reduce its receivables and lease assets along with the associated
liabilities including debt and equipment payables.
The Company has added new classifications to its financial statement
presentation in order to reflect the changes in its business. A line item,
ePlusSuite revenues, has been added to the statement of earnings which includes
the revenues associated with the e-commerce business unit. A new business
segment, e-commerce, has been added for segment reporting purposes to present
separately e-commerce business unit revenues.
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<PAGE>
As a result of the foregoing, the Company's historical results of operations and
financial position may not be indicative of its future performance over time.
However, the Company's results of operations and financial position will
continue to primarily reflect its traditional sales and financing businesses for
at least the next twelve months.
Selected Accounting Policies
Amounts charged for the e-commerce business unit's Procure+ service are
recognized as services are rendered. Amounts charged for the Manage+ service
will be recognized on a straight line basis over the period the services are to
be provided.
The manner in which lease finance transactions are characterized and reported
for accounting purposes has a major impact upon reported revenue and net
earnings. Lease accounting methods significant to our business are discussed
below.
We classify our lease transactions, as required by the Statement of Financial
Accounting Standards No. 13, Accounting for Leases, or FASB No. 13, as: (1)
direct financing; (2) sales- type; or (3) operating leases. Revenues and
expenses between accounting periods for each lease term will vary depending upon
the lease classification.
For financial statement purposes, we present revenue from all three
classifications in lease revenues, and costs related to these leases in direct
lease costs.
Direct Financing and Sales-Type Leases. Direct financing and sales-type leases
transfer substantially all benefits and risks of equipment ownership to the
customer. A lease is a direct financing or sales-type lease if the
creditworthiness of the customer and the collectability of lease payments are
reasonably certain and it meets one of the following criteria: (1) the lease
transfers ownership of the equipment to the customer by the end of the lease
term; (2) the lease contains a bargain purchase option; (3) the lease term at
inception is at least 75% of the estimated economic life of the leased
equipment; or (4) the present value of the minimum lease payments is at least
90% of the fair market value of the leased equipment at the inception of the
lease.
Direct finance leases are recorded as investment in direct financing leases upon
acceptance of the equipment by the customer. At the inception of the lease,
unearned lease income is recorded which represents the amount by which the gross
lease payments receivable plus the estimated residual value of the equipment
exceeds the equipment cost. Unearned lease income is recognized, using the
interest method, as lease revenue over the lease term.
Sales-type leases include a dealer profit or loss which is recorded by the
lessor at the inception of the lease. The dealer's profit or loss represents the
difference, at the inception of the lease, between the fair value of the leased
property and its cost or carrying amount. The equipment subject to such leases
may be obtained in the secondary marketplace, but most frequently is the result
of re-leasing our own portfolio. This profit or loss which is recognized at
lease inception, is included in net margin on sales-type leases. For equipment
sold through our technology business unit subsidiaries, the dealer margin is
presented in equipment sales revenue and cost of equipment sales. Interest
earned on the present value of the lease payments and residual value is
recognized over the lease term using the interest method and is included as part
of our lease revenues.
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<PAGE>
Operating Leases. All leases that do not meet the criteria to be classified as
direct financing or sales-type leases are accounted for as operating leases.
Rental amounts are accrued on a straight-line basis over the lease term and are
recognized as lease revenue. Our cost of the leased equipment is recorded on the
balance sheet as investment in operating lease equipment and is depreciated on a
straight-line basis over the lease term to our estimate of residual value.
Revenue, depreciation expense and the resulting profit for operating leases are
recorded on a straight-line basis over the life of the lease.
As a result of these three classifications of leases for accounting purposes,
the revenues resulting from the "mix" of lease classifications during an
accounting period will affect the profit margin percentage for such period and
such profit margin percentage generally increases as revenues from direct
financing and sales-type leases increase. Should a lease be financed, the
interest expense declines over the term of the financing as the principal is
reduced.
Residual Values. Residual values represent our estimated value of the equipment
at the end of the initial lease term. The residual values for direct financing
and sales-type leases are recorded in investment in direct financing and
sales-type leases, on a net present value basis. The residual values for
operating leases are included in the leased equipment's net book value and are
recorded in investment in operating lease equipment. The estimated residual
values will vary, both in amount and as a percentage of the original equipment
cost, and depend upon several factors, including the equipment type,
manufacturer's discount, market conditions and the term of the lease.
We evaluate residual values on an ongoing basis and record any required changes
in accordance with FASB No. 13. Residual values are affected by equipment supply
and demand and by new product announcements and price changes by manufacturers.
In accordance with generally accepted accounting principles, residual value
estimates are adjusted downward when such assets are impaired.
We seek to realize the estimated residual value at lease termination through:
(1) renewal or extension of the original lease; (2) sale of the equipment either
to the lessee or the secondary market; or (3) lease of the equipment to a new
user. The difference between the proceeds of a sale and the remaining estimated
residual value is recorded as a gain or loss in lease revenues when title is
transferred to the lessee, or, if the equipment is sold on the secondary market,
in equipment sales revenues and cost of equipment sales when title is
transferred to the buyer. The proceeds from any subsequent lease are accounted
for as lease revenues at the time such transaction is entered into.
Initial Direct Costs. Initial direct costs related to the origination of direct
financing, sales-type or operating leases are capitalized and recorded as part
of the net investment in direct financing leases, or net operating lease
equipment, and are amortized over the lease term.
Sales. Sales revenue includes the following types of transactions: (1) sales of
new or used equipment which is not subject to any type of lease; (2) sales of
equipment subject to an existing lease, under which we are lessor, including any
underlying financing related to the lease; and (3) sales of off-lease equipment
to the secondary market.
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<PAGE>
Other Sources of Revenue. Amounts charged for the electronic commerce business
unit's Procure(+) service are recognized as services are rendered. Amounts
charged for the Manage(+) service will be recognized on a straight line basis
over the period the services are provided. These revenues are included in our
ePlusSuite revenues in our statement of earnings.
Fee and other income results from (1) income from events that occur after the
initial sale of a financial asset such as escrow/prepayment income, (2)
re-marketing fees, (3) brokerage fees earned for the placement of financing
transactions and (4) interest and other miscellaneous income. These revenues are
included in fee and other income in our statements of earnings.
RESULTS OF OPERATIONS - Three Months Ended June 30, 1999 Compared to Three
Months Ended June 30, 2000
Total revenues generated by the Company during the three-month period ended June
30, 2000 were $83,613,106 compared to revenues of $53,955,781 during the
comparable period in the prior fiscal year, an increase of 55.0%. This increase
is primarily the result of increased revenues from the sales of equipment, which
increased 67.9% to $55,689,994 during the three months ended June 30, 2000. The
Company's acquisition of CLG, Inc. also contributed to the increase in revenues,
primarily lease revenues. The Company's revenues are composed of sales and other
revenue, and may vary considerably from period to period (See "POTENTIAL
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS").
Sales revenue, which includes sales of equipment and sales of leased equipment,
increased 51.6% to $72,112,056 during the three-month period ended June 30,
2000, as compared to $47,561,605 in the corresponding period in the prior fiscal
year.
The majority of sales of equipment are generated through the Company's
technology business unit subsidiaries. Sales of used and/or off-lease equipment
are also generated from the Company's brokerage and re-marketing activities. For
the three-month period ended June 30, 2000, equipment sales through the
Company's technology business unit subsidiaries accounted for 97.2% of sales of
equipment, with the remainder being sales from brokerage and re-marketing
activities. Sales of equipment increased significantly during the three month
period ended June 30, 2000 as compared to the prior fiscal year as a result of
increased customer purchase volume in the Company's technology business unit
subsidiaries. The acquisition of CLG, Inc. in September, 1999, did not
materially contribute to the increase in sales of equipment for the periods
presented.
The Company realized a gross margin on sales of equipment of 14.3% for the three
month period ended June 30, 2000, as compared to a gross margin of 11.4%
realized on sales of equipment during the comparable period in the prior fiscal
year. This increase in net margin percentage can be primarily attributed to the
Company's technology business unit subsidiaries acquisition of higher profit
margin customers and focus on selling higher margin equipment and services. The
Company's gross margin on sales of equipment is affected by the mix and volume
of products sold.
The Company also recognizes revenue from the sale of leased equipment. During
the three months ended June 30, 2000, sales of leased equipment increased 14.2%
to $16,422,062. The revenue and gross margin recognized on sales of leased
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<PAGE>
equipment can vary significantly depending on the nature and timing of the sale,
as well as the timing of any debt funding recognized in accordance with SFAS No.
125. The majority of the Company's sales of leased equipment has historically
been sold to MLC/CLC, LLC, a joint venture in which the Company owns a 5%
interest. During the three months ended June 30, 1999 and 2000, sales to
MLC/CLC, LLC, accounted for 34.6% and 91.4% of sales of leased equipment,
respectively. Sales to the joint venture require the consent of the joint
venture partner. Firstar Equipment Finance Corporation, which owns 95% of
MLC/CLC, LLC, has discontinued their investment in new lease acquisitions
effective May, 2000. The Company has developed and will continue to develop
relationships with additional lease equity investors and financial
intermediaries to diversify its sources of equity financing.
During the three months ended June 30, 2000, the Company recognized a gross
margin of 2.5% on leased equipment sales of $16,422,062 as compared to a gross
margin of 1.8% on leased equipment sales of $14,385,824 during the same period
in the prior fiscal year. The increase in gross margin is due primarily to
increased origination fees charged to the equity purchasers of leased equipment.
The Company's lease revenues increased 54.5% to $8,554,985 for the three months
ended June 30, 2000 compared with the corresponding period in the prior fiscal
year. This increase consists of increased lease earnings and rental revenues
reflecting a higher average investment in direct financing and sales type
leases. The investment in direct financing and sales type leases at June 30,
1999 and 2000 was $100,716,270 and $223,046,902, respectively. The June 30, 2000
balance represents an increase of $122,330,632 or 121.5% over the balance as of
June 30, 1999. The increase in the net investment in direct financing and sales
type leases, as well as the corresponding lease revenues, was due in large part
to the acquisition of CLG, Inc. The increase in lease revenues for the three
months ended June 30, 2000 in comparison to the corresponding period in prior
year, without the operations of CLG, Inc., would have been 2.0%.
For the three months ended June 30, 2000, fee and other income increased 113.6%
over the comparable period in the prior fiscal year. This increase is
attributable to increases in revenues from adjunct services and fees, including
broker fees, support fees, warranty reimbursements, and learning center revenues
generated by the Company's technology business unit subsidiaries. Included in
the Company's fee and other income are earnings from certain transactions which
are in the Company's normal course of business but there is no guarantee that
future transactions of the same nature, size or profitability will occur. The
Company's ability to consummate such transactions, and the timing thereof, may
depend largely upon factors outside the direct control of management. The
earnings from these types of transactions in a particular period may not be
indicative of the earnings that can be expected in future periods. The
acquisition of CLG, Inc. did not materially affect the increases for the periods
presented.
For the three months ended June 30, 2000, the Company recorded $1,116,439 in
ePlusSuite revenues. These revenues consisted primarily of amounts charged for
the arrangement of procurement transactions executed through Procure+, a
component of ePlusSuite. There were no ePlusSuite revenues recorded in the
comparable three months of the prior fiscal year, as ePlusSuite was introduced
on November 2, 1999. During the three months ended June 30, 2000, the selling,
general and administrative expenses allocated to the e-commerce busines unit
consisted primarily of a corporate overhead allocation.
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<PAGE>
The Company's direct lease costs increased 2,056,435, or 216.7% during the
three-month period ended June 30, 2000 as compared to the same period in the
prior fiscal year. The increase for the three-month period is attributable to
increased credit loss reserve expense and the acquisition of CLG, Inc., which
significantly increased the Company's operating lease portfolio and therefore
its depreciation expense. The increase in direct lease costs attributable to the
acquisition of CLG, Inc. was $1,367,736, or 66.5% of the overall increase.
Salaries and benefits expenses increased 72.3% during the three-month period
ended June 30, 2000 over the same period in the prior year. This increase
reflects the increased number of personnel employed by the Company, higher
commission expenses in the technology business unit, and the acquisition of CLG,
Inc.
Interest and financing costs incurred by the Company for the three months ended
June 20, 2000 increased 169.1%, and relate to interest costs on the Company's
indebtedness. The Company's lease related non-recourse debt portfolio has
increased significantly over the balance in the prior year due to its increased
investment in direct financing and sales-type leases and the acquisition of
CLG, Inc. Payment for interest costs on the majority of non-recourse and certain
recourse notes are typically remitted directly to the lender by the lessee.
The Company's provision for income taxes increased to $1,656,611 for the three
months ended June 30, 2000 from $1,001,642 for the three months ended June 30,
1999, reflecting effective income tax rates of 40% for both periods.
The foregoing resulted in a 65.4% increase in net earnings for the three-month
period ended June 30, 2000 as compared to the same periods in the prior fiscal
year. Basic and fully diluted earnings per common share were $.26 and $.24 for
the three months ended June 30, 2000, as compared to $.20 for both methods for
the three months ended June 30, 1999. Basic and diluted weighted average common
shares outstanding for the three months ended June 30, 2000 were 9,397,157 and
10,263,498, respectively. For the three months ended June 30, 1999, the basic
and diluted weighted average shares outstanding were 7,477,532 and 7,492,780,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
During the three-month period ended June 30, 2000, the Company used cash flows
in operations of $10,892,768, and used cash flows from investing activities of
$9,424,333. Cash flows generated by financing activities amounted to $9,195,120
during the same period. The net effect of these cash flows was a net decrease in
cash and cash equivalents of $11,121,981 during the three-month period. During
the same period, the Company's total assets increased $602,150, less than 1.0%.
On April 17, 2000, the Company completed a secondary offering of 1,000,000
shares of its common stock at a price of $28.50 per share. Net proceeds to the
Company were $25,999,884.
The Company's debt financing activities typically provide approximately 80% to
100% of the purchase price of the equipment purchased by the Company for lease
to its customers. Any balance of the purchase price (the Company's equity
investment in the equipment) must generally be financed by cash flow from its
operations, the sale of the equipment lease to third parties, or other internal
means of financing. Although the Company expects that the credit quality of its
leases and its residual return history will continue to allow it to obtain such
financing, no assurances can be given that such financing will be available, at
acceptable terms, or at all. The financing necessary to support the Company's
leasing activities has principally been provided by non-recourse and recourse
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<PAGE>
borrowings. Historically, the Company has obtained recourse and non-recourse
borrowings from money centers and regional banks, insurance companies, finance
companies and financial intermediaries. The Company has formal programs with Key
Corporate Capital, Inc., Fleet Business Credit Corporation, Centura Bank,
Wachovia Bank & Trust, Norwest Equipment Finance, Inc., and Synovus Leasing
Company. These programs require that each transaction is specifically approved
and done solely at the lender's discretion. During the three-month period ending
June 30, 2000, the Company's lease related non-recourse debt portfolio decreased
5.9% to $172,115,811.
On March 12, 1997, the Company established a $10,000,000 credit facility
agreement with Heller Financial, Inc. ("Heller"). Under the terms of the Heller
facility, a maximum amount of $10,000,000 was available to borrow provided that
each draw was subject to the approval of Heller. On March 12, 1998, the formal
commitment from Heller to fund additional advances under the line was allowed to
expire, however, we are still transacting business as if the formal agreement
terms are in place. The primary purpose of the Heller facility was for the
permanent fixed-rate discounting of rents for commercial leases of information
technology assets with the Company's middle-market customers. As of June 30,
2000 the balance on this account was $1,796,224. Originally, each advance under
the facility bore an annual interest rate equal to the sum of the weekly average
U.S. Treasury Constant Maturities for a Treasury Note having approximately an
equal term as the weighted average term of the contracts subject to the advance,
plus an index ranging from 1.75% to 3.00%, depending on the amount of the
advance and the credit rating (if any) of the lessee. Thereafter, the annual
interest rate was fixed by Heller each month and adjusted each subsequent month.
The Heller facility contains a number of contractual covenants and is a limited
recourse facility, secured by a first-priority lien in the lease contracts and
chattel paper relating to each loan advance, the equipment under the lease
contracts, a 10% cross-collateralized first loss guarantee, and all books,
records and proceeds. The Heller facility was made to MLC Group and is
guaranteed by ePlus inc. The Heller facility is subject to their sole
discretion, and is further subject to ePlus inc.'s compliance with certain
conditions and procedures.
Through MLC/CLC, LLC, the Company has a joint venture agreement that has
historically provided the equity investment financing for certain of the
Company's transactions. Firstar Equipment Finance Company ("FEFCO"), formerly
Cargill Leasing Corporation, is an unaffiliated investor which owns 95% of
MLC/CLC, LLC. FEFCO's parent company, Firstar Corporation, is a $20 billion bank
holding company that is publicly traded on the New York Stock Exchange under the
symbol "FSR". This joint venture arrangement enables the Company to invest in a
significantly greater portfolio of business than its limited capital base would
otherwise allow. A significant portion of the Company's revenue generated by the
sale of leased equipment is attributable to sales to MLC/CLC, LLC. (See "RESULTS
OF OPERATIONS"). FEFCO has discontinued new lease acquisition transactions
effective May, 2000.
The Company's "Accounts payable - equipment" represents equipment costs that
have been placed on a lease schedule, but for which the Company has not yet
paid. The balance of unpaid equipment cost can vary depending on vendor terms
and the timing of lease originations. As of June 30, 2000, the Company had
$28,962,152 of unpaid equipment cost, as compared to $22,975,545 at March 31,
2000.
Working capital financing in our leasing business is provided by a $65 million
committed credit facility which is a short-term, secured, recourse facility
provided through First Union National Bank, N.A. and which has syndicated the
facility to the following participants and in the following amounts:
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<PAGE>
National City Bank ($15 million); Summit Bank ($10 million); Bank Leumi USA ($10
million); and Key Bank ($10 million). This credit facility has been in place
since December 1998, was renewed for another one-year period on December 19,
1999, has full recourse to the Company, and is secured by a blanket lien against
all of the Company's assets. In addition, the Company has entered into pledge
agreements to pledge the common stock of all wholly-owned subsidiaries. The
interest rates charged under the facility are LIBOR plus 1.5% or Prime minus
.5%, depending on the term of the borrowing. The facility expires on December
19, 2000. As of June 30, 2000, the Company had an outstanding balance of $15.0
million on the First Union Credit Facility.
ePlus Technology of NC inc., ePlus Technology of PA inc. and ePlus Technology
inc. have separate credit sources to finance their working capital requirements
for inventories and accounts receivable. Their traditional business as sellers
of PC's and related network equipment and software products is financed through
agreements known as "floor planning" financing where interest expense for the
first thirty to forty days is not charged but is paid for by the
supplier/distributor. These floor plan liabilities are recorded as accounts
payable-trade as they are normally repaid within the thirty to forty day time
frame and represent an assigned accounts payable originally generated with the
supplier/distributor. If the thirty to forty day obligation is not paid timely,
interest is then assessed at stated contractual rates.
As of June 30, 2000 the floor planning agreements are as follows:
<TABLE>
<CAPTION>
Balance at
Entity Floor Plan Supplier Credit Limit June 30, 2000
-------------------------- ----------- ----------- -------------
ePlus Technology of NC inc.
<S> <C> <C>
Finova Capital Corp. $ 4,000,000 $ 1,696,538
IBM Credit Corp. 250,000 --
ePlus Technology of PA inc.
Finova Capital Corp. 7,000,000 4,092,207
IBM Credit Corp. 750,000 155,123
EPlus Technology inc. BankAmerica Credit 18,500,000 2,061,115
</TABLE>
ePlus Technology of PA inc. also has a line of credit in place with PNC Bank,
N.A. that expires on September 30, 2000, and is guaranteed by ePlus inc. The
credit facility provided by Finova Capital Corporation, is required to be
guaranteed by ePlus inc. for the greater of one-half of the outstanding balance
or $5,500,000.
Availability under the revolving lines of credit may be limited by the asset
value of equipment purchased by the Company and may be further limited by
certain covenants and terms and conditions of the facilities.
ePlus Technology, inc. was notified by Bank America Credit of its intent to
terminate its floor planning effective August 16, 2000. ePlus Technology, inc.
will secure another floor plan supplier or utilize internal working capital as
an alternative.
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<PAGE>
The implementation of the Company's e-commerce business strategy will require a
significant amount of cash beyond what the Company currently has available or is
likely to generate from its current operations. In addition, the Company may
selectively acquire other companies that have attractive customer relationships
and skilled sales forces. The Company may also acquire technology companies to
expand and enhance the platform of ePlusSuite to provide additional
functionality and value added services. As a result, the Company expects to
require additional financing to fund its strategy implementation and potential
future acquisitions, which may include additional debt and equity financing.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company's future quarterly operating results and the market price of its
stock may fluctuate. In the event the Company's revenues or earnings for any
quarter are less than the level expected by securities analysts or the market in
general, such shortfall could have an immediate and significant adverse impact
on the market price of the Company's stock. Any such adverse impact could be
greater if any such shortfall occurs near the time of any material decrease in
any widely followed stock index or in the market price of the stock of one or
more public equipment leasing and financing companies or major customers or
vendors of the Company.
The Company's quarterly results of operations are susceptible to fluctuations
for a number of reasons, including, without limitation, its entry into the
e-commerce market, any reduction of expected residual values related to the
equipment under the Company's leases, timing of specific transactions and other
factors (See "FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS"). Quarterly
operating results could also fluctuate as a result of the sale by the Company of
equipment in its lease portfolio, at the expiration of a lease term or prior to
such expiration, to a lessee or to a third party. Such sales of equipment may
have the effect of increasing revenues and net income during the quarter in
which the sale occurs, and reducing revenues and net income otherwise expected
in subsequent quarters.
The Company believes that comparisons of quarterly results of its operations are
not necessarily meaningful and that results for one quarter should not be relied
upon as an indication of future performance.
INFLATION
The Company does not believe that inflation has had a material impact on its
results of operations during the first three quarters of fiscal 2000.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
Certain statements contained herein are not based on historical fact, but are
forward-looking statements that are based upon numerous assumptions about future
conditions that may not occur. Actual events, transactions and results may
materially differ from the anticipated events, transactions, or results
described in such statements. The Company's ability to consummate such
transactions and achieve such events or results is subject to certain risks and
uncertainties. Such risks and uncertainties include, but are not limited to the
matters set forth below.
The Company's e-commerce business has an extremely limited operating history.
Although it has been in the business of financing and selling information
technology equipment since 1990, the Company expects to derive a significant
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<PAGE>
portion of its future revenues from its ePlusSuite services. As a result, the
Company will encounter some of the challenges, risks, difficulties and
uncertainties frequently encountered by early stage companies using new and
unproven business models in new and rapidly evolving markets. Some of these
challenges relate to the Company's ability to:
o increase the total number of users of ePlusSuite services
o adapt to meet changes in its markets and competitive developments; and
o continue to update its technology to enhance the features and functionality
of its suite of products.
The Company cannot be certain that its business strategy will be successful or
that it will successfully address these and other challenges, risks and
uncertainties.
Over the longer term, the Company expects to derive a significant portion of its
revenues from ePlusSuite services, which is based on an unproven business model.
The Company expects to incur increased expenses that may negatively impact
profitability. The Company also expects to incur significant sales and
marketing, research and development, and general and administrative expenses in
connection with the development of this business. As a result, the Company may
incur significant losses in its e-commerce business unit in the foreseeable
future, which may have a material adverse effect on the future operating results
of the Company as a whole.
The Company began operating its ePlusSuite services in November, 1999. Broad and
timely acceptance of the ePlusSuite services, which is critical to the Company's
future success, is subject to a number of significant risks. These risks
include:
o operating resource management and procurement on the Internet is a new
market; the system's ability to support large numbers of buyers and
suppliers is unproven
o significant enhancement of the features and services of ePlusSuite services
is needed to achieve widespread commercial initial and continued widespread
acceptance of the system;
o the pricing model may not be acceptable to customers;
o if the Company is unable to develop and increase transaction volume on
ePlusSuite, it is unlikely that it will ever achieve or maintain
profitability in this business;
o businesses that have made substantial up-front payments for e-commerce
solutions may be reluctant to replace their current solution and adopt the
Company's solution;
o the Company's ability to adapt to a new market that is characterized by
rapidly changing technology, evolving industry standards and frequent new
product announcements; o significant expansion of internal resources is
needed to support planned growth of the Company's ePlusSuite services.
THE YEAR 2000 ISSUE
We have completed the Year 2000 compliance modification to our
information-technology and non-information technology based applications. To
date, we have not experienced any disruptions in any aspect of our operations.
We continue to monitor our infrastructure, the products we offer, and our
critical business partners to ensure continued success. We do not anticipate any
significant future costs related to maintaining our Year 2000 compliance.
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<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Although a substantial portion of the Company's liabilities are non-recourse,
fixed interest rate instruments, the Company is reliant upon lines of credit and
other financing facilities which are subject to fluctuations in interest rates.
Should interest rates significantly increase, the Company would incur increased
interest expense, which could potentially lower earnings.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On April 11, 2000, the Company issued 709,956 shares of common stock
to TC Plus LLC pursuant to a cashless exercise of a warrant, based on
an exercise price of $11.00 per share. Due to the sophisticated nature
of the investor, the Company relied on the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended, in the
issuance of the shares pursuant to the exercise.
On May 25, 2000, the Company issued a common stock purchase warrant to
a business partner which allows the holder to purchase up to 50,000
shares of the Company's common stock at a price of $18.75 per share
over a two year period beginning July 1, 2000. Due to the
institutional and sophisticated nature of the investor, the Company
relied on the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended, in the issuance of the warrant.
Item 3. Defaults Under Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6(a) Exhibits
Exhibit
Number Description Page
-------------- --------------------------------------------------------
27.1 Financial Data 21
Item 6(b) Reports on Form 8-K
None
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
ePlus inc.
/s/ PHILLIP G. NORTON
By: Phillip G. Norton, Chairman of the Board,
President and Chief Executive Officer
Date: August 14, 2000
/s/ STEVEN J. MENCARINI
By: Steven J. Mencarini, Senior Vice President
and Chief Financial Officer
Date: August 14, 2000
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