UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

EN POINTE TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware		75-2467002
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization):
2381 Rosecrans Avenue, Suite 325
El Segundo, California		90245
(Address of principal executive offices)		(Zip Code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YES þ NO o

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

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

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

As of May14, 2007, 7,150,193 shares of common stock of the Registrant were issued and outstanding.

INDEX

En Pointe Technologies, Inc.

PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets – March 31, 2007 and September 30, 2006
Condensed Consolidated Statements of Operations — Three and six months ended March 31, 2007 and 2006
Condensed Consolidated Statements of Cash Flows — Six months ended March 31, 2007 and 2006
Notes to Condensed Consolidated Financial Statements — March 31, 2007
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits
Signatures
Items 1A, 2, 3, and 5 of Part II have been omitted because they are not applicable with respect to the current reporting period.
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1

Unaudited
(In Thousands Except Share and Per Share Amounts)

		March 31,				September 30,
		2007				2006
ASSETS:
Current assets:
Cash		$	7,503			$	10,240
Restricted cash			75				74
Short term cash investment			1,968				—
Accounts receivable, net			43,834				46,417
Inventories, net			7,639				4,201
Prepaid expenses and other current assets			951				1,067
Total current assets			61,970				61,999
Property and equipment, net of accumulated depreciation and amortization			4,307				2,765
Other assets			2,408				1,474
Total assets		$	68,685			$	66,238
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable, trade		$	16,224			$	19,105
Borrowings under line of credit			18,086				15,673
Accrued liabilities			5,317				5,796
Accrued taxes and other liabilities			6,794				4,928
Total current liabilities			46,421				45,502
Long term liabilities			540				238
Total liabilities			46,961				45,740
Minority interest			1,973				1,487
Stockholders’ equity:
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; with 7,150,193 and 6,976,366 shares issued			7				7
Additional paid-in capital			42,045				41,767
Treasury stock			(1	)			(1	)
Accumulated deficit			(22,300	)			(22,762	)
Total stockholders’ equity			19,751				19,011
Total liabilities and stockholders’ equity		$	68,685			$	66,238

See Notes to Condensed Consolidated Financial Statements.

Condensed Consolidated Statements of Operations
and Comprehensive Income
(Unaudited)
(in thousands, except per share data)

		Three months ended								Six months ended
		March 31,								March 31,
		2007				2006				2007				2006
Net sales:
Product		$	63,225			$	59,433			$	126,187			$	126,691
Service			11,273				11,579				23,931				23,010
Total net sales			74,498				71,012				150,118				149,701
Cost of sales:
Product			57,399				54,539				115,096				117,741
Service			7,013				7,235				15,063				15,201
Total cost of sales			64,412				61,774				130,159				132,942
Gross profit:
Product			5,826				4,894				11,091				8,950
Service			4,260				4,344				8,868				7,809
Total gross profit			10,086				9,238				19,959				16,759
Selling and marketing expenses			7,170				7,691				13,721				13,766
General and administrative expenses			2,756				2,692				5,813				5,210
Operating income (loss)			160				(1,145	)			425				(2,217	)
Interest income, net			93				54				131				61
Other income, net			23				20				39				35
Income (loss) before income taxes and minority interest			276				(1,071	)			595				(2,121	)
Provision for income taxes			4				—				26				—
Income (loss) before minority interest			272				(1,071	)			569				(2,121	)
Minority interest			(59	)			34				(84	)			87
Net income (loss)		$	213			$	(1,037	)		$	485			$	(2,034	)
Other comprehensive loss, net of tax
Foreign currency translation adjustment			(10	)			—				(23	)			—
Comprehensive income (loss)		$	203			$	(1,037	)		$	462			$	(2,034	)
Net income (loss) per share:
Basic		$	0.03			$	(0.15	)		$	0.07			$	(0.29	)
Diluted		$	0.03			$	(0.15	)		$	0.07			$	(0.29	)
Weighted average shares outstanding:
Basic			7,149				6,995				7,136				6,986
Diluted			7,517				6,995				7,453				6,986

See Notes to Condensed Consolidated Financial Statements.

Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)

		Six months ended
		March 31,
		2007				2006
Cash flows from operating activities:
Net income (loss)		$	485			$	(2,034	)
Adjustments to reconcile net income to net cash used by operations:
Depreciation and amortization			1,146				681
Amortization of deferred gain on sale-leaseback							221
Allowances for doubtful accounts, returns, and inventory			83				273
Minority interest in income (loss) of affiliates			84				(87	)
Net change in operating assets and liabilities			(2,432	)			(2,239	)
Net cash used by operating activities			(634	)			(3,185	)
Cash flows from investing activities:
Acquisition of business			(1,302	)			(550	)
Short-term cash investment			(1,968	)
Purchase of property and equipment			(1,128	)			(394	)
Net cash used by investing activities			(4,398	)			(944	)
Cash flows from financing activities:
Net borrowings under line of credit			2,413				4,515
Proceeds from convertible bond issued by affiliate			—				50
Stock offering by affiliate			100				—
Proceeds from exercise of employee stock options			38				100
Payment on long term liabilities			(256	)			(192	)
Net cash provided by financing activities			2,295				4,473
(Decrease) increase in cash		$	(2,737	)		$	344
Supplemental disclosures of cash flow information:
Interest paid		$	139			$	39
Income taxes paid		$	23			$	31
Capitalized leases		$	484			$	—
Stock issued for acquisition of business		$	240			$	—

See Notes to Condensed Consolidated Financial Statements.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 1 — Basis of Presentation and General Information

     In the opinion of management, the unaudited condensed consolidated balance sheet of En Pointe Technologies, Inc., including (i) its wholly-owned subsidiaries En Pointe Technologies Sales, Inc., En Pointe Gov, Inc., En Pointe Technologies Canada, Inc., and The Xyphen Corporation, (ii) effective October 1, 2006, its majority-owned subsidiaries Ovex Technologies (Private) Limited and Ovex Pakistan (Private) Limited, En Pointe Technologies India Pvt. Ltd., and (iii) effective October 2003, its minority-owned Premier BPO, Inc. (a Variable Interest Entity, see Note 8) (collectively, the “Company” or “En Pointe”), at March 31, 2007, and the unaudited condensed consolidated statements of operations and unaudited condensed consolidated statements of cash flows for the interim periods ended March 31, 2007 and 2006, respectively, include all adjustments (consisting only of normal recurring adjustments) necessary to fairly state these financial statements in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial reporting.

     Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the SEC. The year-end balance sheet data were derived from audited financial statements, but do not include disclosures required by generally accepted accounting principles. Operating results for the six months ended March 31, 2007 are not necessarily indicative of the results that may be expected for the year ending September 30, 2007. It is suggested that these condensed financial statements be read in conjunction with the Company’s most recent Form 10-K for the fiscal year ended September 30, 2006.

     The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. On an on-going basis, management evaluates its estimates and judgments, including those related to customer bad debts, product returns, vendor returns, rebate reserves, inventories, other contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Note 2 – Accounting for Stock-Based Compensation

     In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement Financial Accounting Standard (“SFAS”) No. 123 (R), “Share-Based Payment”. SFAS No. 123 (R) requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense in the consolidated financial statements based on their fair values. That expense is then recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). The Company adopted SFAS No. 123 (R) effective beginning October 1, 2005 using the Modified Prospective Application Method. Under this method, SFAS No. 123 (R) applies to new awards and to awards modified, repurchased or cancelled after the effective date. There have been no new share based awards since the Company adopted SFAS No. 123(R) and thus there has been no financial impact from its adoption. Additionally, the Company’s sole equity incentive plan, the 1996 stock option plan, terminated by its terms in March 2006 so no further awards can be made thereunder. The Company has not adopted any new equity incentive plans.

Note 3 – Computation of Earnings Per Share

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

		Three Months Ended								Six Months Ended
		March 31,								March 31,
		2007				2006				2007				2006
Net income (loss)		$	213			$	(1,037	)		$	485			$	(2,034	)
Weighted average shares outstanding			7,149				6,995				7,136				6,986
Effect of dilutive securities:
Dilutive potential of options			368				—				317				—
Weighted average shares and share equivalents outstanding			7,517				6,995				7,453				6,986
Basic income (loss) per share		$	0.03			$	(0.15	)		$	0.07			$	(0.29	)
Diluted income (loss) per share		$	0.03			$	(0.15	)		$	0.07			$	(0.29	)

Note 4 – Recent Accounting Pronouncements

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 provides companies with an option to report selected financial assets and liabilities at fair value. SFAS 159’s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. The Company is currently evaluating the potential impact, if any, that the adoption of SFAS 159 will have on its condensed consolidated financial statements.

     In September 2006, the SEC released Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (SAB 108). SAB 108 provides interpretive guidance on the SEC’s views regarding the process of quantifying materiality of financial statement misstatements. SAB 108 is effective for fiscal years ending after November 15, 2006. The Company does not anticipate that the adoption of this accounting pronouncement will have a material effect on its consolidated financial statements.

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

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

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

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

Note 5 – Acquisition of Business

     On September 19, 2006, the Company entered into a share purchase agreement with Omar Saeed and Arif Saeed (the “Saeeds”), effective October 1, 2006, to acquire 70% of the capital stock of two privately owned Pakistani companies, Ovex Technologies (Private) Limited (“OvexUS”) and Ovex Pakistan (Private) Limited (“OvexDomestic). Both companies are engaged in providing business process outsourcing (“BPO”) services and were wholly-owned by the Saeeds. Under the terms of the agreement, the Company paid the Saeeds a total of $1,680,000 in exchange for 70% of the capital stock of each of the two companies. The

form of the consideration paid consisted of $240,000 in cash, $240,000 in unregistered shares of Company common stock, and a promissory note in the principal amount of $1,200,000, which promissory note was repaid in full in November 2006. Additionally, pursuant to the terms of the agreement, the boards of directors of OvexUS and OvexDomestic were each reconfigured to consist of three members; one designated by the Company (as of March 31, 2007, Edward O. Hunter, a director of the Company, served as the Company’s designee), one designated by the Saeeds and one designated mutually by the two designees.

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

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