PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

e Plus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	December 31, 2023			March 31, 2023
ASSETS

Current assets:
Cash and cash equivalents	$	142,170		$	103,093
Accounts receivable—trade, net		597,363			504,122
Accounts receivable—other, net		50,055			55,508
Inventories		218,046			243,286
Financing receivables—net, current		110,344			89,829
Deferred costs		54,279			44,191
Other current assets		47,057			55,101
Total current assets		1,219,314			1,095,130

Financing receivables and operating leases—net		87,012			84,417
Deferred tax asset		3,682			3,682
Property, equipment, and other assets—net		84,335			70,447
Goodwill		158,284			136,105
Other intangible assets—net		42,970			25,045
TOTAL ASSETS	$	1,595,597		$	1,414,826

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES

Current liabilities:
Accounts payable	$	294,705		$	220,159
Accounts payable—floor plan		92,518			134,615
Salaries and commissions payable		45,372			37,336
Deferred revenue		130,352			114,028
Recourse notes payable—current		-			5,997
Non-recourse notes payable—current		36,165			24,819
Other current liabilities		32,351			24,372
Total current liabilities		631,463			561,326

Non-recourse notes payable - long-term		12,233			9,522
Deferred tax liability		561			715
Other liabilities		73,587			60,998
TOTAL LIABILITIES		717,844			632,561

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS’ EQUITY

Preferred stock, $0.01 per share par value; 2,000 shares authorized; none outstanding		-			-
Common stock, $0.01 per share par value; 50,000 shares authorized; 26,954 outstanding at December 31, 2023 and 26,905 outstanding at March 31, 2023		274			272
Additional paid-in capital		177,465			167,303
Treasury stock, at cost, 446 shares at December 31, 2023 and 261 shares at March 31, 2023		(23,774	)		(14,080	)
Retained earnings		720,995			627,202
Accumulated other comprehensive income—foreign currency translation adjustment		2,793			1,568
Total Stockholders’ Equity		877,753			782,265
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,595,597		$	1,414,826

See Notes to Unaudited Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

UNAUDITED ~~CONDENSED~~ CONSOLIDATED STATEMENTS OF OPERATIONS~~BALANCE SHEETS~~

(in thousands, except per share amounts)

As of
December 31, 2017

As of
March 31, 2017

ASSETS (in thousands, except per share data)

Current assets:
Cash and cash equivalents $ 76,105 $ 109,760
Accounts receivable—trade, net 285,820 266,029
Accounts receivable—other, net 30,690 24,987
Inventories 51,295 93,557
Financing receivables—net, current 74,598 51,656
Deferred costs 24,740 7,971
Other current assets 25,970 43,364
Total current assets 569,218 597,324

Financing receivables and operating leases—net 72,575 71,883
Deferred tax assets—net 1,268 -
Property, equipment and other assets 17,632 11,956
Goodwill 76,546 48,397
Other intangible assets—net 27,414 12,160
TOTAL ASSETS $ 764,653 $ 741,720

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Current liabilities:
Accounts payable $ 125,850 $ 113,518
Accounts payable—floor plan 107,761 132,612
Salaries and commissions payable 20,568 18,878
Deferred revenue 50,739 65,312
Recourse notes payable—current - 908
Non-recourse notes payable—current 27,649 26,085
Other current liabilities 26,116 19,179
Total current liabilities 358,683 376,492

Non-recourse notes payable—long term 3,840 10,431
Deferred tax liability—net - 1,799
Other liabilities 18,518 7,080
TOTAL LIABILITIES 381,041 395,802

COMMITMENTS AND CONTINGENCIES (Note 8)

STOCKHOLDERS' EQUITY

Preferred stock, $.01 per share par value; 2,000 shares authorized; none outstanding - -
Common stock, $.01 per share par value; 25,000 shares authorized;14,046 outstanding at December 31, 2017 and 14,161 outstanding at March 31, 2017
142 142
Additional paid-in capital 128,392 123,536
Treasury stock, at cost (14,165 ) -
Retained earnings 269,048 222,823
Accumulated other comprehensive income—foreign currency translation adjustment 195 (583 )
Total Stockholders' Equity 383,612 345,918
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 764,653 $ 741,720

	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022

Net sales
Product	$	434,371	$	556,018	$	1,457,636	$	1,379,813
Services		74,684		67,458		213,205		195,728
Total		509,055		623,476		1,670,841		1,575,541
Cost of sales
Product		328,908		441,015		1,116,046		1,062,352
Services		46,337		44,089		134,347		127,990
Total		375,245		485,104		1,250,393		1,190,342

Gross profit		133,810		138,372		420,448		385,199

Selling, general, and administrative		89,381		86,730		272,331		248,201
Depreciation and amortization		5,399		3,609		15,821		10,387
Interest and financing costs		983		1,575		3,054		2,863
Operating expenses		95,763		91,914		291,206		261,451

Operating income		38,047		46,458		129,242		123,748

Other income (expense), net		366		2,907		673		(3,112	)

Earnings before tax		38,413		49,365		129,915		120,636

Provision for income taxes		11,131		13,671		36,122		34,134

Net earnings	$	27,282	$	35,694	$	93,793	$	86,502
Net earnings per common share—basic	$	1.02	$	1.34	$	3.53	$	3.26
Net earnings per common share—diluted	$	1.02	$	1.34	$	3.52	$	3.24

Weighted average common shares outstanding—basic		26,618		26,592		26,598		26,561
Weighted average common shares outstanding—diluted		26,697		26,648		26,665		26,688

See Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

UNAUDITED ~~CONDENSED~~ CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~COMPREHENSIVE INCOME

(in thousands)

Three Months Ended
December 31,

Nine Months Ended
December 31,

2017 2016 2017 2016

(in thousands, except per share data)

Net sales $ 342,569 $ 326,657 $ 1,080,571 $ 996,622
Cost of sales 265,881 252,871 838,719 773,239
Gross profit 76,688 73,786 241,852 223,383

Selling, general, and administrative expenses 57,134 50,160 168,138 149,821
Depreciation and amortization 2,894 1,910 7,086 5,408
Interest and financing costs 270 409 903 1,158
Operating expenses 60,298 52,479 176,127 156,387

Operating income 16,390 21,307 65,725 66,996

Other income (expense) (131 ) - (1 ) 380

Earnings before tax 16,259 21,307 65,724 67,376

Provision for income taxes 678 8,687 19,499 27,310

Net earnings $ 15,581 $ 12,620 $ 46,225 $ 40,066

Net earnings per common share—basic $ 1.12 $ 0.92 $ 3.34 $ 2.88
Net earnings per common share—diluted $ 1.11 $ 0.91 $ 3.30 $ 2.86

Weighted average common shares outstanding—basic 13,851 13,791 13,845 13,891
Weighted average common shares outstanding—diluted 13,990 13,920 14,022 14,026

	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022

NET EARNINGS	$	27,282	$	35,694	$	93,793	$	86,502

OTHER COMPREHENSIVE INCOME, NET OF TAX:

Foreign currency translation adjustments		2,027		3,131		1,225		721

Other comprehensive income		2,027		3,131		1,225		721

TOTAL COMPREHENSIVE INCOME	$	29,309	$	38,825	$	95,018	$	87,223

See Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

UNAUDITED ~~CONDENSED~~ CONSOLIDATED STATEMENTS OF CASH FLOWS~~COMPREHENSIVE INCOME~~

Three Months Ended
December 31,

Nine Months Ended
December 31,

2017 2016 2017 2016
(amounts in thousands)

NET EARNINGS $ 15,581 $ 12,620 $ 46,225 $ 40,066

OTHER COMPREHENSIVE INCOME, NET OF TAX:

Foreign currency translation adjustments 75 (145 ) 778 (240 )

Other comprehensive income (loss) 75 (145 ) 778 (240 )

TOTAL COMPREHENSIVE INCOME $ 15,656 $ 12,475 $ 47,003 $ 39,826

(in thousands)

~~See Notes to Unaudited Condensed Consolidated Financial Statements.~~

	Nine Months Ended December 31,
	2023			2022
Cash flows from operating activities:
Net earnings	$	93,793		$	86,502

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization		19,561			14,248
Provision for credit losses		1,027			2,846
Share-based compensation expense		7,145			5,681
Deferred taxes		(153	)		195
Gain on disposal of property, equipment, and operating lease equipment		(263	)		(3,201	)
Changes in:
Accounts receivable		(68,329	)		(266,470	)
Inventories—net		26,623			(90,205	)
Financing receivables—net		(32,666	)		(47,442	)
Deferred costs and other assets		(13,695	)		(60,804	)
Accounts payable—trade		68,164			156,283
Salaries and commissions payable, deferred revenue, and other liabilities		42,285			55,329
Net cash provided by (used in) operating activities		143,492			(147,038	)

Cash flows from investing activities:
Proceeds from sale of property, equipment, and operating lease equipment		469			3,325
Purchases of property, equipment and operating lease equipment		(7,704	)		(5,661	)
Cash used in acquisitions, net of cash acquired		(48,603	)		(13,288	)
Net cash used in investing activities		(55,838	)		(15,624	)

Cash flows from financing activities:
Borrowings of non-recourse and recourse notes payable		293,809			189,063
Repayments of non-recourse and recourse notes payable		(277,612	)		(87,502	)
Proceeds from issuance of common stock		3,019			-
Repurchase of common stock		(9,816	)		(7,224	)
Net borrowings (repayments) on floor plan facility		(58,051	)		9,218
Net cash provided by (used in) financing activities		(48,651	)		103,555

Effect of exchange rate changes on cash		74			3,124

Net increase (decrease) in cash and cash equivalents		39,077			(55,983	)

Cash and cash equivalents, beginning of period		103,093			155,378

Cash and cash equivalents, end of period	$	142,170		$	99,395

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e~~Plus inc. AND SUBSIDIARIES~~

~~UNAUDITED CONDENSED CONSOLIDATED~~ ~~STATEMENTS OF CASH FLOWS~~

Nine Months Ended December 31,
2017 2016
(in thousands)
Cash Flows From Operating Activities:
Net earnings $ 46,225 $ 40,066

Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation and amortization 11,324 8,758
Reserve for credit losses, inventory obsolescence and sales returns 286 926
Share-based compensation expense 4,856 4,520
Deferred taxes (3,058 ) -
Payments from lessees directly to lenders—operating leases
(1,325 ) (1,831 )
Gain on disposal of property, equipment and operating lease equipment (7,555 ) (3,742 )
Gain on sale of financing receivables (4,625 ) (3,968 )
Other 1 316
Changes in:
Accounts receivable—trade (8,295 ) (57,732 )
Accounts receivable—other (1,976 ) (4,232 )
Inventories 43,332 (77,422 )
Financing receivables—net (13,045 ) 17,797
Deferred costs, other intangible assets and other assets (26,188 ) 1,838
Accounts payable 18,406 53,208
Salaries and commissions payable, deferred revenue and other liabilities (9,539 ) 51,200
Net cash provided by operating activities $ 48,824 $ 29,702

Cash Flows From Investing Activities:
Proceeds from sale of property, equipment and operating lease equipment 9,967 6,380
Purchases of property, equipment, software, and operating lease equipment (6,298 ) (7,300 )
Purchases of assets to be leased or financed (5,716 ) (5,897 )
Issuance of financing receivables (138,160 ) (114,671 )
Repayments of financing receivables 59,029 44,091
Proceeds from sale of financing receivables 64,103 39,857
Cash used in acquisitions, net of cash acquired (37,718 ) (9,500 )
Net cash used in investing activities $ (54,793 ) $ (47,040 )

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UNAUDITED ~~CONDENSED~~ CONSOLIDATED STATEMENTS OF CASH FLOWS - continued

(in thousands)

Nine Months Ended December 31,
2017 2016
(in thousands)
Cash Flows From Financing Activities:
Borrowings of non-recourse and recourse notes payable $ 39,365 $ 34,020
Repayments of non-recourse and recourse notes payable (27,269 ) (5,412 )
Repurchase of common stock (13,399 ) (30,493 )
Payment of contingent consideration - (718 )
Repayments of financing of acquisitions (1,604 ) -
Net borrowings (repayments) on floor plan facility (24,851 ) (5,602 )
Net cash used in financing activities (27,758 ) (8,205 )

Effect of exchange rate changes on cash 72 454

Net Decrease in Cash and Cash Equivalents (33,655 ) (25,089 )

Cash and Cash Equivalents, Beginning of Period 109,760 94,766

Cash and Cash Equivalents, End of Period $ 76,105 $ 69,677

Supplemental Disclosures of Cash Flow Information:
Cash paid for interest $ 421 $ 38
Cash paid for income taxes $ 29,987 $ 23,381

Schedule of Non-Cash Investing and Financing Activities:
Proceeds from sale of property, equipment, and operating lease equipment $ 3,463 $ 429
Purchases of property, equipment, software, and operating lease equipment $ (751 ) $ (2,442 )
Purchase of assets to be leased or financed $ (7,225 ) $ (12,700 )
Issuance of financing receivables $ (74,907 ) $ (110,120 )
Repayment of financing receivables $ 9,572 $ 16,454
Proceeds from sale of financing receivables $ 83,954 $ 104,430
Financing of acquisitions $ (12,050 ) $ -
Borrowing of non-recourse and recourse notes payable $ 8,904 $ 33,651
Repayments of non-recourse and recourse notes payable $ (14,465 ) $ (20,438 )
Vesting of share-based compensation $ 12,010 $ 7,982
Repurchase of common stock included in accounts payable $ (766 ) $ -

	Nine Months Ended December 31,
	2023			2022
Supplemental disclosures of cash flow information:
Cash paid for interest	$	2,924		$	2,402
Cash paid for income taxes	$	32,732		$	39,693
Cash paid for amounts included in the measurement of lease liabilities	$	2,992		$	3,374

Schedule of non-cash investing and financing activities:
Proceeds from sale of property, equipment, and leased equipment	$	11		$	34
Purchases of property, equipment, and operating lease equipment	$	(165	)	$	(125	)
Borrowing of non-recourse and recourse notes payable	$	30,329		$	38,267
Debt derecognized due to sales of financial assets	$	(38,465	)	$	(22,686	)
Vesting of share-based compensation	$	9,434		$	9,854
New operating lease assets obtained in exchange for lease obligations	$	4,883		$	3,348

See Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

UNAUDITED ~~CONDENSED~~ CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

Common Stock
Additional
Paid-In
Treasury Retained
Accumulated
Other
Comprehensive

Shares Par Value Capital Stock Earnings Income Total

Balance, April 1, 2017 14,161 $ 142 $ 123,536 $ - $ 222,823 $ (583 ) $ 345,918
Issuance of restricted stock awards 68 - - - - - -
Share-based compensation - - 4,856 - - - 4,856
Repurchase of common stock (183 ) - - (14,165 ) - - (14,165 )
Net earnings - - - - 46,225 - 46,225
Foreign currency translation adjustment - - - - - 778 778

Balance, December 31, 2017 14,046 $ 142 $ 128,392 $ (14,165 ) $ 269,048 $ 195 $ 383,612

	Nine Months Ended December 31, 2023
														Accumulated
						Additional								Other
	Common Stock					Paid-In			Treasury			Retained		Comprehensive
	Shares			Par Value		Capital			Stock			Earnings		Income			Total
Balance, March 31, 2023		26,905		$	272	$	167,303		$	(14,080	)	$	627,202	$	1,568		$	782,265
Issuance of restricted stock awards		153			2		(2	)		-			-		-			—
Issuance of common stock		36			-		1,398			-			-		-			1,398
Share-based compensation		-			-		2,205			-			-		-			2,205
Repurchase of common stock		(147	)		-		-			(7,371	)		-		-			(7,371	)
Net earnings		-			-		-			-			33,847		-			33,847
Foreign currency translation adjustment		-			-		-			-			-		947			947

Balance, June 30, 2023		26,947		$	274	$	170,904		$	(21,451	)	$	661,049	$	2,515		$	813,291
Issuance of restricted stock awards		10			-		-			-			-		-			-
Share-based compensation		-			-		2,414			-			-		-			2,414
Repurchase of common stock		(15	)		-		-			(924	)		-		-			(924	)
Net earnings		-			-		-			-			32,664		-			32,664
Foreign currency translation adjustment		-			-		-			-			-		(1,749	)		(1,749	)

Balance, September 30, 2023		26,942		$	274	$	173,318		$	(22,375	)	$	693,713	$	766		$	845,696
Issuance of restricted stock awards		1			-		-			-			-		-			-
Issuance of common stock		34			-		1,621			-			-		-			1,621
Share-based compensation		-			-		2,526			-			-		-			2,526
Repurchase of common stock		(23	)		-		-			(1,399	)		-		-			(1,399	)
Net earnings		-			-		-			-			27,282		-			27,282
Foreign currency translation adjustment		-			-		-			-			-		2,027			2,027

Balance, December 31, 2023		26,954		$	274	$	177,465		$	(23,774	)	$	720,995	$	2,793		$	877,753

	Nine Months Ended December 31, 2022
													Accumulated
						Additional							Other
	Common Stock					Paid-In		Treasury			Retained		Comprehensive
	Shares			Par Value		Capital		Stock			Earnings		Income			Total
Balance, March 31, 2022		26,886		$	270	$	159,480	$	(6,734	)	$	507,846	$	(124	)	$	660,738
Issuance of restricted stock awards		135			1		-		-			-		-			1
Share-based compensation		-			-		1,773		-			-		-			1,773
Repurchase of common stock		(128	)		-		-		(7,224	)		-		-			(7,224	)
Net earnings		-			-		-		-			22,339		-			22,339
Foreign currency translation adjustment		-			-		-		-			-		(1,339	)		(1,339	)

Balance, June 30, 2022		26,893		$	271	$	161,253	$	(13,958	)	$	530,185	$	(1,463	)	$	676,288
Issuance of restricted stock awards		13			1		-		-			-		-			1
Share-based compensation		-			-		1,958		-			-		-			1,958
Net earnings		-			-		-		-			28,469		-			28,469
Foreign currency translation adjustment		-			-		-		-			-		(1,071	)		(1,071	)

Balance, September 30, 2022		26,906		$	272	$	163,211	$	(13,958	)	$	558,654	$	(2,534	)	$	705,645
Issuance of restricted stock awards		1			-		-		-			-		-			-
Share-based compensation		-			-		1,950		-			-		-			1,950
Net earnings		-			-		-		-			35,694		-			35,694
Foreign currency translation adjustment		-			-		-		-			-		3,131			3,131

Balance, December 31, 2022		26,907		$	272	$	165,161	$	(13,958	)	$	594,348	$	597		$	746,420

See Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

NOTES~~NOTES~~ TO UNAUDITED ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS — Our company was founded in 1990 and is a Delaware corporation. ePlus inc. is sometimes referred to in this Quarterly Report on Form 10-Q as ~~"we," "our," "us," "ourselves,"~~“we,” “our,” “us,” “ourselves,” or "“ePlus." ” ePlus inc. is a holding company that through its subsidiaries provides ~~information technology~~IT solutions ~~which~~that enable organizations to optimize their IT environment and supply chain processes. We also provide consulting, professional ~~and~~services, managed services, and complete lifecycle management services including flexible financing solutions. We focus on ~~middle market~~selling to medium and large enterprises, with customers in ~~North America and~~ the United ~~Kingdom.~~States (“US”) and in select international markets including the United Kingdom (“UK”), the European Union (“EU”), India, Singapore, and Israel.

BASIS OF PRESENTATION — The unaudited ~~condensed~~ consolidated financial statements include the accounts of e~~Plus~~ePlus inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accounts of businesses acquired are included in the unaudited ~~condensed~~ consolidated financial statements from the dates of acquisition. During the quarter ended June 30, 2023, we modified our technology segment into new segments—product, professional services, and managed services—that combine to form our technology business to provide our management the ability to better manage and allocate resources among the separate components of this business. Our professional services and managed services are a significant component of our growth and long-term strategic initiatives. Subsequently, we manage and report our operating results through four operating segments: product, professional services, managed services, and financing. For additional information, see Note 16, “Segment Reporting”.

~~INTERIM~~INTERIM FINANCIAL STATEMENTS — The unaudited ~~condensed~~ consolidated financial statements for the ~~three and~~ nine months ended December 31, ~~2017~~2023, and ~~2016~~2022, were prepared by us ~~without audit,~~ and include all normal and recurring adjustments that, in the opinion of management, are necessary for a fair presentation of our financial position, results of operations, changes in comprehensive income, and cash flows for such periods. Operating results for the ~~three and~~ nine months ended December 31, ~~2017~~2023, and ~~2016~~2022, are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending March 31, ~~2018~~2024, or any other future period. These unaudited ~~condensed~~ consolidated financial statements do not include all disclosures required by the accounting principles generally accepted in the United States (“~~U.S.~~US GAAP”) for annual financial statements. ~~Our audited consolidated~~These financial statements ~~are~~should be read in conjunction with the information contained in our annual report on Form 10-K for the year ended March 31, ~~2017~~2023 (“~~2017~~2023 Annual Report”), and our Form 8-K that we filed with the SEC on October 6, 2023, which ~~should be read~~recasts the disclosures in ~~conjunction with these interim condensed consolidated financial statements.~~certain portions of our 2023 Annual Report to reflect changes in our reportable segments.

USE OF ESTIMATES — The preparation of financial statements in conformity with ~~U.S.~~US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities atas of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, residual values, vendor consideration, lease classification, goodwill and intangible assets, ~~reserves~~allowance for credit losses, inventory obsolescence, and the recognition and measurement of income tax assets and other provisions and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.

The notes to the consolidated financial statements contained in the 2017 Annual Report include additional discussion of the significant accounting policies and estimates used in the preparation of our consolidated financial statements. There have been no material changes to our significant accounting policies and estimates during the nine months ended December 31, 2017.

STOCK SPLIT — On March 31, 2017, we completed a two-for-one stock split in the form of a stock dividend. References made to outstanding shares or per share amounts in the accompanying financial statements and disclosures have been retroactively adjusted for this stock split. The number of authorized shares reflected on the consolidated balance sheets was not affected by the stock split.

CONCENTRATIONS OF RISK — A substantial portion of our ~~sales of product and services~~sales are products from ~~sales of~~ Cisco Systems, ~~Hewlett Packard Enterprise (“HPE”)~~which were 36% and ~~HP, Inc. (collectively “Hewlett Packard companies”), and NetApp products, which represented approximately~~ 39%~~, 5% and 7%, and 45%, 7%, and 5%, respectively,~~ of our technology business segments net sales for the three months ended December 31, 2023, and 2022, respectively, and 45% and 38% of our technology business segments net sales for the nine months ended December 31, ~~2017. Sales of Cisco Systems, Hewlett Packard companies,~~2023, and ~~NetApp represented approximately 45%, 6% and 6%, and 49%, 6% and 5%, respectively,~~2022, respectively.

SIGNIFICANT ACCOUNTING POLICIES — The significant accounting policies used in preparing these Consolidated Financial Statements were applied on a basis consistent with those reflected in our Consolidated Financial Statements for the ~~three and nine months~~year ended ~~December~~March 31, ~~2016. Any~~2023, except for the changes provided in ~~our vendors’ ability to provide products or incentive programs could have a material adverse effect on our business, results of operations and financial condition.~~Note 2, “Recent Accounting Pronouncements.”

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2.	RECENT ACCOUNTING PRONOUNCEMENTS

~~RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED —~~

In ~~May 2014,~~September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. This update requires buyers in a supplier finance program to disclose certain qualitative and quantitative information about the program. It is intended to provide information about an entity’s use of supplier finance programs and their effect on the entity’s working capital, liquidity, and cash flows. This update is effective for us beginning in the first quarter of our fiscal year ending March 31, 2024, except for a requirement to provide a roll forward of our obligations during the annual period, which is effective for us beginning in the first quarter of our fiscal year ending March 31, 2025. We adopted the standard during the first quarter of fiscal year ending March 31, 2024, except for the roll forward requirement, which will be adopted during the first quarter of fiscal year ending March 31, 2025. The adoption of the standard resulted in new disclosures only for amounts presented within Accounts payable – floor plan. For additional information on the new disclosures, see Note 8, “Notes Payable and Credit Facility”.

In November 2023, the FASB issued ASU ~~2014-09,~~ ~~Revenue from Contracts with Customers~~2023-07, Segment Reporting (Topic ~~606), which, along with amendments issued in 2015~~280): Improvements to Reportable Segment Disclosures. This update expands annual and ~~2016, will replace most existing revenue recognition guidance under GAAP and eliminate industry specific guidance. The core principle of the new guidance~~interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. This update is that an entity should recognize revenue for the transfer of goods and services equal to an amount it expects to be entitled to receive for those goods and services. In August 2015, the FASB issued ASU 2015-14, ~~Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, to defer the effective date of ASU 2014-09 by one year. Including the one-year deferral, these updates become~~ effective for usannual periods beginning in our ~~quarter~~fiscal year ending ~~June 30, 2018. The new guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with~~March 31, 2025 and interim periods beginning in the ~~cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method).~~

We have established a cross-functional implementation team and utilized a bottom-up approach to analyze the impact of the standard on our arrangements by reviewing the current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to our revenue contracts. Based on our analysis to date, we have reached the following tentative conclusions regarding the new standard and how we expect it to affect our consolidated financial statements and related disclosures:

~~We will adopt the guidance in our~~first quarter ending June 30, 2018. We currently prefer to adopt the standard using the full retrospective method; however, our ability to do so is dependent on many factors, including the completion of our analysis of information necessary to recast prior period financial statements. Based on these and other factors, we may decide to use the modified retrospective method.

·	Substantially all of our revenue within our technology segment is contractual and is within the scope of ASU No. 2014-09, as amended. The majority of our revenues within our financing segment are scoped out of this update.

·	The majority of our revenues within our technology segment are derived from sales of third-party products, third-party software, third-party services, such as maintenance and software assurance, and sales of e~~Plus professional and managed services.~~

We recognize revenue on sales of third party product and third-party software on a gross basis upon delivery and we are still assessing whether we are acting as a principal or an agent in these transactions under the update.

~~We recognize sales of third party maintenance and software assurance on a net basis at the date of sale and sales of~~ e~~Plus professional and managed services on a gross basis as the services are performed. We do not anticipate a material impact to our revenue recognition for these transactions under the update.~~

·	~~We expect that our disclosures in our notes to our consolidated financial statements related to revenue recognition will be significantly expanded under the new standard.~~

Our analysis and evaluation of the new standard will continue through its effective date in our quarter ending June 30, 2018. A substantial amount of work remains to be completed due to the complexity of the new standard, the application of judgment and the requirement for the use of estimates in applying the new standard, as well as the volume of our ~~customer portfolio and the related terms and conditions of our contracts that must be reviewed.~~

~~In November 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~, which will supersede the current U.S. GAAP on this topic. The core principle of this update is that a lessee should recognize the assets and liabilities that arise from leases. This update requires adoption under the modified retrospective approach and becomes effective for us in our quarterfiscal year ending ~~June 30, 2019.~~March 31, 2026. Early adoption is permitted. We are currently evaluating the impact ofthat this update will have on our financial ~~statements.~~statement disclosures.

In ~~June 2016,~~December 2023, the FASB issued ASU ~~2016-13,~~ ~~Financial Instruments- Credit Losses~~2023-09, Income Taxes (Topic ~~326)~~740): ~~Measurement of Credit Losses on Financial Instruments~~. The amendments in this update replace the incurred loss impairment methodology in current US GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable informationImprovements to ~~inform credit loss estimates.~~Income Tax Disclosures. This update requires ~~adoption under~~disaggregated information about a ~~modified retrospective approach and becomes~~reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. This update is effective for usannual periods beginning in our ~~quarter~~fiscal year ending ~~June 30, 2020.~~March 31, 2026. Early adoption is ~~permitted beginning in our quarter ending June 30, 2019.~~permitted. We are currently evaluating the impact ofthat this update will have on our financial ~~statements.~~statement disclosures.

REVENUES

CONTRACT BALANCES

Accounts receivable – trade consists entirely of amounts due from contracts with customers. In addition, we had $67.3 million and $70.4 million of receivables from contracts with customers included within financing receivables as of December 31, 2023, and March 31, 2023, respectively. The following table provides the balance of contract liabilities from contracts with customers (in thousands):

	December 31, 2023		March 31, 2023
Current (included in deferred revenue)	$	129,875	$	113,713
Non-current (included in other liabilities)	$	58,766	$	47,217

Revenue recognized from the beginning contract liability balance was $15.5 million and $70.1 million for the three and nine months ended December 31, 2023, respectively, and $15.0 million and $57.4 million for the three and nine months ended December 31, 2022, respectively.

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PERFORMANCE OBLIGATIONS

The following table includes revenue expected to be recognized in the future related to performance obligations, primarily non-cancelable contracts for ePlus managed services, that are unsatisfied or partially unsatisfied at the end of the reporting period (in thousands):

Remainder of the year ending March 31, 2024	$	25,473
Year ending March 31, 2025		59,995
Year ending March 31, 2026		29,509
Year ending March 31, 2027		13,633
Year ending March 31, 2028 and thereafter		4,810
Total remaining performance obligations	$	133,420

The table does not include the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, and (ii) contracts where we recognize revenue at the amount that we have the right to invoice for services performed.

3.4.	FINANCING RECEIVABLES AND OPERATING LEASES

Our financing receivables and operating leases consist primarily of ~~assets that we finance for our customers, which we manage as a portfolio~~leases of ~~investments. Equipment financed for our customers is accounted for as investments in direct~~IT and communication equipment and notes receivable from financing ~~sales-type or operating leases in accordance with Accounting Standards Codification (“ASC”) Topic 840,~~ ~~Leases. We also finance third-party~~customer purchases of third-party software, maintenance, and ~~services~~services. Our leases often include elections for ~~our customers, which are classified as notes receivables. Our notes receivables are interest bearing and are often due over a period of time that corresponds with~~ the ~~terms~~lessee to purchase the underlying asset at the end of the ~~leased products.~~lease term. Often, our leases provide the lessee a bargain purchase option.

The following table provides the profit recognized for sales-type leases at their commencement date, including modifications that are recognized on a net basis, for the three and nine months ended December 31, 2023, and 2022 (in thousands):

	Three months Ended December 31,				Nine months Ended December 31,
	2023		2022		2023		2022
Net sales	$	7,418	$	5,916	$	19,913	$	15,405
Cost of sales		6,666		4,949		18,189		12,785
Gross profit	$	752	$	967	$	1,724	$	2,620

The following table provides interest income in aggregate on our sales-type leases and lease income on our operating leases for the three and nine months ended December 31, 2023, and 2022 (in thousands):

	Three months Ended December 31,				Nine months Ended December 31,
	2023		2022		2023		2022
Interest income on sales-type leases	$	1,912	$	996	$	4,898	$	2,677
Lease income on operating leases	$	2,757	$	4,030	$	8,366	$	13,271

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FINANCING RECEIVABLES—NET

~~Our~~The following tables provide a disaggregation of our financing receivables – net ~~consist of the following~~ (in ~~thousands)~~ thousands):

December 31, 2017	Notes Receivables			Lease-Related Receivables			Total Financing Receivables
Minimum payments	$	59,444		$	73,022		$	132,466
Estimated unguaranteed residual value (1)		-			13,358			13,358
Initial direct costs, net of amortization (2)		369			321			690
										Notes			Lease			Financing
December 31, 2023										Receivable			Receivables			Receivables
Gross receivables										$	125,386		$	82,257		$	207,643
Unguaranteed residual value (1)											-			8,860			8,860
Unearned income		-			(6,034	)		(6,034	)		(4,723	)		(16,374	)		(21,097	)
Reserve for credit losses (3)		(451	)		(621	)		(1,072	)
Allowance for credit losses (2)											(829	)		(1,464	)		(2,293	)
Total, net	$	59,362		$	80,046		$	139,408		$	119,834		$	73,279		$	193,113
Reported as:
Current	$	33,109		$	41,489		$	74,598		$	71,905		$	38,439		$	110,344
Long-term		26,253			38,557			64,810			47,929			34,840			82,769
Total, net	$	59,362		$	80,046		$	139,408		$	119,834		$	73,279		$	193,113

(1)

Includes ~~estimated~~ unguaranteed residual values of ~~$7,753~~$4,009 thousand ~~for direct financing leases, which have been sold and accounted for as sales.~~that we retained after selling the related lease receivable.

(2)

~~Initial direct costs are shown net of amortization of $334 thousand.~~

~~(3)~~

~~For details on reserve for credit losses, refer~~Refer to Note ~~5, “Reserves~~7, “Allowance for Credit ~~Losses~~.”Losses” for details.

March 31, 2017

Notes
Receivables

Lease-Related
Receivables

Total Financing
Receivables

Minimum payments $ 48,524 $ 57,872 $ 106,396
Estimated unguaranteed residual value (1) - 18,273 18,273
Initial direct costs, net of amortization (2) 279 341 620
Unearned income - (5,913 ) (5,913 )
Reserve for credit losses (3) (3,434 ) (679 ) (4,113 )
Total, net $ 45,369 $ 69,894 $ 115,263
Reported as:
Current $ 23,780 $ 27,876 $ 51,656
Long-term 21,589 42,018 63,607
Total, net $ 45,369 $ 69,894 $ 115,263

	Notes			Lease			Financing
March 31, 2023	Receivable			Receivables			Receivables
Gross receivables	$	117,008		$	60,157		$	177,165
Unguaranteed residual value (1)		-			8,161			8,161
Unearned income		(5,950	)		(8,050	)		(14,000	)
Allowance for credit losses (2)		(801	)		(981	)		(1,782	)
Total, net	$	110,257		$	59,287		$	169,544
Reported as:
Current	$	65,738		$	24,091		$	89,829
Long-term		44,519			35,196			79,715
Total, net	$	110,257		$	59,287		$	169,544

(1)

Includes ~~estimated~~ unguaranteed residual values of ~~$12,677~~$4,222 thousand ~~for direct financing leases which have been sold and accounted for as sales.~~ that we retained after selling the related lease receivable.

(2)

~~Initial direct costs are shown net of amortization of $510 thousand.~~

~~(3)~~

~~For details on reserve for credit losses, refer~~Refer to Note ~~5, “Reserves~~7, “Allowance for Credit ~~Losses~~.”Losses” for details.

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OPERATING LEASES—NET

Operating leases—net represents leases that do not qualify as ~~direct financing~~sales-type leases. The components of the operating leases—net are as follows (in thousands):

							December 31,			March 31,
	December 31, 2017			March 31, 2017			2023			2023
Cost of equipment under operating leases	$	16,804		$	16,725		$	13,749		$	15,301
Accumulated depreciation		(9,039	)		(8,449	)		(9,506	)		(10,599	)
Investment in operating lease equipment—net (1)	$	7,765		$	8,276		$	4,243		$	4,702

(1)

~~(1)~~

~~These totals~~Amounts include estimated unguaranteed residual values of ~~$2,077~~$1,647 thousand and ~~$1,117~~$1,717 thousand as of December 31, ~~2017~~2023, and March 31, ~~2017,~~2023, respectively.

TRANSFERS OF FINANCIAL ASSETS

We enter into arrangements to transfer the contractual payments due under financing receivables and operating lease agreements, which are accounted for as sales or secured ~~borrowings in accordance with ASC Topic 860,~~ ~~Transfers and Servicing~~. borrowings.

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For transfers accounted for as a secured borrowing, the corresponding investments serve as collateral for non-recourse notes payable. As of December 31, ~~2017~~2023, and March 31, ~~2017,~~2023, we had financing receivables of ~~$37.2~~$70.0 million and ~~$33.1~~$35.7 million, respectively, and operating leases of ~~$5.9~~$2.5 million ~~and $6.6 million, respectively,~~for both periods, which were collateral for non-recourse notes payable. See Note ~~7, "Notes~~8, “Notes Payable and Credit ~~Facility~~."Facility.”

For transfers accounted for as ~~sales,~~a sale, we derecognize the carrying value of the asset transferred plus any liability and recognize a net gain or loss on the sale, which are presented within net sales in the consolidated statement of operations. During the three months ended December 31, ~~2017~~2023, and ~~2016,~~2022, we recognized net gains of ~~$1.2~~$8.1 million and ~~$0.9~~$5.2 million, respectively, and total proceeds from these sales were ~~$32.8~~$422.1 million and ~~$55.8~~$157.2 million, respectively. ~~During~~For the nine months ended December 31, ~~2017~~2023, and ~~2016,~~2022, we recognized net gains of ~~$4.6~~$16.3 million and ~~$4.1~~$15.1 million, respectively, and total proceeds from these sales were ~~$166.9~~$704.3 million and ~~$185.4~~$586.1 million, respectively.

~~For certain assignments of financial assets,~~

When we retain a servicing ~~obligation. For assignments~~obligations in transfers accounted for as sales, we allocate a portion of the proceeds to deferred ~~revenues,~~revenue, which is recognized as we perform the services. As of ~~both~~ December 31, ~~2017~~2023, and March 31, ~~2017,~~2023, we had deferred revenue of $0.4 million and $0.5 million, respectively, for ~~servicing.~~ servicing obligations.

In a limited number of ~~such~~transfers accounted for as sales, we ~~indemnified~~provide an indemnification right to the assignee ~~in the event that~~if the lessee ~~elected~~elects to early terminate the lease. As of December 31, ~~2017, our maximum~~2023, and March 31, 2023, the total potential ~~future~~ payments ~~related to such guarantees is $0.6 million. We believe the possibility of making any payments to be remote.~~that could result from these indemnities was immaterial.

4.5.	LESSEE ACCOUNTING

We lease office space for periods up to six years and lease warehouse space for periods of up to ten years, and we have some lease options that can be exercised to extend beyond those lease term limits. We recognize our right-of-use assets as part of property, equipment, and other assets. We recognize the current and long-term portions of our lease liability as part of other current liabilities and other liabilities, respectively. We recognized rent expense as part of selling, general and administrative expenses. We recognized rent expense of $1.4 million and $1.3 million for the three months ended December 31, 2023, and December 31, 2022, respectively, and $4.4 million and $3.8 million for the nine months ended December 31, 2023, and 2022, respectively.

6.	GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL

The following table summarizes the changes in the carrying amount of goodwill for the nine months ended December 31, ~~2017 and 2016,~~2023 (in thousands):

Nine Months Ended December 31, 2017 Nine Months Ended December 31, 2016
Goodwill
Accumulated
Amortization
/ Impairment
Loss

Net
Carrying
Amount
Goodwill
Accumulated
Amortization
/ Impairment
Loss

Net
Carrying
Amount

Balance as of March 31 $ 57,070 $ (8,673 ) $ 48,397 $ 50,824 $ (8,673 ) $ 42,151
Acquisitions 27,996 - 27,996 7,636 - 7,636
Foreign currency translations 153 - 153 (315 ) - (315 )
Balance as of December 31 $ 85,219 $ (8,673 ) $ 76,546 $ 58,145 $ (8,673 ) $ 49,472

			Professional		Managed
	Product		Services		Services		Total
Balance March 31, 2023 (1)	$	106,497	$	19,712	$	9,896	$	136,105
Acquisitions		19,672		2,456		-	$	22,128
Foreign currency translations		40		7		4	$	51
Balance December 31, 2023 (1)	$	126,209	$	22,175	$	9,900	$	158,284

~~All~~

(1)	Balance is net of $8,673 thousand in accumulated impairments that were recorded in segments that precede our current segment organization.

Goodwill represents the premium paid over the fair value of the net tangible and intangible assets that are individually identified and separately recognized in business combinations.

Our goodwill balance increased by $22.2 million over the nine months ended December 31, 2023, due to $22.1 million in goodwill additions from our acquisition of Network Solutions Group (“NSG”), and from foreign currency translations of $0.1 million. Please refer to Note 15, “Business Combinations” for details of our acquisition.

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We test goodwill for impairment on an annual basis, as of ~~December 31, 2017~~the first day of our third fiscal quarter, and ~~March 31, 2017 was assigned to our technology segment, which is also~~between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a ~~single~~ reporting ~~unit. See Note 15, "Business Combinations" for additional information regarding our acquisitions.~~

~~We performed~~unit below its carrying value. In our annual test ~~for goodwill impairment for fiscal year 2018~~ as of October 1, ~~2017. We~~2023, we performed a qualitative assessment of goodwill and concluded that, more likely than not, the fair value of our product, professional services, and managed services reporting units continued to exceed their carrying value.

During the first quarter ended June 30, 2023, we separated our technology segment into three new segments: product, professional services, and managed services. We concluded that each segment was one reporting ~~unit, more likely than not, exceeded its respective carrying~~unit. At that time, we allocated our goodwill to the reporting units affected using a relative fair value ~~as of October 1, 2017.~~

approach. We ~~performed our annual test for goodwill impairment for fiscal year 2017 as of October 1, 2016. We elected to bypass the qualitative assessment of goodwill and estimate~~concluded that the fair value of ~~our~~each new reporting ~~units. The fair value of our technology reporting~~ unit ~~substantially~~ exceeded its carrying ~~value as of October 1, 2016.~~value. Our conclusions would not be impacted by a ten percent change in our estimate of the fair value of the reporting unit.

OTHER INTANGIBLE ASSETS

~~Our~~Our other intangible assets consist of the following aton December 31, ~~2017~~2023, and March 31, ~~2017~~2023 (in thousands):

	December 31, 2017							March 31, 2017							December 31, 2023										March 31, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying			Accumulated				Net Carrying			Gross Carrying			Accumulated				Net Carrying
															Amount			Amortization				Amount			Amount			Amortization				Amount
Customer relationships & other intangibles	$	41,777	$	(16,792	)	$	24,985	$	23,373	$	(12,553	)	$	10,820
Purchased intangibles																$	115,471		$	(72,784	)		$	42,687		$	85,449		$	(61,376	)		$	24,073
Capitalized software development		4,908		(2,479	)		2,429		3,649		(2,310	)		1,339			10,517			(10,234	)			283			10,516			(9,544	)			972
Total	$	46,685	$	(19,271	)	$	27,414	$	27,022	$	(14,863	)	$	12,159		$	125,988		$	(83,018	)		$	42,970		$	95,965		$	(70,920	)		$	25,045

~~Customer~~

Purchased intangibles, consisting mainly of customer relationships, ~~and capitalized~~are generally amortized between 5 to 10 years. Capitalized software development ~~costs are~~is generally amortized over ~~an estimated useful life, which is generally between 3 to 8 years.~~ ~~Trade names and trademarks are amortized over an estimated useful life of 10~~5 years.

Customer relationships and other intangibles increased for the nine months ended December 31, 2017 due to business acquisitions by $18.4 million, of which $2.4 million is internally developed processes, $15.7 million is customer relationships, $0.2 million is due to foreign exchange translation, and $0.1 million in capitalized software development costs.

Total amortization expense for customer relationships and other intangible assets was ~~$1.9 million and $1.1~~$3.9 million for the three months ended December 31, 2023, and ~~$4.2~~$2.5 million for the three months ended December 31, 2022, and $11.3 million and ~~$3.4~~$7.2 million for the nine months ended December 31, ~~2017~~2023, and ~~2016,~~2022, respectively.

~~See Note 15, “Business Combinations” for additional information regarding acquired intangibles.~~

5.7.	~~RESERVES~~ALLOWANCE FOR CREDIT LOSSES

~~Activity~~The following table provides the activity in our ~~reserves~~allowance for credit losses for the nine months ended December 31, ~~2017~~2023, and ~~2016 were as follows~~2022 (in thousands):

Accounts
Receivable

Notes
Receivable

Lease-Related
Receivables
Total
Balance April 1, 2017 $ 1,279 $ 3,434 $ 679 $ 5,392
Provision for credit losses 165 37 106 308
Write-offs and other - (3,020 ) (164 ) (3,184 )
Balance December 31, 2017 $ 1,444 $ 451 $ 621 $ 2,516

	Accounts Receivable			Notes Receivable		Lease Receivables			Total
Balance April 1, 2023	$	2,572		$	801	$	981		$	4,354
Provision for credit losses		516			27		484			1,027
Write-offs and other		(89	)		1		(1	)		(89	)
Balance December 31, 2023	$	2,999		$	829	$	1,464		$	5,292

	Accounts Receivable			Notes Receivable			Lease-Related Receivables		Total			Accounts Receivable			Notes Receivable			Lease Receivables		Total
Balance April 1, 2016	$	1,127		$	3,381		$	685	$	5,193
Balance April 1, 2022												$	2,411		$	708		$	681	$	3,800
Provision for credit losses		229			139			93		461			1,584			546			716	$	2,846
Write-offs and other		(32	)		(12	)		-		(44	)		(102	)		(2	)		-	$	(104	)
Balance December 31, 2016	$	1,324		$	3,508		$	778	$	5,610
Balance December 31, 2022												$	3,893		$	1,252		$	1,397	$	6,542

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Our reserves for credit losses and minimum payments associated with our notes receivables and lease-related receivables disaggregated on the basis of our impairment method were as follows (in thousands):

December 31, 2017 March 31, 2017

Notes
Receivable

Lease-
Related
Receivables

Notes
Receivable

Lease-
Related
Receivables

Reserves for credit losses:
Ending balance: collectively evaluated for impairment $ 389 $ 621 $ 348 $ 556
Ending balance: individually evaluated for impairment 62 - 3,086 123
Ending balance $ 451 $ 621 $ 3,434 $ 679

Minimum payments:
Ending balance: collectively evaluated for impairment $ 59,382 $ 73,022 $ 45,438 $ 57,730
Ending balance: individually evaluated for impairment 62 - 3,086 142
Ending balance $ 59,444 $ 73,022 $ 48,524 $ 57,872

We place receivables on non-accrual status when events, such as a customer’s declaring bankruptcy, occur that indicate a receivable will not be collectable. We charge off uncollectable financing receivables when we stop pursuing collection. As of March 31, 2017 we had a balance outstanding as of $3.2 million for a customer in bankruptcy which was fully reserved and on a non-accrual status. We wrote off this balance against the reserve for credit losses during the nine months ended December 31, 2017, after the bankruptcy case was substantially complete.

~~The age of the recorded minimum lease payments and net credit exposure associated with~~evaluate our ~~investment in direct financing and sales-type leases that are past due disaggregated based on our~~customers using an internally assigned credit quality rating ~~(“CQR”) were as follows~~“CQR”. The CQR categories of our financing receivables are:

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•	High CQR: This rating includes accounts with excellent to good business credit, asset quality and capacity to meet financial obligations. Loss rates in this category are generally less than 1%.

•	Average CQR: This rating includes accounts with average credit risk that are more susceptible to loss in the event of adverse business or economic conditions. Loss rates in this category are in the range of 1% to 8%.

•	Low CQR: This rating includes accounts that have marginal credit risk such that the customer’s ability to make repayment is impaired or may likely become impaired. The loss rates in this category in the normal course are greater than 8% and up to 100%.

The following table provides the amortized cost basis of our financing receivables by CQR and by credit origination year as of December 31, ~~2017~~2023 (in thousands):

	Amortized cost basis by origination year ending March 31,
	2024		2023		2022		2021		2020		2019 and prior		Total		Transfers (2)			Net credit exposure

Notes receivable:
High CQR	$	78,475	$	19,040	$	4,558	$	3,230	$	39	$	-	$	105,342	$	(35,451	)	$	69,891
Average CQR		10,780		4,078		374		75		-		14		15,321		(3,858	)		11,463
Total	$	89,255	$	23,118	$	4,932	$	3,305	$	39	$	14	$	120,663	$	(39,309	)	$	81,354

Lease receivables:
High CQR	$	26,317	$	9,664	$	2,211	$	1,270	$	214	$	10	$	39,686	$	(5,320	)	$	34,366
Average CQR		17,209		10,713		2,749		375		2		-		31,048		(3,548	)		27,500
Total	$	43,526	$	20,377	$	4,960	$	1,645	$	216	$	10	$	70,734	$	(8,868	)	$	61,866

Total amortized cost (1)	$	132,781	$	43,495	$	9,892	$	4,950	$	255	$	24	$	191,397	$	(48,177	)	$	143,220

(1)	Excludes unguaranteed residual values of $4,009 thousand that we retained after selling the related lease receivable.

(2)	Transfers consist of receivables that have been transferred to third-party financial institutions on a non-recourse basis.

The following table provides the amortized cost basis of our financing receivables by CQR and by credit origination year as of March 31, 2023 (in thousands):

	Amortized cost basis by origination year ending March 31,
	2023		2022		2021		2020		2019		2018 and prior		Total		Transfers (2)			Net credit exposure

Notes receivable:
High CQR	$	72,155	$	11,378	$	11,267	$	370	$	30	$	-	$	95,200	$	(28,115	)	$	67,085
Average CQR		12,793		2,675		213		115		61		1		15,858		(1,432	)		14,426
Total	$	84,948	$	14,053	$	11,480	$	485	$	91	$	1	$	111,058	$	(29,547	)	$	81,511

Lease receivables:
High CQR	$	21,629	$	3,842	$	1,916	$	565	$	51	$	9	$	28,012	$	(1,437	)	$	26,575
Average CQR		23,796		3,430		770		35		3		-		28,034		(1,594	)		26,440
Total	$	45,425	$	7,272	$	2,686	$	600	$	54	$	9	$	56,046	$	(3,031	)	$	53,015

Total amortized cost (1)	$	130,373	$	21,325	$	14,166	$	1,085	$	145	$	10	$	167,104	$	(32,578	)	$	134,526

(1)	Excludes unguaranteed residual values of $4,222 thousand that we retained after selling the related lease receivable.

(2)

Transfers consist of receivables that have been transferred to third-party financial institutions on a non-recourse basis and receivables that are in the process of being transferred to third-party financial institutions.

Table of Contents

The following table provides an aging analysis of our financing receivables as of December 31, 2023 (in thousands):

	31-60 Days Past Due		61-90 Days Past Due		> 90 Days Past Due		Total Past Due		Current		Total Billed		Unbilled		Amortized Cost
Notes receivable	$	5,735	$	306	$	2,131	$	8,172	$	5,617	$	13,789	$	106,874	$	120,663
Lease receivables		542		754		2,023		3,319		3,221		6,540		64,194		70,734
Total	$	6,277	$	1,060	$	4,154	$	11,491	$	8,838	$	20,329	$	171,068	$	191,397

The following table provides an aging analysis of our financing receivables as of March 31, 2023 (in thousands):

	31-60 Days Past Due		61-90 Days Past Due		> 90 Days Past Due		Total Past Due		Current		Total Billed		Unbilled		Amortized Cost
Notes receivable	$	1,020	$	862	$	473	$	2,355	$	7,703	$	10,058	$	101,000	$	111,058
Lease receivables		1,068		463		864		2,395		5,413		7,808		48,238		56,046
Total	$	2,088	$	1,325	$	1,337	$	4,750	$	13,116	$	17,866	$	149,238	$	167,104

Our financial assets on nonaccrual status were not significant as of December 31, 2023, and March 31, ~~2017 (in thousands):~~2023.

31-60
Days
Past
Due

61-90
Days
Past
Due

Greater
than 90
Days
Past
Due

Total
Past
Due
Current
Unbilled
Minimum
Lease
Payments

Total
Minimum
Lease
Payments

Unearned
Income

Non-
Recourse
Notes
Payable

Net
Credit
Exposure

December 31, 2017

High CQR $ 188 $ 90 $ 907 $ 1,185 $ 18,238 $ 30,496 $ 49,919 $ (3,027 ) $ (14,420 ) $ 32,472
Average CQR 30 36 216 282 124 22,697 23,103 (1,385 ) (11,413 ) 10,305
Low CQR - - - - - - - - - -
Total $ 218 $ 126 $ 1,123 $ 1,467 $ 18,362 $ 53,193 $ 73,022 $ (4,412 ) $ (25,833 ) $ 42,777

March 31, 2017

High CQR $ 379 $ 224 $ 230 $ 833 $ 406 $ 32,532 $ 33,771 $ (2,362 ) $ (12,924 ) $ 18,485
Average CQR 113 20 113 246 91 23,622 23,959 (1,556 ) (13,353 ) 9,050
Low CQR - - 142 142 - - 142 (19 ) - 123
Total $ 492 $ 244 $ 485 $ 1,221 $ 497 $ 56,154 $ 57,872 $ (3,937 ) $ (26,277 ) $ 27,658

~~Table of Contents~~

~~The age of the recorded notes receivable balance disaggregated based on our internally assigned CQR were as follows as December 31, 2017 and March 31, 2017 (in thousands):~~

31-60
Days
Past
Due

61-90
Days
Past
Due

Greater
than 90
Days
Past Due

Total
Past
Due
Current
Unbilled
Notes
Receivable

Total
Notes
Receivable

Non-
Recourse
Notes
Payable

Net
Credit
Exposure

December 31, 2017

High CQR $ 4 $ - $ 833 $ 837 $ 2,071 $ 35,001 $ 37,909 $ (21,971 ) $ 15,938
Average CQR 1,086 4 599 1,689 8 19,776 21,473 (15,555 ) 5,918
Low CQR - - 62 62 - - 62 - 62
Total $ 1,090 $ 4 $ 1,494 $ 2,588 $ 2,079 $ 54,777 $ 59,444 $ (37,526 ) $ 21,918

March 31, 2017

High CQR $ 183 $ 663 $ 755 $ 1,601 $ 1,165 $ 23,359 $ 26,125 $ (12,003 ) $ 14,122
Average CQR 28 5 - 33 555 18,725 19,313 (13,732 ) 5,581
Low CQR - - 3,086 3,086 - - 3,086 - 3,086
Total $ 211 $ 668 $ 3,841 $ 4,720 $ 1,720 $ 42,084 $ 48,524 $ (25,735 ) $ 22,789

We estimate losses on our net credit exposure to be between 0% - 5% for customers with highest CQR, as these customers are investment grade or the equivalent of investment grade. We estimate losses on our net credit exposure to be between 2% - 15% for customers with average CQR, and between 15% - 100% for customers with low CQR, which includes customers in bankruptcy.

6.8.	~~PROPERTY, EQUIPMENT, OTHER ASSETS AND LIABILITIES~~

~~Our property, equipment, other assets and liabilities consist of the following (in thousands):~~

December 31,
2017

March 31,
2017

Other current assets:

Deposits & funds held in escrow $ 14,819 $ 39,161
Prepaid assets 10,429 3,388
Other 722 815
Total other current assets $ 25,970 $ 43,364

Property, equipment and other assets

Property and equipment, net $ 8,013 $ 6,690
Deferred costs 7,326 3,536
Other 2,293 1,730
Total other assets - long term $ 17,632 $ 11,956

December 31,
2017

March 31,
2017

Other current liabilities:

Accrued expenses $ 7,907 $ 7,450
Accrued income taxes payable 170 1,761
Contingent consideration 5,360 554
Other 12,679 9,414
Total other current liabilities $ 26,116 $ 19,179

Other liabilities:

Deferred revenue $ 10,064 $ 4,704
Contingent consideration long-term 7,765 1,500
Other 689 876
Total other liabilities - long term $ 18,518 $ 7,080

~~Table of Contents~~

As of December 31, 2017 we had current and long-term contingent consideration liability balance of $5.4 and $7.8 million, respectively, of which $10.0 million relates to a recent acquisition. For details on the contingent consideration liability, refer to Note 15, “~~Business Combinations~~.”

As of December 31, 2017 and March 31, 2017 we had customer deposits and funds held in escrow of $14.8 million and $39.2 million, respectively. These balances relate to financial assets that were sold to third-party banks. In conjunction with those sales, a portion of the proceeds were placed in escrow and will be released to us upon payment of outstanding invoices related to the underlying financing arrangements that were sold.

7.	NOTES PAYABLE AND CREDIT FACILITY

CREDIT FACILITY

We finance the operations of our subsidiaries ePlus Technology, inc., ePlus Technology Services, inc., and SLAIT Consulting, LLC (collectively, the “Borrowers”) in our technology business through a credit facility with Wells Fargo Commercial Distribution Finance, LLC (“WFCDF”). The WFCDF credit facility (the “WFCDF Credit Facility”) has a floor plan facility and a revolving credit facility.

On October 13, 2021, the Borrowers amended, restated, and replaced in entirety their then-existing credit agreements with WFCDF. On October 31, 2022, the Borrowers entered into the First Amendment to the credit agreement. Under this agreement and its amendment, the credit facility is provided by a syndicate of banks (collectively, the “Lenders”) for which WFCDF acts as administrative agent and consists of a discretionary senior secured floor plan facility in favor of the Borrowers.

On March 10, 2023, the Borrowers entered into a Second Amendment to the credit agreement that amended the credit agreement to increase the maximum aggregate amount of principal available under the floor plan facility to $500.0 million and increase the maximum aggregate amount of principal available under the Revolving Facility to $200.0 million.

Under the accounts payable floor plan facility, we had an outstanding balance of $92.5 million and $134.6 million as of December 31, 2023, and March 31, 2023, respectively. On our balance sheet, our liability under the accounts payable floor plan facility is presented as accounts payable – floor plan.

We use the floor plan to facilitate the purchase of inventory from designated suppliers. The Lenders pay our suppliers and provide us extended payment terms. We pay down the floor plan facility on three specified dates each month, generally 30-60 days from the invoice date. We do not incur any interest or other incremental expenses for the floor plan facility. We are not involved in establishing the terms or conditions of the arrangements between our suppliers and the Lenders.

Table of Contents

Under the revolving credit facility, we had no balance outstanding as of December 31, 2023, and March 31, 2023. On our balance sheet, our liability under the revolving credit facility is presented as part of recourse notes payable – current.

The fair value of the outstanding balances under the WFCDF Credit Facility were approximately equal to their carrying value as of December 31, 2023, and March 31, 2023.

The amount of principal available is subject to a borrowing base determined by, among other things, the Borrowers’ accounts receivable and inventory, each pursuant to a formula and subject to certain reserves. Loans accrue interest at a rate per annum equal to Term SOFR Rate plus a Term SOFR Adjustment of 0.10% plus an Applicable Margin of 1.75%.

Our borrowings under the WFCDF Credit Facility are secured by the assets of the Borrowers. Additionally, the WFCDF Credit Facility requires a guaranty of $10.5 million by ePlus inc.

Under the WFCDF Credit Facility, the Borrowers are restricted in their ability to pay dividends to ePlus inc. unless their available borrowing meets or met certain thresholds. As of December 31, 2023, and March 31, 2023, their available borrowing met the thresholds such that there were no restrictions on their ability to pay dividends.

The WFCDF Credit Facility has an initial one-year term, which automatically renews for successive one-year terms thereafter. However, either the Borrowers or WFCDF may terminate the WFCDF Credit Facility at any time by providing a written termination notice to the other party no less than 90 days prior to such termination.

The loss of the WFCDF Credit Facility could have a material adverse effect on our future results as we currently rely on this facility and its components for daily working capital and liquidity for our technology business and as an operational function of our accounts payable process.

RECOURSE NOTES PAYABLE

Recourse notes payable consist of borrowings that, in the event of default, the lender has recourse against us. As of March 31, 2023, we had $6.0 million arising from one installment payment arrangement within our technology business. As of December 31, 2023, we have fully paid off our recourse notes payable. Our payments under this installment agreement were due quarterly in amounts that were correlated to the payments due to us from a customer under a related notes receivable. We discounted our payments due under this installment agreement to calculate our payable balance using an interest rate of 3.50% as of March 31, 2023.

NON-RECOURSE NOTES PAYABLE

Non-recourse notes payable consists of borrowings that, in the event of a default by a customer, the lender generally only has recourse against the customer, and ~~recourse obligations consist~~the assets serving as collateral, but not against us. As of ~~the following (in thousands):~~

December 31,
2017

March 31,
2017

Recourse notes payable with interest rates ranging from 3.20% to 4.13% as of March 31, 2017.
Current $ - $ 908

Non-recourse notes payable secured by financing receivables and investment in operating leases with interest rates ranging from 2.00% to 8.45% December 31, 2017, and ranging from 2.00% to 7.75% as of March 31, 2017.
Current $ 27,649 $ 26,085
Long-term 3,840 10,431
Total non-recourse notes payable $ 31,489 $ 36,516

December 31, 2023, and March 31, 2023, we had $48.4 million and $34.3 million, respectively, of non-recourse borrowings that were collateralized by investments in notes and leases. Principal and interest payments ~~on non-recourse notes payable~~ are generally due ~~monthly~~periodically in amounts that are approximately equal to the total payments due from the customer under the leases or notes receivable that collateralize the notes payable. The weighted average interest rate for our non-recourse notes payable was ~~3.73%~~6.64% and 5.01%, as of ~~both~~ December 31, ~~2017~~2023, and March 31, ~~2017. The weighted average interest rate for our recourse notes payable was~~ 3~~.45%~~2023, as of March 31, 2017. Under recourse financing, in the event of a default by a customer, the lender has recourse to the customer, the assets serving as collateral, and us. Under non-recourse financing, in the event of a default by a customer, the lender generally only has recourse against the customer, and the assets serving as collateral, but not against us.respectively.

~~Our technology segment, through our subsidiary~~ ePlus Technology, inc., finances its operations with funds generated from operations, and with a credit facility with Wells Fargo Commercial Distribution Finance, LLC (“WFCDF”). This facility provides short-term capital for our technology segment. There are two components of the WFCDF credit facility: (1) a floor plan component, and (2) an accounts receivable component. Under the floor plan component, we had outstanding balances of $107.8 million and $132.6 million as of December 31, 2017 and March 31, 2017, respectively. Under the accounts receivable component, we had no outstanding balances as of December 31, 2017 and March 31, 2017.

On July 27, 2017, we executed an amendment to the WFCDF credit facility which temporarily increases the aggregate limit of the two components from $250.0 million to $325.0 million from the date of the agreement through October 31, 2017, and provides us an election beginning July 1 in each subsequent year to similarly temporarily increase the aggregate limit of the two components to $325.0 million ending the earlier of 90 days following the date of election or October 31 of that same year.

As of December 31, 2017, the facility agreement had an aggregate limit of the two components of $250 million, and the accounts receivable component had a sub-limit of $30 million, which bears interest assessed at a rate of the One Month LIBOR plus two and one half percent.

~~Table of Contents~~

~~The credit facility has full recourse to~~ ePlus Technology, inc. and is secured by a blanket lien against all its assets, such as receivables and inventory. Availability under the facility may be limited by the asset value of equipment we purchase or accounts receivable, and may be further limited by certain covenants and terms and conditions of the facility. These covenants include but are not limited to a minimum excess availability of the facility and minimum earnings before interest, taxes, depreciation and amortization (“EBITDA”) of e~~Plus Technology, inc. We were in compliance with these covenants as of December 31, 2017. In addition, the facility restricts the ability of~~ e~~Plus Technology, inc. to transfer funds to its affiliates in the form of dividends, loans or advances with certain exceptions for dividends to~~ e~~Plus inc. The facility also requires that financial statements of~~ ePlus Technology, inc. be provided within 45 days of each quarter and 90 days of each fiscal year end and also includes that other operational reports be provided on a regular basis. Either party may terminate with 90 days’ advance notice. We are not, and do not believe that we are reasonably likely to be, in breach of the WFCDF credit facility. In addition, we do not believe that the covenants of the WFCDF credit facility materially limit our ability to undertake financing. In this regard, the covenants apply only to our subsidiary, e~~Plus Technology, inc. This credit facility is secured by the assets of only~~ e~~Plus Technology, inc. and the guaranty as described below.~~

~~The facility provided by WFCDF requires a guaranty of $10.5 million by~~ e~~Plus inc. The guaranty requires~~ ePlus inc. to deliver its annual audited financial statements by certain dates. We have delivered the annual audited financial statements for the year ended March 31, 2017, as required. The loss of the WFCDF credit facility could have a material adverse effect on our future results as we currently rely on this facility and its components for daily working capital and liquidity for our technology segment and as an operational function of our accounts payable process.

~~Fair Value~~

~~As of December 31, 2017 and March 31, 2017, the fair value of our long-term recourse and non-recourse notes payable approximated their carrying value.~~

8.9.	COMMITMENTS AND CONTINGENCIES

~~Legal Proceedings~~

LEGAL PROCEEDINGS

~~From time to time, we may be~~

We are subject to various legal proceedings, as well as demands, claims and threatened litigation, that arise in the ~~ordinary~~normal course of ~~business.~~ ~~In the opinion of management, there was~~our business and have not at least a reasonable possibility that the Company may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies for asserted legal and other claims. ~~However, the~~been fully resolved. The ultimate outcome of any litigation or other legal ~~proceedings~~dispute is uncertain. When a loss related to a legal proceeding or claim is probable and ~~claims brought against us is subject to significant uncertainty. Therefore, although management considers~~reasonably estimable, we accrue our best estimate for the ~~likelihood~~ultimate resolution of ~~such an outcome to be remote, if~~the matter. If one or more ~~of these~~ legal matters ~~were~~are resolved against ~~the Company~~us in a reporting period for amounts ~~in excess of management’s~~above our expectations, ~~the Company’s consolidated~~our financial ~~statements~~condition and operating results for that ~~reporting~~ period ~~could~~may be ~~materially~~ adversely affected. As of December 31, 2023, we do not believe that there is a reasonable possibility that any material loss exceeding the amounts already recognized for these proceedings and matters, if any, has been incurred. Any outcome, whether favorable or unfavorable, may materially and adversely affect us due to legal costs and expenses, diversion of management attention and other factors. We expense legal costs in the period incurred. We cannot assure that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against us in the future, and these matters could relate to prior, current, or future transactions or events.

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9.10.

EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net earnings available to common shareholders by the basic weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is calculated by dividing net earnings available to common shareholders by the basic weighted average number of shares of common stock outstanding plus common stock equivalents during each period.

~~Table of Contents~~

The following table provides a reconciliation of the numerators and denominators used to calculate basic and diluted net income per common share as disclosed on our unaudited consolidated statements of operations for the three and nine months ended December 31, ~~2017~~2023, and ~~2016~~2022, respectively (in thousands, except per share data).

Three Months Ended
December 31,

Nine Months Ended
December 31,

2017 2016 2017 2016

Net earnings attributable to common shareholders - basic and diluted $ 15,581 $ 12,620 $ 46,225 $ 40,066

Basic and diluted common shares outstanding:

Weighted average common shares outstanding — basic 13,851 13,791 13,845 13,891
Effect of dilutive shares 139 129 177 135
Weighted average shares common outstanding — diluted 13,990 13,920 14,022 14,026

Earnings per common share - basic $ 1.12 $ 0.92 $ 3.34 $ 2.88

Earnings per common share - diluted $ 1.11 $ 0.91 $ 3.30 $ 2.86

~~12.~~13.

INCOME TAXES

~~Income Taxes – Provision~~

Our provision for income tax expense was ~~$0.7~~$11.1 million and ~~$19.5~~$36.1 million for the three and nine months ended December 31, ~~2017,~~2023, as compared to ~~$8.7~~$13.7 million and ~~$27.3~~$34.1 million for the same periods in the prior year. Our effective ~~income~~ tax rate for the three and nine months ended December 31, ~~2017,~~2023, was ~~4.2%~~29.0% and ~~29.7%~~27.8% respectively, compared with 27.7% and 28.3%, respectively, ~~compared to 40.8% and 40.5%~~for the same periods in the prior year. The effective tax rate for the three and nine months ended December 31, ~~2016, respectively. In~~2023, and December 31, 2022, differed from the ~~third quarter, the Company revised its estimated annual effective tax rate to reflect a change in the~~US federal statutory rate ~~from 35%~~of 21.0% primarily due to 21%, resulting from legislation that was enacted on December 22, 2017. The rate change is administratively effective at the beginning of our current fiscal year, using a blended rate for the annual period. As a result, the blended statutory tax rate for our current year is 31.5%. In addition, we recognized an estimated tax benefit in our tax provision for the period related to adjusting our deferred tax balance to reflect the new corporate tax rate. As a result,state and local income tax expense reported for the first nine months was adjusted to reflect the effects of the change in the tax law and resulted in a decrease in income tax expense of $2.6 million during the third quarter. In addition we estimated the tax effect of originating items occurring in the fourth quarter that are expected to reverse at a rate of 21%. This resulted in an additional tax benefit of $0.8 million.

The accounting for the effects of the rate change on deferred tax balances is provisional and we will finalize these estimates during our fourth quarter of fiscal year 2018. We re-measured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, we are still analyzing certain aspects of the new tax law and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts.

taxes.

~~Table of Contents~~

~~Income Taxes – Uncertain Tax Positions~~

~~We account for our tax positions in accordance with ASC Topic 740,~~ ~~Income Taxes~~. Under the guidance, we evaluate uncertain tax positions based on the two-step approach. The first step is to evaluate each uncertain tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained in an audit, including resolution of related appeals or litigation processes, if any. For tax positions that are not likely of being sustained upon audit, the second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50 percent likely of being realized upon ultimate settlement.

Our total gross unrecognized tax benefits recorded for uncertain income tax, and interest and penalties thereon, were negligible as of December 31, 2017, and December 31, 2016. We had no additions or reductions to our gross unrecognized tax benefits during the three and nine months ended December 31, 2017. We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.

~~13.~~14.

FAIR VALUE OF FINANCIAL INSTRUMENTS

~~We account for the fair values of our assets and liabilities in accordance with ASC Topic 820,~~ ~~Fair Value Measurement and Disclosure.~~The following table summarizes the fair value hierarchy of our financial instruments as of December 31, ~~2017~~2023, and March 31, ~~2017~~2023 (in thousands):

Fair Value Measurement Using

Recorded
Amount

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs (Level 2)

Significant
Unobservable
Inputs
(Level 3)

December 31, 2017

Assets:
Money market funds $ 21,596 $ 21,596 $ - $ -

Liabilities:
Contingent consideration $ 13,125 $ - $ - $ 13,125

March 31, 2017

Assets:
Money market funds $ 50,866 $ 50,866 $ - $ -

Liabilities:
Contingent consideration $ 554 $ - $ - $ 554

			Fair Value Measurement Using
	Recorded Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2023
Assets:
Money market funds	$	30,230	$	30,230	$	-	$	-

March 31, 2023
Assets:
Money market funds	$	8,880	$	8,880	$	-	$	-

~~For~~

15.	BUSINESS COMBINATIONS

PEAK RESOURCES, INC. (“PEAK”)

On January 27,2024, our subsidiary, ePlus Technology, inc., acquired certain assets and liabilities of PEAK. Based in Denver, CO, PEAK is an established provider of modern data center, networking, and security products and services. The acquisition will help drive additional growth with enhanced engineering, sales, and services delivery capabilities in the ~~three and nine months ended December 31, 2017, we recorded adjustments that increased the fair value~~mountain west region. Our preliminary sum for consideration transferred is $5.6 million, equal to cash paid at closing. As of our ~~liability~~filing date, our initial accounting for ~~contingent consideration by $0.7 million, and $12.6 million due to~~the business acquisitions. For the nine months ended December 31, 2017, we made $0.6 million in payments to satisfy the current obligations of the contingent consideration arrangement from our earlier acquisition of Consolidated IT Services.combination is incomplete.

~~14.~~

~~SEGMENT REPORTING~~

Our operations are conducted through two operating segments that are also both reportable segments. Our technology segment includes sales of information technology products, third-party software, third-party maintenance, advanced professional and managed services and our proprietary software to commercial enterprises, state and local governments, and government contractors. Our financing segment consists of the financing of IT equipment, software and related services to commercial enterprises, state and local governments, and government contractors. We measure the performance of the segments based on operating income.

Table of Contents

~~Our reportable segment information was as follows (in thousands):~~

Three Months Ended
December 31, 2017 December 31, 2016
Technology Financing Total Technology Financing Total

Sales of product and services $ 330,953 $ - $ 330,953 $ 317,391 $ - $ 317,391
Financing revenue - 9,592 9,592 - 8,190 8,190
Fee and other income 1,678 346 2,024 915 161 1,076
Net sales 332,631 9,938 342,569 318,306 8,351 326,657

Cost of sales, product and services 264,487 - 264,487 251,729 - 251,729
Direct lease costs - 1,394 1,394 - 1,142 1,142
Cost of sales 264,487 1,394 265,881 251,729 1,142 252,871

Selling, general, and administrative expenses 53,836 3,298 57,134 47,780 2,380 50,160
Depreciation and amortization 2,893 1 2,894 1,908 2 1,910
Interest and financing costs - 270 270 - 409 409
Operating expenses 56,729 3,569 60,298 49,688 2,791 52,479

Operating income $ 11,415 $ 4,975 $ 16,390 $ 16,889 $ 4,418 $ 21,307

Selected Financial Data - Statement of Cash Flow

Depreciation and amortization $ 3,157 $ 1,422 $ 4,579 $ 1,941 $ 985 $ 2,926
Purchases of property, equipment and operating lease equipment $ 2,018 $ 844 $ 2,862 $ 849 $ 3,282 $ 4,131

Selected Financial Data - Balance Sheet

Total assets $ 595,584 $ 169,069 $ 764,653 $ 546,728 $ 189,950 $ 736,678

Nine Months Ended
December 31, 2017 December 31, 2016
Technology Financing Total Technology Financing Total

Sales of product and services $ 1,045,792 $ - $ 1,045,792 $ 968,799 $ - $ 968,799
Financing revenue - 30,698 30,698 - 23,899 23,899
Fee and other income 3,707 374 4,081 3,679 245 3,924
Net sales 1,049,499 31,072 1,080,571 972,478 24,144 996,622

Cost of sales, product and services 834,873 - 834,873 769,780 - 769,780
Direct lease costs - 3,846 3,846 - 3,459 3,459
Cost of sales 834,873 3,846 838,719 769,780 3,459 773,239

Selling, general, and administrative expenses 158,838 9,300 168,138 141,295 8,526 149,821
Depreciation and amortization 7,084 2 7,086 5,400 8 5,408
Interest and financing costs - 903 903 - 1,158 1,158
Operating expenses 165,922 10,205 176,127 146,695 9,692 156,387

Operating income $ 48,704 $ 17,021 $ 65,725 $ 56,003 $ 10,993 $ 66,996

Selected Financial Data - Statement of Cash Flow

Depreciation and amortization $ 7,413 $ 3,911 $ 11,324 $ 5,494 $ 3,264 $ 8,758
Purchases of property, equipment and operating lease equipment $ 4,064 $ 2,234 $ 6,298 $ 2,413 $ 4,887 $ 7,300

Selected Financial Data - Balance Sheet

Total assets $ 595,584 $ 169,069 $ 764,653 $ 546,728 $ 189,950 $ 736,678

NETWORK SOLUTIONS GROUP (NSG)

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~~15.~~

~~BUSINESS COMBINATIONS~~

~~Integrated Data Storage, LLC acquisition~~

On ~~September 15, 2017,~~April 30, 2023, our subsidiary, ePlus Technology, inc., acquired certain assets and ~~assumed certain~~ liabilities of ~~Integrated Data Storage, LLC (“IDS”) though an asset purchase agreement. Headquartered in Oak Brook, IL~~NSG, formerly a business unit of CCI Systems, Inc., a Michigan-based provider of networking services and ~~with offices in downtown Chicago and Indianapolis, IDS~~solutions. This acquisition is an advanced data center solutions provider focused on cloud enablement and managed services, including its proprietary IDS Cloud, which features enterprise-class technology infrastructure coupled with consulting serviceshelping to ~~support private, hybrid, and public cloud deployments. The acquisition expands~~ e~~Plus’ footprint~~drive additional growth for us in the ~~Midwest and enhances its~~service provider end-markets with enhanced engineering, sales, and ~~engineering~~services delivery capabilities ~~in cloud services, disaster recovery and backup as a service, storage, data center, and professional services.~~specific to the industry.

Our ~~preliminary~~ sum ~~of total~~for consideration transferred is ~~$38.4~~ $48.6 million consisting of ~~$29.8~~$59.6 million paid in cash at closing ~~less $1.4~~ minus $11.0 million ~~in receivables due~~that was paid back to us ~~as a working capital adjustment, plus an additional $10.0 million equal to~~during the ~~preliminary fair value of consideration, contingent on~~quarter ended September 30, 2023, by the ~~acquiree’s business operations future gross profit. The contingent consideration was calculated using the Monte Carlo simulation model~~sellers based on ~~our projections of future gross profits. The maximum payout~~adjustments to a determination of the ~~contingent consideration is $15.0 million paid over 3 years.~~ total net assets delivered. Our ~~preliminary~~ allocation of the purchase consideration to the assets acquired and liabilities assumed is presented below (in thousands):

Acquisition
Date Amount

Accounts receivable and other assets $ 14,353
Property and equipment 1,620
Identified intangible assets 13,650
Accounts payable and other current liabilities (12,313 )
Total identifiable net assets 17,310
Goodwill 21,088
Total purchase consideration $ 38,398

	Acquisition Date Amount
Accounts receivable	$	20,419
Other assets		1,940
Identified intangible assets		29,960
Accounts payable and other liabilities		(24,758	)
Contract liabilities		(1,086	)
Total identifiable net assets		26,475
Goodwill		22,128
Total purchase consideration	$	48,603

Our sum for consideration transferred and our allocation of the purchase consideration is preliminary and subject to revision as additional information related to the fair value of assets and liabilities becomes available.

The identified intangible assets of ~~$13.7~~$30.0 million ~~consist~~consists of customer relationships with an estimated useful life of 8seven years. The fair value of acquired receivables equals the gross contractual amounts receivable. We expect to collect all acquired receivables.

We recognized goodwill related to this transaction of ~~$21.1~~$22.1 million, of which ~~was~~$19.7 million and $2.4 million were assigned to our ~~technology~~product and professional services reporting ~~unit.~~segment, respectively. The goodwill recognized in the acquisition is attributable to the acquired assembled workforce and expected synergies, none of which qualify for recognition as a separate intangible asset. The total amount of goodwill is expected to be deductible for tax purposes.

The amount of revenues and earnings of the acquiree since the acquisition date are not material. Likewise, the impact to the revenue and earnings of the combined entity for the current reporting period ~~through~~as though the acquisition date had ~~the acquisition date~~ been April 1, ~~2017,~~2023, is not material.

~~OneCloud Consulting Inc. acquisition~~

FUTURE COM, LTD. (“FUTURE COM”)

On ~~May 17, 2017,~~July 15, 2022, our subsidiary, e~~Plus~~ePlus Technology, inc., acquired ~~100%~~certain assets and liabilities of Future Com, a Texas-based provider of cybersecurity solutions, cloud security and security consulting services throughout the US. Our acquisition provides access to enhanced engineering, sales, and services delivery capabilities in the South-Central region of the ~~stock~~United States, as well as bolstering the skills and expertise surrounding ePlus’ growing cybersecurity practice.

Table of OneCloud Consulting, Inc. (“OneCloud”). Based in Milpitas, CA, OneCloud is a versatile team of highly trained technology consultants, architects, developers and instructors. OneCloud enables its customers’ cloud and application strategy via professional services, technical education and software development. The acquisition provides us with additional ability to address customers’ needs in cloud-based solutions and infrastructure, including DevOps, OpenStack, and other emerging technologies, to our broad customer base.Contents

Our sum ~~of total~~for consideration we transferred ~~was $10.0~~is $13.3 million consisting of ~~$7.9~~$13.0 million paid in cash at closing ~~net of cash acquired, and $2.1~~plus an additional $0.3 million ~~equal~~that was subsequently paid to the ~~fair value of contingent consideration, calculated using the Monte Carlo simulation model. The maximum payout~~sellers based on adjustments to our determination of the ~~contingent consideration is $4.5 million paid over 3 years.~~

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total net assets delivered. Our allocation of the purchase consideration to the assets acquired and liabilities assumed is presented below (in thousands):

	Acquisition Date Amount			Acquisition Date Amount

Accounts receivable and other assets	$	488
Accounts receivable				$	4,033
Other assets					129
Identified intangible assets		4,130			8,360
Accounts payable and other current liabilities		(1,822	)		(8,714	)
Contract liabilities					(214	)
Total identifiable net assets		2,796			3,594
Goodwill		7,189			9,694
Total purchase consideration	$	9,985		$	13,288

The identified intangible assets of ~~$4.1~~$8.4 million ~~consist~~consists of customer relationships ~~of $1.7 million~~ with an estimated useful life of ~~8 years, and internally developed processes~~seven years. The fair value of ~~$2.4 million with an estimated useful life of 5 years.~~acquired receivables equals the gross contractual amounts receivable. We expect to collect all acquired receivables.

We recognized goodwill related to this transaction of ~~$7.2~~$9.7 million, which was originally assigned to our technology ~~reporting unit.~~segment. As a result of changes in our segments, we subsequently reassigned the goodwill to our product, professional services, and managed services segments. The goodwill recognized in the acquisition is attributable to the acquired assembled workforce and expected synergies, none of which qualify for recognition as a separate intangible asset. The total amount of goodwill is expected to be deductible for tax purposes.

~~Consolidated~~

16.	SEGMENT REPORTING

We manage and report our operating results through four operating segments: product, professional services, managed services, and financing. Our product segment includes sales of IT ~~Services acquisition~~

~~On December 6, 2016,~~products, third-party software, and third-party maintenance, software assurance, and other third-party services. Our professional services segment includes our ~~subsidiary~~ ePlus Technology, inc., acquired certain assets and assumed certain liabilities of Consolidated IT Services. Consolidated IT Services’ business provides data center, unified communications, networking,advanced professional services, staff augmentation, project management services, cloud consulting services and security ~~solutions to a diverse set of domestic~~services. Our managed services segment includes our advanced managed services, service desk, storage-as-a-service, cloud hosted services, cloud managed services and ~~international customers including commercial, enterprise, and state, local, and education (SLED) organizations in the upper Midwest. Acquiring Consolidated IT Services expanded our reach~~managed security services. We refer to the ~~upper Midwest, a new geography~~product segment, professional services segment, and managed services segment collectively as our technology business. Our financing business segment consists of the financing of IT equipment, software, and related services to commercial enterprises, state and local governments, and government contractors.

We measure the performance of the segments within our technology business based on gross profit, while we measure our financing business segment based on operating income. We do not present asset information for e~~Plus, and enables us~~our reportable segments as we do not provide asset information to ~~market~~ our ~~advanced technology solutions to their long-standing customer base.~~chief operating decision maker.

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The total purchase price is $13.1 million including $9.5 million paid in cash at closing and $4.0 million that will be paid in cash in equal quarterly installments over 2 years, less $0.4 million paid back to us as part of the final working capital adjustment. Our allocation of the purchase consideration to the assets acquired and liabilities is presented belowfollowing table provides reportable segment information (in thousands):

Acquisition
Date Amount

Accounts receivable and other current assets $ 7,491
Property and equipment 1,045
Identified intangible assets 4,090
Accounts payable and other current liabilities (5,786 )
Total identifiable net assets 6,840
Goodwill 6,227
Total purchase consideration $ 13,067

~~In the nine months ended December 31, 2017,~~ ~~we increased identified intangible assets and decreased goodwill by $280 thousand from the provisional amounts recorded as of March 31, 2017.~~

	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2023		2022		2023		2022

Net sales
Product	$	419,478	$	544,316	$	1,418,581	$	1,336,309
Professional services		40,044		39,151		113,870		114,369
Managed services		34,640		28,307		99,335		81,359
Financing		14,893		11,702		39,055		43,504
Total		509,055		623,476		1,670,841		1,575,541

Gross profit
Product		91,919		104,485		308,059		282,042
Professional services		17,332		15,294		47,852		45,046
Managed services		11,015		8,075		31,006		22,692
Financing		13,544		10,518		33,531		35,419
Total		133,810		138,372		420,448		385,199

Operating expenses
Technology business		91,599		86,764		278,869		247,568
Financing		4,164		5,150		12,337		13,883
Total		95,763		91,914		291,206		261,451

Operating income
Technology business		28,667		41,090		108,048		102,212
Financing		9,380		5,368		21,194		21,536
Total		38,047		46,458		129,242		123,748

Other income (expense), net		366		2,907		673		(3,112	)

Earnings before tax	$	38,413	$	49,365	$	129,915	$	120,636

Depreciation and amortization
Technology business	$	5,381	$	3,582	$	15,747	$	10,304
Financing		18		27		74		83
Total	$	5,399	$	3,609	$	15,821	$	10,387

Interest and financing costs
Technology business	$	217	$	1,308	$	1,428	$	2,117
Financing		766		267		1,626		746
Total	$	983	$	1,575	$	3,054	$	2,863

Selected Financial Data - Statement of Cash Flow

Purchases of property, equipment, and operating lease equipment
Technology business	$	2,028	$	2,225	$	6,717	$	4,122
Financing		68		1,026		987		1,539
Total	$	2,096	$	3,251	$	7,704	$	5,661

~~The identified intangible assets of $4.1 million consist entirely of customer relationships with an estimated useful life of 7 years.~~

We recognized goodwill related to this transaction of $6.2 million, which was assigned to our technology reporting unit. The goodwill recognized in the acquisition is attributable to the acquired assembled workforce and expected synergies, none of which qualify for recognition as a separate intangible asset. The total amount of goodwill is expected to be deductible for tax purposes. The amount of revenues and earnings of the acquiree since the acquisition date are not material. Likewise, the impact to the revenue and earnings of the combined entity for the prior reporting period through the acquisition date had the acquisition date been April 1, 2016 is not material.

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The following tables provide a disaggregation of net sales by source and further disaggregate our revenue recognized from contracts with customers by timing and our position as principal or agent (in thousands):

	Three months ended December 31, 2023
	Product		Professional Services		Managed Services		Financing		Total

Net Sales
Contracts with customers	$	412,060	$	40,044	$	34,640	$	774	$	487,518
Financing and other		7,418		-		-		14,119		21,537
Total	$	419,478	$	40,044	$	34,640	$	14,893	$	509,055

Timing and position as principal or agent
Transferred at a point in time as principal	$	367,350	$	-	$	-	$	774	$	368,124
Transferred at a point in time as agent		44,710		-		-		-		44,710
Transferred over time as principal		-		40,044		34,640		-		74,684
Total revenue from contracts with customers	$	412,060	$	40,044	$	34,640	$	774	$	487,518

	Nine months ended December 31, 2023
	Product		Professional Services		Managed Services		Financing		Total

Net Sales
Contracts with customers	$	1,398,668	$	113,870	$	99,335	$	4,899	$	1,616,772
Financing and other		19,913		-		-		34,156		54,069
Total	$	1,418,581	$	113,870	$	99,335	$	39,055	$	1,670,841

Timing and position as principal or agent
Transferred at a point in time as principal	$	1,262,010	$	-	$	-	$	4,899	$	1,266,909
Transferred at a point in time as agent		136,658		-		-		-		136,658
Transferred over time as principal		-		113,870		99,335		-		213,205
Total revenue from contracts with customers	$	1,398,668	$	113,870	$	99,335	$	4,899	$	1,616,772

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	Three months ended December 31, 2022
	Product		Professional Services		Managed Services		Financing		Total

Net Sales
Contracts with customers	$	538,400	$	39,151	$	28,307	$	560	$	606,418
Financing and other		5,916		-		-		11,142		17,058
Total	$	544,316	$	39,151	$	28,307	$	11,702	$	623,476

Timing and position as principal or agent
Transferred at a point in time as principal	$	495,294	$	-	$	-	$	560	$	495,854
Transferred at a point in time as agent		43,106		-		-		-		43,106
Transferred over time as principal		-		39,151		28,307		-		67,458
Total revenue from contracts with customers	$	538,400	$	39,151	$	28,307	$	560	$	606,418

	Nine months ended December 31, 2022
	Product		Professional Services		Managed Services		Financing		Total

Net Sales
Contracts with customers	$	1,320,904	$	114,369	$	81,359	$	8,428	$	1,525,060
Financing and other		15,405		-		-		35,076		50,481
Total	$	1,336,309	$	114,369	$	81,359	$	43,504	$	1,575,541

Timing and position as principal or agent
Transferred at a point in time as principal	$	1,199,508	$	-	$	-	$	8,428	$	1,207,936
Transferred at a point in time as agent		121,396		-		-		-		121,396
Transferred over time as principal		-		114,369		81,359		-		195,728
Total revenue from contracts with customers	$	1,320,904	$	114,369	$	81,359	$	8,428	$	1,525,060

TECHNOLOGY BUSINESS DISAGGREGATION OF REVENUE

The following table provides a disaggregation of our revenue from contracts with customers for our technology business by customer end market and by type (in thousands):

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	Three Months Ended December 31,						Nine Months Ended December 31,
	2023			2022			2023			2022
Customer end market:
Telecom, Media & Entertainment	$	139,551		$	184,539		$	405,192		$	431,269
Technology		83,951			133,067			268,302			299,088
State and local government and educational institutions		60,108			72,730			264,419			207,823
Healthcare		55,504			69,825			214,182			205,297
Financial Services		38,816			48,008			174,391			118,917
All others		116,232			103,605			305,300			269,643
Net sales		494,162			611,774			1,631,786			1,532,037
Less: Revenue from financing and other		(7,418	)		(5,916	)		(19,913	)		(15,405	)
Revenue from contracts with customers	$	486,744		$	605,858		$	1,611,873		$	1,516,632

Type:
Product
Networking	$	209,936		$	275,774		$	723,760		$	584,311
Cloud		120,253			157,126			427,365			470,851
Security		58,822			77,111			156,504			173,623
Collaboration		13,608			13,405			53,647			45,572
Other		16,859			20,900			57,305			61,952
Total product		419,478			544,316			1,418,581			1,336,309

Professional services		40,044			39,151			113,870			114,369
Managed services		34,640			28,307			99,335			81,359
Net sales		494,162			611,774			1,631,786			1,532,037
Less: Revenue from financing and other		(7,418	)		(5,916	)		(19,913	)		(15,405	)
Revenue from contracts with customers	$	486,744		$	605,858		$	1,611,873		$	1,516,632

We do not disaggregate sales by customer end market beyond the technology business.

FINANCING BUSINESS SEGMENT DISAGGREGATION OF REVENUE

We analyze our revenues within our financing business segment based on the nature of the arrangement. Our financing revenue generally consists of portfolio income, transactional gains, and post-contract earnings including month-to-month rents and the sales of off-lease equipment. All our revenues from contracts with customers within our financing business segment is from the sales of off-lease equipment.

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Item 2.

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion is intended to further the reader’s understanding of our consolidated financial condition and results of operations. It should be read in conjunction with the unaudited consolidated financial statements included in this ~~quarterly report~~Quarterly Report on Form 10-Q and the audited consolidated financial statements included in our annual report on Form 10-K for the ~~fiscal~~ year ended March 31, ~~2017~~2023 (“~~2017~~2023 Annual Report”)., and our Form 8-K that we filed with the SEC on October 6, 2023, which recasts the disclosures in certain portions of our 2023 Annual Report to reflect changes in our reportable segments. These historical financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described in Part I, Item 1A, “Risk Factors,” in our ~~2017~~2023 Annual ~~Report.~~Report, as updated by our Form 8-K that we filed with the SEC on October 6, 2023, as well as in our other filings with the SEC.

EXECUTIVE OVERVIEW

~~Business Description~~BUSINESS DESCRIPTION

We are a leading solutions provider ~~that delivers~~in the areas of security, cloud, networking, collaboration, artificial intelligence, and emerging technologies to domestic and foreign organizations across all industry segments. We deliver actionable outcomes for organizations by ~~utilizing~~using information technology ~~(IT)~~(“IT”) and consulting solutions to drive business agility and innovation. Leveraging ~~world-class~~our engineering talent, we assess, plan, deliver, and secure solutions comprised of leading technologies and consumption models aligned with our customers’ needs. Our expertise and experience ~~enables~~ e~~Plus~~enable us to craft optimized solutions that take advantage of the cost, scale, and efficiency of private, public and hybrid cloud in an evolving market. ~~We also~~As part of our solutions, we provide consulting, professional services, managed services, IT staff augmentation, and complete lifecycle management services ~~including~~in the areas of security, cloud, networking, collaboration, and emerging technologies. Additionally, we offer flexible financing ~~solutions.~~for purchases from us and from third parties. We have been in the business of selling, leasing, financing, and managing ~~information technology~~IT and other assets for more than 2730 years.

Our primary focus is to deliver integrated ~~technology~~ solutions that address our customers’ ~~Cloud, Security and Digital Infrastructure~~business needs, ~~for~~leveraging the appropriate technologies, both ~~on-premise~~on-premises and in the cloud. Our ~~Hybrid IT framework~~approach is ~~a lifecycle approach that includes~~to lead with advisory consulting ~~assessment, architecture, testing, implementation, managed services, maintenance~~to understand our customers’ needs, and ~~periodic consultative reviews. In addition~~then design, deploy, and manage solutions aligned to their objectives. Underpinning the broader areas of cloud, ~~our portfolio of expertise includes software defined,~~ security, ~~IoT,~~networking, and collaboration are specific skills in orchestration and automation, application modernization, DevSecOps, zero-trust architectures, data ~~and~~management, data visualization, analytics, ~~mobility, hyper-converged infrastructure,~~network modernization, edge compute and other advanced and emerging technologies. ~~We design, implement and manage an array~~These solutions are comprised of ~~IT solutions~~class-leading technologies from ~~multiple leading IT vendors. We are an authorized reseller from over 1,000 vendors, but primarily from approximately 100 vendors, including Artista~~partners such as Amazon Web Services, Arista Networks, Check Point, Cisco Systems, Citrix, Commvault, Crowdstrike, Deepwatch, Dell EMC, F5 Networks, Foresite, Fortinet, Gigamon, ~~HP Inc.,~~ HPE, Juniper Networks, Lenovo, Microsoft, NetApp, ~~Nimble Storage,~~Nutanix, NVIDIA, Oracle, Palo Alto Networks, Proficio, Pure Storage, ~~Quantum,~~Rubrik, Splunk, Varonis, and VMware, among many others.We are an authorized reseller of over 1,500 vendors, which enable us to provide our customers with new and evolving IT solutions. We possess top-level engineering certifications with a broad range of leading IT vendors that enable us to offer multi-vendor IT solutions that are optimized for each of our customers’ specific requirements. Our hosted, proprietary software solutions are focused on giving our customers more control over their IT supply chain, by automating and optimizing the procurement and management of their owned, leased, and consumption-based assets.

Our scale and financial resources have enabled us to continue investing in engineering and technology resources ~~and~~to stay ~~current with emerging~~at the forefront of technology trends. ~~By delivering leading edge Hybrid IT solutions,~~ e~~Plus~~Our expertise in core and emerging technologies, buttressed by our robust portfolio of consulting, professional, and managed services, has ~~become~~enabled us to remain a trusted advisor tofor our customers. ~~Our integrated technology solutions incorporate hardware, software, security and both managed and professional services.~~ In addition, we offer a wide range of consumption options including leasing and financing for technology and other capital assets. We believe our lifecycle approach offering of integrated solutions, services and financing, asset management and our proprietary supply chain software, is unique in the industry. This broad portfolio enables us to deliver a ~~unique~~customized customer experience that spans the continuum from fast delivery of competitively priced products and services to subsequent management and ~~upkeep,~~maintenance, and through to end-of-life disposal services. This approach ~~also~~ permits us to ~~accommodate~~deploy sophisticated solutions to enable our customers’ business ~~requirements and deliver ever-more-sophisticated hybrid IT solutions, thus solidifying our relationships and value.~~outcomes.

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Our go-to-market strategy focuses primarily on diverse end-markets for middle market to large enterprises. ~~For the twelve months ended December 31, 2017, the percentage of revenue by customer end market within our~~We serve customers in markets including telecom, media and entertainment, technology, ~~segment includes technology industry 25%,~~ state and local government and educational institutions ~~17%~~(“SLED”), ~~telecommunications, media~~healthcare, and ~~entertainment 14%~~financial services. We sell to customers in the United States (“US”), ~~financial services 16%, and healthcare 13%. The majority~~which account for most of our sales, ~~were generated within the United States; however, we have the ability~~and to ~~support our~~ customers ~~nationally and internationally~~in select international markets including ~~a presence in~~ the United Kingdom (“~~U.K.”~~UK”), the European Union (“EU”), India, Singapore, and ~~Singapore.~~Israel. Our technology ~~segment~~business segments accounted for ~~97%~~98% of our net sales and ~~70%~~84% of our operating income, while our financing segment accounted for 3%2% of our net sales and ~~30%~~16% of our operating income, for the nine months ended December 31, ~~2017.~~2023.

BUSINESS TRENDS

We believe the following key factors are impacting our business performance and our ability to achieve business results:

~~Table of Contents~~General economic concerns including inflation, rising interest rates, staffing shortages, remote work trends, and geopolitical concerns may impact our customers’ willingness to spend on technology and services.

~~Key Business Metrics~~

Like others in the industry, we are experiencing ongoing supply constraints that have affected, and could continue to further affect, lead times for delivery of certain products, our having to carry more inventory for longer periods, the cost of products, vendor return and cancellation policies, and our ability to meet customer demands. We continue to work closely with our suppliers to further mitigate disruptions outside our control. Despite these actions, we believe extended lead times will likely continue to persist for at least the next few quarters.

We are experiencing increases in prices from our suppliers. We generally have been able to pass price increases to our customers. Accordingly, inflation could have a material impact on our sales, gross profit, or operating costs in the future. Our financing quotes are generally indexed to market changes to enable us to change rates from time of quote to funding. Financing transactions funded with our cash flows, not debt, are subject to interest rate risk. If the market interest rate exceeds our internal rate of return, we may not fund the transaction to obtain the proceeds and lock in our profit on the transaction. Also, we are experiencing constriction of funds available and more stringent assessment for our financing arrangements from our lender partners.

Customers’ top focus areas include artificial intelligence, security, cloud solutions, hybrid work environments (work from home, work from anywhere, and return to office), as well as digital transformation and modernization. We have developed advisory services, solutions, and professional and managed services to meet these priorities and help our customers attain and maintain their desired outcome.

Modernizing legacy applications, data modernization, reducing operational complexity, securing workloads, the cost and performance of IT operations, and agility are changing the way companies are purchasing and consuming technology. These are fueling deployments of solutions on cloud, managed services and hybrid platforms and licensing models, which may include invoicing over the term of the agreement.

Rapid cloud adoption has led to customer challenges around increasing costs, security concerns, and skillset gaps. These challenges are consistent across all industries and sizes. We have developed a Cloud Managed Services portfolio to address these needs, allowing our clients to focus on driving business outcomes via optimized and secure cloud platforms.

KEY BUSINESS METRICS

Our management monitors ~~a number of~~several financial and non-financial measures and ratios on a regular basis ~~in order~~ to track the progress of our business. We believe that the most important of these measures and ratios include net sales, gross margin, ~~gross margin on product and services,~~ operating income margin, net earnings, and net earnings per common share, in each case based on information prepared in accordance with US GAAP, as well as the non-GAAP financial measures and ratios, including Adjusted EBITDA, Adjusted EBITDA margin, ~~Adjusted gross billings of product~~Non-GAAP: Net earnings and ~~services, and non-GAAP net~~Non-GAAP: Net earnings per common share.

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We also use a variety of operating and other information to evaluate the operating performance of our business, develop financial forecasts, make strategic decisions, and prepare and approve annual budgets. We use gross billings as an operational metric to assess the volume of transactions or market share for our technology business segments—product, professional services, and managed services—as well as to understand changes in our accounts receivable and accounts payable. We believe gross billings will aid investors in the same manner.

These key indicators include financial information that is prepared in accordance with ~~U.S.~~US GAAP and presented in our ~~unaudited condensed~~ consolidated financial statements, as well as non-GAAP and operational performance measurement tools. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial position that either excludes or includes amounts that are correspondingly not normally excluded or included in the most directly comparable measure calculated and presented in accordance with ~~U.S~~US GAAP. ~~Non-GAAP~~Our use of non-GAAP information as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results reported under GAAP, as these measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

~~Our~~Set forth in footnotes (1) and (2) of the tables that immediately follow the next paragraph, we set forth our reasons for using and presenting Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share-diluted in the tables and discussion that follow.

The following tables provide our key business metrics for our consolidated entity, our technology business- consisting of our product, professional services, and ~~results from those metrics are as follows, (dollars in thousands)~~managed services segments- and our financing business segment (in thousands, except per share amounts):

Three Months Ended
December 31,

Nine Months Ended
December 31,

2017 2016 2017 2016

Sales of products and services $ 330,953 $ 317,391 $ 1,045,792 $ 968,799

Adjusted gross billings of product and services (1) $ 464,105 $ 432,407 $ 1,449,371 $ 1,317,188

Gross margin 22.4 % 22.6 % 22.4 % 22.4 %
Gross margin, product and services 20.1 % 20.7 % 20.2 % 20.5 %
Operating income margin 4.8 % 6.5 % 6.1 % 6.7 %

Net earnings $ 15,581 $ 12,620 $ 46,225 $ 40,066
Net earnings margin 4.5 % 3.9 % 4.3 % 4.0 %
Net earnings per common share - diluted $ 1.11 $ 0.91 $ 3.30 $ 2.86

Non-GAAP: Net earnings (2) $ 13,574 $ 15,621 $ 44,013 $ 43,710
Non-GAAP: Net earnings per common share - diluted (2) $ 0.97 $ 1.12 $ 3.14 $ 3.12

Adjusted EBITDA (3) $ 19,284 $ 23,217 $ 72,811 $ 72,404
Adjusted EBITDA margin (3) 5.6 % 7.1 % 6.7 % 7.3 %

Purchases of property and equipment used internally $ 2,018 $ 849 $ 4,064 $ 2,413
Purchases of equipment under operating leases 844 3,282 2,234 4,887
Total capital expenditures $ 2,862 $ 4,131 $ 3,436 $ 7,300

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	Three Months Ended December 31,						Nine Months Ended December 31,
Consolidated	2023			2022			2023			2022

Financial metrics
Net sales	$	509,055		$	623,476		$	1,670,841		$	1,575,541

Gross profit	$	133,810		$	138,372		$	420,448		$	385,199
Gross margin		26.3	%		22.2	%		25.2	%		24.4	%
Operating income margin		7.5	%		7.5	%		7.7	%		7.9	%

Net earnings	$	27,282		$	35,694		$	93,793		$	86,502
Net earnings margin		5.4	%		5.7	%		5.6	%		5.5	%
Net earnings per common share - diluted	$	1.02		$	1.34		$	3.52		$	3.24

Non-GAAP financial metrics
Non-GAAP: Net earnings (1)	$	31,546		$	36,714		$	106,399		$	97,623
Non-GAAP: Net earnings per common share - diluted (1)	$	1.18		$	1.38		$	3.99		$	3.66

Adjusted EBITDA (2)	$	46,189		$	53,325		$	153,636		$	141,933
Adjusted EBITDA margin		9.1	%		8.6	%		9.2	%		9.0	%

Technology business segments

Financial Metrics
Net sales
Product	$	419,478		$	544,316		$	1,418,581		$	1,336,309
Professional services		40,044			39,151			113,870			114,369
Managed services		34,640			28,307			99,335			81,359
Total	$	494,162		$	611,774		$	1,631,786		$	1,532,037

Gross profit
Product	$	91,919		$	104,485		$	308,059		$	282,042
Professional services		17,332			15,294			47,852			45,046
Managed services		11,015			8,075			31,006			22,692
Total	$	120,266		$	127,854		$	386,917		$	349,780

Gross margin
Product		21.9	%		19.2	%		21.7	%		21.1	%
Professional services		43.3	%		39.1	%		42.0	%		39.4	%
Managed services		31.8	%		28.5	%		31.2	%		27.9	%
Total		24.3	%		20.9	%		23.7	%		22.8	%

Operating income	$	28,667		$	41,090		$	108,048		$	102,212

Non-GAAP financial metric
Adjusted EBITDA (2)	$	36,725		$	47,869		$	132,170		$	120,135

Operational metric
Gross billings (3)
Networking	$	251,322		$	314,709		$	839,638		$	676,761
Security		189,476			193,866			480,159			509,241
Cloud		181,559			234,464			641,120			708,080
Collaboration		23,180			27,925			97,111			100,799
Other		55,473			60,803			203,805			205,603
Product gross billings		701,010			831,767			2,261,833			2,200,484
Service gross billings		95,976			67,076			233,618			212,319
Total gross billings	$	796,986		$	898,843		$	2,495,451		$	2,412,803

Financing business segment

Financial metrics
Net sales	$	14,893		$	11,702		$	39,055		$	43,504

Gross profit	$	13,544		$	10,518		$	33,531		$	35,419

Operating income	$	9,380		$	5,368		$	21,194		$	21,536

Non-GAAP financial metric
Adjusted EBITDA (2)	$	9,464		$	5,456		$	21,466		$	21,798

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(1)

~~We define Adjusted gross billings of product~~

Non-GAAP: Net earnings and ~~services as our sales of product and services~~Non-GAAP: Net earnings per common share – diluted are based on net earnings calculated in accordance with ~~U.S.~~US GAAP, adjusted to exclude other (income) expense, share-based compensation, and acquisition and integration expenses, and the ~~costs incurred~~ related to sales of third party software assurance, subscription licenses, maintenance and services. We have provided below a reconciliation of Adjusted gross billings of product and services to Sales of product and services, which is the most directly comparable financial measure to this non-GAAP financial measure.tax effects.

We use ~~Adjusted gross billings of product~~Non-GAAP: Net earnings and ~~services~~Non-GAAP: Net earnings per common share – diluted as a supplemental ~~measure~~measures of our performance to gain insight into our operating performance and performance trends. We believe that the ~~volume~~exclusion of other income and acquisition-related amortization expense in calculating Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted provides management and investors a useful measure for period-to-period comparisons of our business ~~generated~~and operating results by excluding items that management believes are not reflective of our ~~technology segment,~~underlying operating performance. Accordingly, we believe that Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted provide useful information to ~~analyze the changes to~~investors and others in understanding and evaluating our ~~accounts receivable and accounts payable. Our~~operating results. However, our use of ~~Adjusted gross billings of product and services~~non-GAAP information as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under ~~U.S.~~US GAAP. In addition, other companies, including companies in our industry, might calculate ~~Adjusted gross billings of product~~similar Non-GAAP: Net earnings and ~~services~~Non-GAAP: Net earnings per common share – diluted or similarly titled measures differently, which may reduce their usefulness as comparative measures.

The following table provides our calculation of Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted (in thousands, except per share amounts):

	Three Months Ended December 31,						Nine Months Ended December 31,
	2023			2022			2023			2022
GAAP: Earnings before tax	$	38,413		$	49,365		$	129,915		$	120,636
Share-based compensation		2,526			1,950			7,145			5,681
Acquisition related amortization expense		3,856			2,505			11,348			7,182
Other (income) expense		(366	)		(2,907	)		(673	)		3,112
Non-GAAP: Earnings before provision for income taxes		44,429			50,913			147,735			136,611

GAAP: Provision for income taxes		11,131			13,671			36,122			34,134
Share-based compensation		733			544			2,005			1,624
Acquisition related amortization expense		1,115			693			3,173			2,030
Other (income) expense		(106	)		(811	)		(190	)		933
Tax benefit (expense) on restricted stock		10			102			226			267
Non-GAAP: Provision for income taxes		12,883			14,199			41,336			38,988

Non-GAAP: Net earnings	$	31,546		$	36,714		$	106,399		$	97,623

	Three Months Ended December 31,						Nine Months Ended December 31,
	2023			2022			2023			2022
GAAP: Net earnings per common share - diluted	$	1.02		$	1.34		$	3.52		$	3.24

Share-based compensation		0.07			0.05			0.19			0.15
Acquisition related amortization expense		0.10			0.07			0.30			0.20
Other (income) expense		(0.01	)		(0.08	)		(0.01	)		0.08
Tax benefit (expense) on restricted stock		-			-			(0.01	)		(0.01	)
Total non-GAAP adjustments - net of tax		0.16			0.04			0.47			0.42

Non-GAAP: Net earnings per common share - diluted	$	1.18		$	1.38		$	3.99		$	3.66

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Three Months Ended
December 31,

Nine Months Ended
December 31,

2017 2016 2017 2016
Sales of products and services $ 330,953 $ 317,391 $ 1,045,792 $ 968,799
Costs incurred related to sales of third party software assurance, maintenance and services 133,152 115,016 403,579 348,389

Adjusted gross billings of product and services $ 464,105 $ 432,407 $ 1,449,371 $ 1,317,188

(2)

Non-GAAP net earnings per common share are based on net earnings calculated in accordance with U.S. GAAP, adjusted to exclude other income and acquisition related amortization expense, and related effects on income tax, the tax (benefit) expense recognized due to the vesting of shared based compensation, the tax benefit associated with the re-measurement of deferred tax assets and liabilities at the new tax rates, as well as an adjustment to our tax expense in the prior year assuming a 31.5% effective annual income tax rate for U.S. operations due to changes in U.S. tax rates. We use Non-GAAP net earnings per common share as a supplemental measure of our performance to gain insight into our operating performance. We believe that the exclusion of these items in calculating Non-GAAP net earnings per common share provides management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that non-GAAP net earnings per common share provide useful information to investors and others in understanding and evaluating our operating results. However, our use of Non-GAAP net earnings per common share as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under U.S. GAAP. In addition, other companies, including companies in our industry, might calculate Non-GAAP net earnings per common share or similarly titled measures differently, which may reduce their usefulness as comparative measures.

Three Months Ended
December 31,

Nine Months Ended
December 31,

2017 2016 2017 2016
GAAP: Earnings before tax $ 16,259 $ 21,307 $ 65,724 $ 67,376
Acquisition related amortization expense 1,871 1,035 4,178 3,098
Other (income) expense 131 - 1 (380 )
Non-GAAP: Earnings before provision for income taxes 18,261 22,342 69,903 70,094

GAAP: Provision for income taxes 678 8,687 19,499 27,310
Acquisition related amortization expense 547 267 1,421 956
Other (income) expense 55 13 - (144 )
Remeasurement of deferred taxes 3,407 - 3,407 -
Adjustment to FY17 US Federal tax rate to 31.5% - (2,252 ) - (2,252 )
Tax benefit on restricted stock - 6 1,563 514
Non-GAAP: Provision for income taxes 4,687 6,721 25,890 26,384

Non-GAAP: Net earnings $ 13,574 $ 15,621 $ 44,013 $ 43,710

GAAP: Net earnings per common share - diluted $ 1.11 $ 0.91 $ 3.30 $ 2.86
Non-GAAP: Net earnings per common share - diluted $ 0.97 $ 1.12 $ 3.14 $ 3.12

~~(3)~~

We define Adjusted EBITDA as net earnings calculated in accordance with ~~U.S~~US GAAP, adjusted for the following: interest expense, depreciation and amortization, share-based compensation, acquisition and integration expenses, provision for income taxes, and other ~~income.~~income (expense). Adjusted EBITDA presented for the technology business and the financing business segment is defined as operating income calculated in accordance with US GAAP, adjusted for interest expense, share-based compensation, acquisition and integration expenses, and depreciation and amortization. We consider the interest on notes payable from our financing business segment and depreciation expense presented within cost of sales, which includes depreciation on assets financed as operating leases, to be operating expenses. As such, they are not included in the amounts added back to net earnings in the Adjusted EBITDA calculation. WeIn the table below, we provide ~~below~~ a reconciliation of Adjusted EBITDA to net earnings, which is the most directly comparable financial measure to this non-GAAP financial measure. Adjusted EBITDA margin is our calculation of Adjusted EBITDA divided by net sales.

~~Table of Contents~~

We use Adjusted EBITDA as a supplemental measure of our performance to gain insight into our operating ~~performance.~~performance and performance trends. We believe that the exclusion of other income in calculating Adjusted EBITDA and Adjusted EBITDA margin provides management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating our operating results. However, our use of Adjusted EBITDA and Adjusted EBITDA margin as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under ~~U.S.~~US GAAP. In addition, other companies, including companies in our industry, might calculate Adjusted EBITDA and Adjusted EBITDA margin or similarly titled measures differently, which may reduce their usefulness as comparative measures.

Three Months Ended
December 31,

Nine Months Ended
December 31,

Consolidated
2017 2016 2017 2016
Net earnings $ 15,581 $ 12,620 $ 46,225 $ 40,066
Provision for income taxes 678 8,687 19,499 27,310
Depreciation and amortization 2,894 1,910 7,086 5,408
Other (income) expense 131 - 1 (380 )
Adjusted EBITDA $ 19,284 $ 23,217 $ 72,811 $ 72,404

Technology Segment

Operating income $ 11,415 $ 16,889 $ 48,704 $ 56,003
Depreciation and amortization 2,893 1,908 7,084 5,400
Adjusted EBITDA $ 14,308 $ 18,797 $ 55,788 $ 61,403

Financing Segment

Operating income $ 4,975 $ 4,418 $ 17,021 $ 10,993
Depreciation and amortization 1 2 2 8
Adjusted EBITDA $ 4,976 $ 4,420 $ 17,023 $ 11,001

~~Consolidated Results~~The following table provides our calculations of ~~Operations~~Adjusted EBITDA (in thousands):

	Three Months Ended December 31,						Nine Months Ended December 31,
Consolidated	2023			2022			2023			2022
Net earnings	$	27,282		$	35,694		$	93,793		$	86,502
Provision for income taxes		11,131			13,671			36,122			34,134
Share-based compensation		2,526			1,950			7,145			5,681
Interest and financing costs		217			1,308			1,428			2,117
Depreciation and amortization		5,399			3,609			15,821			10,387
Other income (expense)		(366	)		(2,907	)		(673	)		3,112
Adjusted EBITDA	$	46,189		$	53,325		$	153,636		$	141,933

Technology business segments
Operating income	$	28,667		$	41,090		$	108,048		$	102,212
Depreciation and amortization		5,381			3,582			15,747			10,304
Share based compensation		2,460			1,889			6,947			5,502
Interest and financing costs		217			1,308			1,428			2,117
Adjusted EBITDA	$	36,725		$	47,869		$	132,170		$	120,135

Financing business segment
Operating income	$	9,380		$	5,368		$	21,194		$	21,536
Depreciation and amortization		18			27			74			83
Share-based compensation		66			61			198			179
Adjusted EBITDA	$	9,464		$	5,456		$	21,466		$	21,798

(3)

Gross billings are the total dollar value of customer purchases of goods and services including shipping charges during the period, net of customer returns and credit memos, sales, or other taxes. Gross billings includes the transaction values for certain sales transactions that are recognized on a net basis, and, therefore, includes amounts that will not be recognized as revenue.

~~During~~

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CONSOLIDATED RESULTS OF OPERATIONS

Net sales: Net sales for the three months ended December 31, ~~2017, net sales increased 4.9%~~2023, decreased $114,.4 million, or 18.4%, ~~or $15.9 million~~ to ~~$342.6~~$509.1 million, compared to ~~$326.7~~$623.5 million in the same three-month period in the prior year. The decrease in net sales was partially driven by lower net sales from our product segment due to decreased sales volume and was partially offset by higher net sales from professional services segment, managed services segment, and financing segment net sales due to higher transaction gains.

Net sales for the nine months ended December 31, 2023, increased $95.3 million, or 6.0%, to $1,670.8 million, compared to $1,575.5 million in the same nine-month period in the prior year. The increase in net sales was driven by higher net sales from our product segment and managed services segments, primarily from the addition of sales to new customers from our acquisitions of Network Solutions Group (“NSG”) and Future Com, Ltd. (“Future Com”), and was partially offset by a decline in revenues from our financing business segment primarily due to lower post contract earnings.

Gross profit: Gross profit for the three months ended December 31, 2023, decreased 3.3%, to $133.8 million, compared to $138.4 million in the same three-month period in the prior year due to a decline in product net sales. Overall, gross margin increased 410 basis points to 26.3%, as compared to the same period in the prior ~~fiscal~~ year. ~~For~~The increase in gross margin was primarily due to increases in both product and service margin along with higher gross margin in our financing business segment.

Gross profit for the nine months ended December 31, ~~2017, net sales~~2023, increased ~~8.4%~~9.2%, ~~or $83.9 million~~ to ~~$1,080.6~~$420.4 million, compared to ~~$996.6~~$385.2 million in the same nine-month period in the prior year due to increased net sales volume. Overall, gross margin for the nine months ended December 31, 2023, increased 80 basis points to 25.2%, as compared to the same period in the prior ~~fiscal~~ year.

~~Adjusted~~ The increase in gross ~~billings of~~margin was primarily due increases in both product and ~~services~~service margin within our technology business segments along with higher margin in our financing business segment.

Operating expenses: Operating expenses for the three months ended December 31, 2023, increased ~~7.3%~~$3.9 million, or 4.2%, ~~or $31.7~~to $95.8 million, as compared to ~~$464.1~~$91.9 million for the same three-month period in the prior year. The increase in operating expenses was primarily due to an increase of $4.3 million in salaries and benefits, mainly driven by an increase in headcount and salary increases offset by a decrease of $1.1 million in variable compensation corresponding to the decrease in gross profit. As of December 31, 2023, we had 1,897 employees, an increase of 8.7% from 1,745 as of December 31, 2022.

General and administrative expenses also increased $0.6 million for the three months ended December 31, ~~2017 from $432.4 million for~~2023, compared to the ~~same period in the prior fiscal year. For the nine~~three months ended December 31, ~~2017, adjusted gross billings of product~~2022, as we had higher software, subscription, and ~~services increased 10.0%, or $132.2 million~~maintenance fees due to ~~$1,449.4 million, from $1,317.2 million for~~ the ~~same period in the prior fiscal year. Both the three month and nine month~~ increase in ~~demand was from commercial customers primarily in the technology, financial services~~headcount.

Depreciation and ~~health care industries, partially offset by SLED and other industries.~~

~~Consolidated gross profit rose 3.9% to $76.7 million, compared with $73.8~~amortization increased $1.8 million for the three months ended December 31, ~~2016. Consolidated gross margins were 22.4%~~2023, compared to the three months ended December 31, 2022, due to increased amortization of intangible assets from the acquisition of NSG. Interest and financing costs decreased $0.6 million for the three months ended December 31, ~~2017 a decrease of 20 basis points~~2023, compared to ~~22.6% for~~ the same three-month period in the prior ~~fiscal~~ year due to lower ~~product margins, including~~outstanding borrowings. Offsetting these increases was a decrease of $1.2 million in ~~vendor incentives earned, which~~provision for credit losses.

Operating expenses for the nine months ended December 31, 2023, increased $29.7 million, or 11.4%, to $291.2 million, as compared to $261.5 million for the same nine-month period in the prior year. Our increase in operating expenses was ~~offset~~primarily due to an increase of $18.9 million in salaries and benefits, mainly driven by an increase in ~~service revenues.~~headcount, as well as higher variable compensation of $3.5 million corresponding to the increase in gross profit.

~~Consolidated gross profit rose 8.3% to $241.9 million, compared with $223.4~~General and administrative expenses also increased $3.6 million for the nine months ended December 31, ~~2016. Consolidated gross margins were 22.4% for both~~2023, compared to the nine months ended December 31, ~~2017~~2022, as we had higher software, subscription and ~~2016. Consolidated gross margins were impacted by lower product margins, including a decrease in vendor incentives earned, which was offset by~~maintenance fees, travel and entertainment costs due to the return of in-person business meetings and events, advertising and marketing fees, and facility rent due to the opening of our new Customer Innovation Center. In addition, we had higher ~~service~~professional and ~~financing revenues.~~legal fees.

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~~Our operating expenses~~Depreciation and amortization increased ~~14.9% to $60.3~~$5.4 million ~~or 78.6% of gross profits~~ for ~~the three months ended December 31, 2017 as compared to $52.5 million, representing 71.1% of gross profits in the same period prior year. For~~ the nine months ended December 31, ~~2017, our operating expenses increased 12.6% to $176.6 million, or 72.5% of gross profits as~~2023, compared to ~~$156.4~~the nine months ended December 31, 2022, due to increased amortization of intangible assets from the acquisition of NSG. Interest and financing costs increased $0.2 million ~~representing 70.0% of gross profits~~for the nine months ended December 31, 2023, compared to the same nine-month period in the ~~same~~ prior year ~~period. The majority of this increase reflects increased salary expense~~ due to ~~an increase~~higher interest rates offset by lower outstanding borrowings. Offsetting these increases was a decrease of $1.8 million in ~~headcount, as well as variable compensation as~~provision for credit losses.

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Operating income: As a result of the ~~increase in gross profit, and an increase in employee healthcare costs. Our headcount increased by 120 employees or 10.3% to 1,284 from 1,164 a year ago, 98 of which~~ ~~were from the acquisitions of IDS and OneCloud~~. ~~The net additions in personnel compared to the prior year include 105 sales and engineering positions,~~ ~~with the~~ ~~remaining additions being administrative, IT, and finance positions.~~

~~Operating~~foregoing, operating income for the three months ended December 31, ~~2017~~2023, decreased ~~23.1%~~$8.5 million, or 18.3%, to ~~$16.4~~$38.0 million, as compared to ~~$21.3~~$46.5 million for ~~the same period in the prior year. For~~ the three months ended December 31, ~~2017, the~~2022, and operating margin remained flat at 7.5%. The decrease in operating income ~~margin decreased 170 basis points~~was due to ~~4.8%~~decreases from ~~6.5% for the same period in the prior year.~~ our technology business, which was offset by higher operating income from our financing business segment.

Operating income for the nine months ended December 31, ~~2017 decreased 1.9%~~2023, increased $5.5 million, or 4.4%, to ~~$65.7million,~~$129.2 million, as compared to ~~$67.0~~$123.7 million for ~~the same period in the prior year. For~~ the nine months ended December 31, ~~2017, the~~2022, and operating ~~income~~ margin decreased 60by 20 basis points to ~~6.1%~~7.7%. The increase in operating income was due to increases from ~~6.7% for the same period in the prior year.~~our technology business, which was offset slightly by lower operating income from our financing business segment.

~~Consolidated net earnings~~Adjusted EBITDA for the three months ended December 31, ~~2017 were $15.6~~2023, was $46.2 million, ~~an increase~~a decrease of ~~23.5%~~$7.1 million, or 13.4%, ~~or $3.0 million,~~as compared to $53.3 million for the same three-month period in the prior year’s results of $12.6 million. For the nine months ended December 31, 2017, consolidated net earnings were $46.2 million, an increase of 15.4%, or $6.2 million, compared to the prior year’s results of $40.1 million.

~~Adjusted EBITDA decreased $3.9 million, or 16.9% to $19.3 million and~~year. Adjusted EBITDA margin ~~decreased 150 basis points to 5.6%~~ for the three months ended December 31, ~~2017,~~2023, increased 50 basis points to 9.1%, as compared to the ~~prior period of 7.1%. For the nine~~three months ended December 31, ~~2017,~~2022, of 8.6%. The decrease in Adjusted EBITDA ~~increased $0.4 million, or 0.6%~~was due to ~~$72.8 million and~~decreases from our technology business, which was offset by higher Adjusted EBITDA ~~margin decreased 60 basis points to 6.7%~~from our financing business segment.

Adjusted EBITDA for the nine months ended December 31, ~~2017,~~2023, was $153.6 million, an increase of $11.6 million, or 8.2%, as compared to $141.9 million for the same nine-month period in the prior ~~period~~year. Adjusted EBITDA margin for the nine months ended December 31, 2023, increased 20 basis points to 9.2%, as compared to the nine months ended December 31, 2022, of ~~7.3%~~9.0%. The increase in Adjusted EBITDA was due to increases from our technology business, which was offset slightly by lower Adjusted EBITDA from our financing business segment.

~~Diluted~~Net earnings per common share ~~increased 22.0%~~diluted for the three months ended December 31, 2023, decreased $0.32, or 23.9%, to $1.02 per share, as compared to $1.34 per share in the same three-month period in the prior year. Non-GAAP: Net earnings per common share diluted for the three months ended December 31, 2023, decreased $0.20, or ~~$0.20~~14.5%, to ~~$1.11~~$1.18 per share, as compared to $1.38 per share for the three months ended December 31, 2017, as compared to $0.91 per share for the three months ended December 31, 2016. Our effective tax rate for the three months ended December 31, 2017 was 4.2%, which includes a tax benefit $3.4 million from the re-measurement of deferred tax assets and liabilities due to the change in the U.S. statutory rate. Non-GAAP diluted2022.

Net earnings per common share ~~decreased 13.4% to $0.97~~diluted for ~~the three months ended December 31, 2017, as compared to $1.12 for the three months ended December 31, 2016.~~

~~For~~ the nine months ended December 31, ~~2017, diluted earnings per share~~2023, increased ~~15.4%~~$0.28, or 8.6%, ~~or $0.44~~ to ~~$3.30~~$3.52 per share, as compared to ~~$2.86~~$3.24 per share in the same nine-month period in the prior year. Non-GAAP: Net earnings per common share diluted for the nine months ended December 31, 2023, increased $0.33, or 9.0%, to $3.99 per share, as compared to $3.66 per share for the nine months ended December 31, ~~2016.~~ 2022.

SEGMENT OVERVIEW

Technology business segments

Our ~~effective tax rate~~technology business includes three segments: product, professional services, and managed services as further discussed below.

Product segment: Our product segment consists of the sale of third-party hardware, third-party perpetual and subscription software, and third-party maintenance, software assurance, and other third-party services. The product segment also includes internet-based business-to-business supply chain management solutions for IT products.

Professional services segment: Our professional services segment includes our advanced professional services to our customers that are performed under time and materials, fixed fee, or milestone contracts. Professional services include cloud consulting, staff augmentation services, and project management services.

Managed services segment: Our managed services segment includes our advanced managed services that include managing various aspects of our customers’ environments and are billed in regular intervals over a contract term, usually between three to five years. Managed services also include security solutions, storage-as-a-service, cloud hosted services, cloud managed services, and service desk.

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The quarter ended June 30, 2023, was the ~~nine months ended December 31, 2017 was 29.7%,~~first quarterly period in which includes a tax benefit of $1.6 million related to the vesting of share based compensation and a tax benefit $3.4 million from the re-measurement of deferred tax assets and liabilities due to the change in the U.S. statutory rate. Non-GAAP diluted earnings per share increased 0.6% to $3.14 for the nine months ended December 31, 2017, as compared to $3.12 for the nine months ended December 31, 2016.

~~Cash and cash equivalents decreased $33.7 million or 30.7% to $76.1 million at December 31, 2017 compared with $109.8 million as of March 31, 2017.~~ ~~The decrease is primarily the result of investments in our financing portfolio, working capital required for the growth in~~we reported these three separate segments within our technology ~~segment~~, ~~$29.8 million paid in cash at closing of our acquisition of IDS~~ ~~and $7.9 million paid in cash at closing for our acquisition of OneCloud. Our cash~~business as we previously consolidated this information within a single technology segment. We manage the technology business segments based on ~~hand, funds generated from operations, amounts available under our credit facility~~gross profit and the ~~possible monetization of~~operating expenses associated with these segments in total as our ~~investment portfolio provide sufficient liquidity for~~technology business. Based upon our current business and operations, we intend to continue reporting these three segments that will comprise our technology business. We recast prior periods to conform with our current segment organization.

~~Segment Overview~~

Our ~~operations are conducted through two segments:~~ technology ~~and financing.~~

~~Technology Segment~~

~~The technology segment sells IT equipment and software and related services~~business segments sell primarily to ~~corporate customers,~~corporations, state and local governments, and higher education ~~institutions on a nationwide basis, with geographic concentrations relating to~~institutions. Customers of our ~~physical locations. The~~ technology ~~segment also provides Internet-based business-to-business supply chain management solutions for information technology products.~~

~~Table of Contents~~

Our technology segment derives revenue from the sales of new equipment and service engagements. Included in the sales of product and services are revenues derived from performing advanced IT professional and managed services that may be sold together with and integral to third-party products and software. Our service engagements are generally governed by statements of work, and are primarily fixed price (with allowance for changes); however, some service agreements are based on time and materials.

~~Customers who purchase IT equipment and services from us~~business may have a customer master ~~agreements, or CMAs,~~agreement (“CMA”) with our company, which ~~stipulate~~stipulates the terms and conditions of the commercial relationship. Some CMAs contain pricing arrangements, and most contain mutual voluntary termination clauses. Our other customers place orders using purchase orders without a CMA in place or with other documentation customary for the business. Often, our work with state and local governments is based on public bids and our written bid ~~responses~~responses. Our service engagements are generally governed by statements of work and are primarily fixed price (with allowance for changes); however, some service agreements are based on time and materials.

We endeavor to minimize ~~our~~the cost of sales in our product segment through incentive programs provided by vendors and distributors. The programs we qualify for are generally set by our reseller authorization level with the vendor. The authorization level we achieve and maintain governs the types of products we can resell as well as such items as ~~pricing received,~~variable discounts applied against the list price, funds provided for the marketing of these products and other special promotions. These authorization levels are achieved by us through purchase volume, certifications held by sales executives or engineers and/or contractual commitments by us. The authorization levels are costly to maintain, and these programs continually ~~change and,~~change; therefore, there is no guarantee of future reductions of costs provided by these vendor consideration programs.

Financing ~~Segment~~business segment

Our financing business segment offers financing solutions to corporations, ~~governmental entities,~~government contractors, state and local governments, and educational institutions ~~nationwide and also~~ in the ~~United Kingdom,~~US, which accounts for most of our transactions, and to corporations in select international markets including Canada, the UK, and ~~Iceland.~~the EU. The financing business segment derives revenue from leasing IT equipment, medical equipment, and ~~medical~~other equipment, and the disposition of that equipment at the end of the lease. The financing business segment also derives revenues from the financing of third-party software licenses, software assurance, maintenance, and other services.

Financing revenue generally falls into the following three categories:

~~Portfolio income: Interest income from financing receivables and rents due under operating leases;~~

Portfolio income: Interest income from financing receivables and rents due under operating leases.

Transactional gains: Net gains or losses on the ~~sale of financial assets; and~~

~~Post-contract earnings: Month-to-month rents; early termination, prepayment, make-whole, or buyout fees; and net gains on the sale of off-lease (used) equipment.~~

Our financing segment sells the equipment underlying a lease to the lessee or a third-party other than the lessee. These sales occur at the end of the lease term and revenues from the sales of such equipment are recognized at the date of sale. We also recognize revenue from events that occur after the initial sale of a financial ~~asset~~assets.

Post-contract earnings: Month-to-month rents; early termination, prepayment, make-whole, or buyout fees; and ~~remarketing fees from certain residual value investments.~~the sale of off-lease (used) equipment.

Fluctuations in ~~Revenues~~operating results

Our operating results ~~of operations are susceptible~~may fluctuate due to ~~fluctuations for a number of reasons, including, without limitation,~~ customer demand for our products and services, supplier costs, product availability, changes in vendor incentive programs, interest rate fluctuations, currency fluctuations, the timing of sales of financial assets, general economic conditions, and differences between estimated residual values and actual amounts realized ~~related to the equipment we lease. Operating results could also fluctuate as a result of a sale prior to the expiration of the lease term to the lessee or to a third-party or from post-term events.~~

for leased equipment. We expect to continue to expand by ~~opening new sales locations and~~ hiring additional staff for specific targeted market areas ~~in the near future~~and roles whenever we can find both experienced personnel and desirable geographic ~~areas. These investments~~areas over the longer term, which may ~~reduce~~impact our ~~results from operations in the short term.~~operating results.

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~~CRITICAL ACCOUNTING ESTIMATES~~

The preparation of financial statements in conformity with U.S. GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, or different assumptions were made, it is possible that alternative accounting policies would have been applied, resulting in a change in financial results. On an ongoing basis, we reevaluate our estimates, including those related to revenue recognition, residual values, vendor incentives, lease classification, goodwill and intangibles, reserves for credit losses and income taxes specifically relating to uncertain tax positions. We base estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. For all such estimates, we caution that future events rarely develop exactly as forecasted, and therefore, these estimates may require adjustment.

Our critical accounting estimates have not changed from those reported in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2017 annual Report.

SEGMENT RESULTS OF OPERATIONS

The three and nine months ended December 31, ~~2017~~2023, compared to the three and nine months ended December 31, ~~2016~~2022

~~Technology Segment~~TECHNOLOGY BUSINESS SEGMENTS

The results of operations for our technology business segments were as follows (in thousands):

	Three Months Ended December 31,						Nine Months Ended December 31,
	2023			2022			2023			2022
Financial Metrics
Net sales
Product	$	419,478		$	544,316		$	1,418,581		$	1,336,309
Professional services		40,044			39,151			113,870			114,369
Managed services		34,640			28,307			99,335			81,359
Total	$	494,162		$	611,774		$	1,631,786		$	1,532,037

Gross Profit
Product		91,919			104,485			308,059			282,042
Professional services		17,332			15,294			47,852			45,046
Managed services		11,015			8,075			31,006			22,692
Total		120,266			127,854			386,917			349,780

Selling, general, and administrative		86,001			81,874			261,694			235,147
Depreciation and amortization		5,381			3,582			15,747			10,304
Interest and financing costs		217			1,308			1,428			2,117
Operating expenses		91,599			86,764			278,869			247,568

Operating income	$	28,667		$	41,090		$	108,048		$	102,212

Key Metrics & Other Information
Gross billings	$	796,986		$	898,843		$	2,495,451		$	2,412,803

Adjusted EBITDA	$	36,725		$	47,869		$	132,170		$	120,135

Product margin		21.9	%		19.2	%		21.7	%		21.1	%
Professional service margin		43.3	%		39.1	%		42.0	%		39.4	%
Managed service margin		31.8	%		28.5	%		31.2	%		27.9	%

Net sales by customer end market:
Telecom, media & entertainment	$	139,551		$	184,539		$	405,192		$	431,269
Technology		83,951			133,067			268,302			299,088
SLED		60,108			72,730			264,419			207,823
Healthcare		55,504			69,825			214,182			205,297
Financial services		38,816			48,008			174,391			118,917
All others		116,232			103,605			305,300			269,643
Total	$	494,162		$	611,774		$	1,631,786		$	1,532,037

Net sales by type:
Networking	$	209,936		$	275,774		$	723,760		$	584,311
Cloud		120,253			157,126			427,365			470,851
Security		58,822			77,111			156,504			173,623
Collaboration		13,608			13,405			53,647			45,572
Other		16,859			20,900			57,305			61,952
Total products		419,478			544,316			1,418,581			1,336,309

Professional services		40,044			39,151			113,870			114,369
Managed services		34,640			28,307			99,335			81,359
Total	$	494,162		$	611,774		$	1,631,786		$	1,532,037

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Net sales: Net sales of the combined technology business segments for the three months ended December 31, 2023, decreased compared to the three months ended December 31, 2022, driven by decreased volume from customers across all our significant customer end markets.

Net sales of the combined technology business segments for the nine months ended December 31, 2023, increased compared to the nine months ended December 31, 2022, driven by demand from customers in SLED, financial services, and healthcare industries, offset by decreased volume with customers in telecom, media, and entertainment, and technology industries.

Product segment sales for the three months ended December 31, 2023, decreased compared to the same three-month period in the prior year due to lower sales of networking equipment, cloud, and security products. These changes were driven by the timing of purchases by existing customers, which are determined by their buying cycles, and the timing of specific IT related initiatives. Offsetting these decreases was the addition of product sales to customers from the NSG acquisition, which contributed $15.5 million.

Product segment sales for the nine months ended December 31, 2023, increased compared to the same nine-month period in the prior year due to higher sales of networking equipment and collaboration products, offset by a decline in sales of cloud and security products. These changes were driven by the timing of purchases by existing customers, which are determined by their buying cycles, and the timing of specific IT related initiatives. In addition, the increase in product segment sales during this nine-month period was due to the addition of product sales to customers from the NSG acquisition, which contributed $75.0 million.

Professional services segment sales for the three months ended December 31, 2023, increased compared to the three months ended December 31, 2022, due to higher project related services of $3.8 million, offset by a decrease in staff augmentation and consulting revenues of $2.7 million and $0.2 million, respectively, primarily driven by the closure of projects with existing customers.

Professional services segment sales for the nine months ended December 31, 2023, decreased compared to the nine months ended December 31, 2022, due to a decrease in staff augmentation and consulting revenues of $7.1 million and $0.1 million, respectively, primarily driven by the decline in customer demand for these services. Offsetting this decline was higher project related services of $7.1 million, primarily driven by the addition of professional services sales to customers from our NSG acquisition.

Managed services segment sales for the three and nine months ended December 31, ~~2017~~2023, increased compared to the three and ~~2016~~nine months ended December 31, 2022, due to ongoing expansion of these service offerings during both periods primarily related to ongoing growth in enhanced maintenance support, service desk, and security operations center revenues.

Gross profit: Gross profit of the combined technology business segments for the three months ended December 31, 2023, decreased compared to the three months ended December 31, 2022, due mainly to the decrease in product segment sales, offset by increases in managed service, and professional service sales. Gross profit margin increased by 340 basis points to 24.3% during this three-month period due to higher product, managed service, and professional service margin.

Gross profit of the combined technology business segments for the nine months ended December 31, 2023, increased compared to the nine months ended December 31, 2022, due to the increase in product and managed service sales, offset by a slight decline in professional service sales. Gross profit margin increased by 90 basis points to 23.7% during this nine-month period due to higher product, managed service, and professional service margin.

Product segment margin for the three months ended December 31, 2023, increased by 270 basis points from the same three-month period in the prior year due to a shift in product mix as we sold a higher proportion of third-party maintenance and services in the third quarter of 2024, and an increase in vendor incentives.

Product segment margin for the nine months ended December 31, 2023, increased by 60 basis points from the same nine-month period in the prior year due to improvements to up front margins and an increase in vendor incentives, offset by a shift in product mix as we sold a higher proportion of networking hardware than third party services that are recognized on a net basis.

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Professional services segment margin for the three and nine months ended December 31, 2023, increased by 420 and 260 basis points, respectively, from the same three- and nine-month period in the prior year primarily due to a shift in mix toward higher margin project-based services, offset by lower staff augmentation services.

Managed services segment margin for the three and nine months ended December 31, 2023, increased by 330 basis points, from the same three- and nine-month period in the prior year primarily due to improved margin within our service desk line of business.

Selling, general, and administrative: Selling, general, and administrative expenses for the three and nine months ended December 31, 2023, for the technology business, increased compared to the three and nine months ended December 31, 2022, mainly due to increases in salaries and benefits.

Salaries and benefits for the three months ended December 31, 2023, increased $3.4 million, or 4.8% to $73.9 million, as compared to $70.5 million for the same three-month period in the prior year, due to an increase of $3.4 million in salaries and benefits, mainly driven by increased headcount and salary increases. Our technology business had an aggregate of 1,863 employees as of December 31, 2023, an increase of 154 from 1,709 as of December 31, 2022. We added 83 employees from our acquisition of NSG. In total, we added 134 additional customer-facing employees for the three months ended December 31, 2023, compared to the same three-month period in the prior year, of which 60 were professional services and technical support personnel due to demand for our services.

Salaries and benefits for the nine months ended December 31, 2023, increased $23.4 million, or 11.8% to $221.9 million, as compared to $198.5 million for the same nine-month period in the prior year, due to an increase of $18.7 million in salaries and benefits, mainly driven by increased headcount and salary increases, and an increase of $4.7 million in variable compensation because of the increase in gross profit.

General and administrative expenses for the technology business for the three months ended December 31, 2023, increased $1.1 million, or 9.9%, to $12.1 million, as compared to $11.0 million for the same three-month period in the prior year, driven by higher software, subscription and maintenance fees of $0.4 million, and higher consulting fees of $0.4 million.

General and administrative expenses for our technology business for the nine months ended December 31, 2023, increased $4.0 million, or 11.4%, to $39.3 million, as compared to $35.3 million for the same nine-month period in the prior year. General and administrative expenses increased due to higher travel and entertainment costs of $1.0 million due to the return of in-person business meetings and events, higher software, subscription and maintenance fees of $0.9 million, higher consulting fees of $0.8 million, higher advertising and marketing fees of $0.7 million, and higher facility rent of $0.6 million due to the opening of our new Customer Innovation Center.

Provision for credit losses for our technology business for the three months ended December 31, 2022, was $0.3 million. There were no provision for credit losses in December 31, 2023. Our lower provision for credit losses for the three months ended December 31, 2023, was due to changes in our net credit exposure.

Provision for credit losses for our technology business for the nine months ended December 31, 2023, was $0.4 million, as compared to $1.3 million for the same nine-month period in the prior year. Our lower provision for credit losses for the nine months ended December 31, 2023, was due to changes in our net credit exposure.

Depreciation and amortization: Depreciation and amortization of our technology business for the three and nine months ended December 31, 2023, increased compared to the three and nine months ended December 31, 2022, primarily due to more amortization from intangible assets acquired in the NSG and Future Com acquisitions.

Interest and financing costs: Interest and financing costs of our technology business for the three months ended December 31, 2023, decreased by 83.4% to $0.2 million compared to $1.3 million for the three months ended December 31, 2022, primarily due to lower average borrowings under our WFCDF Credit Facility. Interest and financing costs of our technology business for the nine months ended December 31, 2023, decreased by 32.5% to $1.4 million compared to $2.1 million for the nine months ended December 31, 2022, due to lower average borrowings outstanding under our WFCDF Credit Facility.

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FINANCING BUSINESS SEGMENT

The results of operations for our financing business segment were as follows ~~(dollars in~~(in thousands):

	Three Months Ended December 31,									Nine Months Ended December 31,									Three Months Ended December 31,				Nine Months Ended December 31,
	2017		2016		Change					2017		2016		Change					2023		2022		2023		2022
Sales of product and services	$	330,953	$	317,391	$	13,562		4.3	%	$	1,045,792	$	968,799	$	76,993		7.9	%
Fee and other income		1,678		915		763		83.4	%		3,707		3,679		28		0.8	%
Financial metrics
Portfolio earnings																			$	3,701	$	2,391	$	10,113	$	7,952
Transactional gains																				8,107		5,181		16,335		15,125
Post-contract earnings																				2,685		4,036		11,357		19,281
Other																				400		94		1,250		1,146
Net sales		332,631		318,306		14,325		4.5	%		1,049,499		972,478		77,021		7.9	%	$	14,893	$	11,702	$	39,055	$	43,504
Cost of sales, product and services		264,487		251,729		12,758		5.1	%		834,873		769,780		65,093		8.5	%

Gross profit		68,144		66,577		1,567		2.4	%		214,626		202,698		11,928		5.9	%		13,544		10,518		33,531		35,419

Selling, general, and administrative expenses		53,836		47,780		6,056		12.7	%		158,838		141,295		17,543		12.4	%
Selling, general, and adminstrative																				3,380		4,856		10,637		13,054
Depreciation and amortization		2,893		1,908		985		51.6	%		7,084		5,400		1,684		31.2	%		18		27		74		83
Interest and financing costs																				766		267		1,626		746
Operating expenses		56,729		49,688		7,041		14.2	%		165,922		146,695		19,227		13.1	%		4,164		5,150		12,337		13,883

Operating income	$	11,415	$	16,889	$	(5,474	)	(32.4	%)	$	48,704	$	56,003	$	(7,299	)	(13.0	%)	$	9,380	$	5,368	$	21,194	$	21,536

Key business metrics
Adjusted gross billings of product and services	$	464,105	$	432,407	$	31,698		7.3	%	$	1,449,371	$	1,317,188	$	132,183		10.0	%

Key metrics & other information
Adjusted EBITDA	$	14,308	$	18,797	$	(4,489	)	(23.9	%)	$	55,788	$	61,403	$	(5,615	)	(9.1	%)	$	9,464	$	5,456	$	21,466	$	21,798

Net sales: Net sales for the three months ended December 31, ~~2017 were $332.6 million~~2023, increased due to higher portfolio earnings and transactional gains offset by lower post-contract earnings. Portfolio earnings increased compared to $318.3 million during the three months ended December 31, 2016, an increase of 4.5%, or $14.3 million. For the nine months ended December 31, 2017, net sales were $1,049.5 million compared to $972.5 million during the same period in the prior year ~~an increase of 7.9%, or $77.0 million.~~

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Adjusted gross billings of product and services for the three months ended December 31, 2017 were $464.1 million compared to $432.4 million during the three months ended December 31, 2016, an increase of 7.3%, or $31.7 million. ~~Sales of product and services for the three months ended December 31, 2017 were $331.0 million compared to $317.4~~ ~~million during the same period in the prior year, an increase of 4.3%, or $13.6 million.~~

The increase in net sales of product and services during the three months ended December 31, 2017 was also due, in part, to an increase in demand for products and services from customers in the technology, financial services and healthcare industries, partially offset by reductions in sales to ~~state and local government and educational customers (“SLED”), technology, and telecom, media and entertainment customers, and other industries.~~

For the nine months ended December 31, 2017, adjusted gross billings of product and services were $1,449.4 million compared to $1,317.2 million during the nine months ended December 31, 2016, an increase of 10.0%, or $132.2 million. For the nine months ended December 31, 2017, sales of product and services were $1,045.8 million compared to $~~968.8~~ ~~million during the same period in the prior year, an increase of 7.9%, or $77.0 million. The increase in net sales of product and services during the nine month period was~~mainly due to an increase in demand for products and services from customers in the financial services industries, technology, and health care industries, which include sales relating to several large projects for large customers.

~~Summarized below are the sequential and year-over-year changes in net sales of product and services:~~

Quarter Ended Sequential Year over Year
December 31, 2017 (7.5 %) 4.3 %
September 30, 2017 0.2 % (1.0 %)
June 30, 2017 11.1 % 23.1 %
March 31, 2017 1.3 % 10.3 %
December 31, 2016 (12.1 %) 10.3 %

We rely on our vendors to fulfill a large majority of shipments to our customers. As of December 31, 2017, we had open orders of $170.0 million and deferred revenue of $59.6 million. As of December 31, 2016, we had open orders of $238.5 million and deferred revenues of $~~66.3~~ ~~million.~~

We analyze sales of products and services by customer end market and by manufacturer, as opposed to discrete product and service categories. The percentage of sales of product and services by industry and vendor are summarized below:

Twelve Months Ended December 31,
2017 2016 Change
Revenue by customer end market:

Technology 25 % 22 % 3 %
SLED 17 % 21 % (4 %)
Telecom, Media & Entertainment 14 % 16 % (2 %)
Financial Services 16 % 12 % 4 %
Healthcare 13 % 11 % 2 %
Other 15 % 18 % (3 %)
Total 100 % 100 %

Revenue by vendor:

Cisco Systems 44 % 49 % (5 %)
HP Inc. & HPE 7 % 6 % 1 %
NetApp 4 % 5 % (1 %)
Sub-total 55 % 60 % (5 %)
Other 45 % 40 % 5 %
Total 100 % 100 %

Our revenues by customer end market have remained consistent with over 80% of our revenues generated from customers within the five end markets identified above. During the trailing twelve months ended December 31, 2017 we had an increase in the percentage total revenues from customers in the technology, financial services, and health care industries, which were partially offset by decreases in the percentage of total revenues from SLED compared to the prior year period. These changes were driven by changes in customer buying cycles and specific IT related initiatives, rather than the acquisition or loss of a customer or set of customers.

~~Table of Contents~~

The majority of our revenues by vendor are derived from Cisco Systems, a combined HP Inc. and HPE, and NetApp, which, collectively, declined to 55% for the twelve months ended December 31, 2017 from approximately 60% in the prior year trailing twelve month period, with the greatest decline in the proportional percentage of total revenues in Cisco product sales. The decrease in the percentage of revenues from the top three vendors is due in part to substantial competition and rapid developments in the IT industry. None of the vendors included within the “other” category exceeded 4% of total revenues.

~~Cost of sales, product and services:~~ Cost of sales, product and services increased 5.1% for the three months ended December 31, 2017 as compared to the prior year period, due to the 4.3% increase in sales of product and services. For the nine months ended December 31, 2017, cost of sales, product and services increased 8.5% due to the increase in sales of product and services. Our gross margin on the sales of product and services decreased 60 basis points to 20.1% for the three months ended December 31, 2017, from 20.7% in the same period in the prior year.

For the nine months ended December 31, 2017, our gross margin on the sales of product and services decreased 30 basis points to 20.2%, from 20.5%, due to lower product margins from a large competitively bid project which partially shipped during the nine month periodhigher average investments outstanding as well as ~~reduction in vendor incentives earned as~~ a ~~percentage~~higher average earnings rate. Transactional gains increased due to a higher volume of financial assets sold during the quarter. Total proceeds from sales of ~~product services. Vendor incentives earned as a percentage of sales of product services for the three months~~financing receivables were $422.1 million and ~~the nine months ended December 31, 2017 decreased 50 and 30 basis points respectively, as compared to same periods in the prior year.~~

~~Selling, general, and administrative expenses:~~ ~~Selling, general, and administrative expenses were $53.8~~$157.2 million for the three months ended December 31, ~~2017, an increase~~2023, and 2022, respectively. Our proceeds from sales of ~~$6.0 million, or 12.7% compared to $47.8 million~~financing receivables for the three months ended December 31, 2023, are higher than the same period in the prior year due in part to a few large transactions in the current year period. ~~Salaries~~Post-contract earnings decreased due to lower month-to-month rents.

Net sales for the nine months ended December 31, 2023, decreased due to lower post-contract earnings offset by higher portfolio earnings and ~~benefits~~transactional gains. Post-contract earnings decreased due to lower proceeds from sales of off-lease equipment, and lower month-to-month rents. Portfolio earnings increased ~~$4.3 million, or 10.8% to $44.5 million,~~ compared to ~~$40.2 million during~~the same period in the prior ~~year. Most of the increase was~~year mainly due to higher ~~salaries~~average investments outstanding as well as a higher average earnings rate. Transactional gains increased due to higher volume of financial assets sold during the year. Total proceeds from sales of financing receivables were $704.3 million and ~~benefits expenses related to the increase in the number of employees from both acquisitions and internal growth.~~

~~Selling, general, and administrative expenses were $158.8~~$586.1 million for the nine months ended December 31, ~~2017, an increase~~2023, and 2022, respectively. Our proceeds from sales of ~~$17.5 million, or 12.4% compared to $141.3 million~~financing receivables for the prior year period. Salaries and benefits increased $12.8 million, or 10.8% to $130.6 million, compared to $117.8 million during the prior year. Approximately 20.8% of this increase was due to higher variable compensation due to the increase in gross profit, 18.6% of the increase was due to higher employee benefits, and the remaining increase was primarily due salary expense related to an increase in the number of employees. Our technology segment had 1,236 employees as of December 31, 2017, an increase of 123, or 11.1%, from 1,113 at December 31, 2016. The acquisitions of ~~OneCloud and IDS accounted for 98 of the added positions.~~ ~~There were 107 positions added in the past year related to sales, marketing, and professional services personnel.~~

General and administrative expenses increased $1.5 million, or 23.9% to $7.9 million during the three months ended December 31, 2017 compared to $6.4 million the prior year, due to an adjustment of $0.7 million to the fair value of contingent consideration for acquisitions, higher advertising and marketing expense, and travel expenses, including travel expense related to acquisitions. For the nine months ended December 31, ~~2017, general and administrative expenses increased $3.9 million, or 20.3% to $23.3 million compared to $19.3 million~~2023, are higher than the same period in the prior year due in part to the incremental adjustment of $0.8 million to the fair value of contingent consideration for acquisitions, and higher travel expense, including travel expense related to acquisitions. Professional and other fees increased $0.9 million, or 20.7% to $5.0 million primarily due to legal fees related to the IDS and OneCloud acquisitions.

~~Depreciation and amortization expense~~ ~~increased $1.0 million, or 51.6% to $2.9 million during the three months ended December 31, 2017 compared to $1.9 million~~a few large transactions in the prior year. For the nine months ended December 31, 2017, depreciation and amortization expense increased $1.7 million, or 31.2% to $7.1 million compared to $5.4 million in the prior year. The increase in depreciation and amortization expense is related to the acquisitions of Consolidated IT Services in December 2016, OneCloud in May 2017, and IDS in September 2017.current year period.

~~Segment operating income:~~ ~~As a result of the foregoing, operating income was $11.4 million, a decrease of $5.5 million, or 32.4%~~Gross Profit: Gross profit for the three months ended December 31, ~~2017~~2023, increased compared to ~~$16.9 million in the prior year period. For~~ the three months ended December 31, ~~2017, Adjusted EBITDA was $14.3 million, a decrease of $4.5 million, or 23.9% compared~~2022, due to ~~$18.8 million~~an increase in the prior year period. For the nine months ended December 31, 2017, operating income was $48.7 million, a decrease of $7.3 million, or 13.0% compared to $56.0 million in the prior year period. Adjusted EBITDAtransaction gains. Gross profit for the nine months ended December 31, ~~2017, was $55.8 million,~~2023, decreased compared to the nine months ended December 31, 2022, due to a decrease ~~of $5.6 million, or 9.1%~~in revenue, primarily month-to-month rents.

Selling, general and administrative:Selling, general, and administrative expenses for the three months ended December 31, 2023, decreased compared to ~~$61.4 million~~the three months ended December 31, 2022, due to a decrease in provision for credit losses, and a decrease in other professional fees. Selling, general, and administrative expenses for the nine months ended December 31, 2023, decreased compared to the nine months ended December 31, 2022, due to a decrease in variable compensation due to the decline in gross profit. Also contributing to the decrease is a decline in provision for credit losses as we incurred increased expense in the prior ~~year period.~~nine-month period due to higher investment exposure.

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~~Financing Segment~~

~~The results of operations for our~~Interest and financing ~~segment~~costs: Interest and financing costs for the three and nine months ended December 31, ~~2017 and 2016 were as follows (dollars in thousands):~~

Three Months Ended
December 31,

Nine Months Ended
December 31,

2017 2016 Change 2017 2016 Change
Financing revenue $ 9,592 $ 8,190 $ 1,402 17.1 % $ 30,698 $ 23,899 $ 6,799 28.4 %
Fee and other income 346 161 185 114.9 % 374 245 129 52.7 %
Net sales 9,938 8,351 1,587 19.0 % 31,072 24,144 6,928 28.7 %
Direct lease costs 1,394 1,142 252 22.1 % 3,846 3,459 387 11.2 %
Gross profit 8,544 7,209 1,335 18.5 % 27,226 20,685 6,541 31.6 %

Selling, general, and administrative expenses 3,298 2,380 918 38.6 % 9,300 8,526 774 9.1 %
Depreciation and amortization 1 2 (1 ) (50.0 %) 2 8 (6 ) (75.0 %)
Interest and financing costs 270 409 (139 ) (34.0 %) 903 1,158 (255 ) (22.0 %)
Operating expenses 3,569 2,791 778 27.9 % 10,205 9,692 513 5.3 %

Operating income $ 4,975 $ 4,418 $ 557 12.6 % $ 17,021 $ 10,993 $ 6,028 54.8 %

Key business metrics

Adjusted EBITDA $ 4,976 $ 4,420 $ 556 12.6 % $ 17,023 $ 11,001 $ 6,022 54.7 %

~~Net sales: Net sales~~2023, increased ~~by $1.6 million, or 19.0% to $9.9 million for the three months ended December 31, 2017, as~~ compared to $8.4 million prior year results due to higher post-contract earnings and other financing revenues. During the quarters ended December 31, 2017 and 2016, we recognized net gains on sales of financial assets of $1.2 million and $0.9 million, respectively, and the fair value of assets received from these sales were $32.8 million and $55.8 million, respectively. Post contract earnings increased $1.4 million due to the gain on sale of equipmentn associated with early lease terminations, and other financing revenues decreased $0.3 million mainly due to earnings on consumption based financing arrangements.

For the nine months ended December 31, 2017, net sales increased by $6.9 million, or 28.7% to $31.1 million as compared to $24.1 million prior year results due to higher transactional gains and other financing revenues. During the nine months ended December 31, 2017 and 2016, we recognized net gains on sales of financial assets of $4.6 million and $4.1 million, respectively, and the fair value of assets received from these sales were $166.9 million and $185.4 million, respectively. Post contract earnings increased $4.9 million due to the gain on sale of equipment associated with early lease terminations, and other financing revenues increased $1.0 million mainly due to earnings on consumption based financing arrangements.

~~At December 31, 2017, we had $147.2 million in financing receivables and operating leases, compared to $140.4 million as of December 31, 2016, an increase of $6.8 million or 4.8%.~~

~~Gross Profit:~~ ~~Gross profit increased by $1.3 million, or 18.5% to $8.5 million for the three months ended December 31, 2017, compared to the same period in the prior year.~~ ~~For the nine months ended December 31, 2017, gross profit increased $6.5 million, or 31.6% to $27.2 million compared to the same period of the prior year, as a result of higher revenues.~~ ~~Direct lease costs increased $0.3 million and $0.4 million for~~ the three and nine months ended December 31, ~~2017, respectively, which primarily consists of depreciation expense from operating leases.~~

~~Selling, general, and administrative expenses:~~ For the three months ended December 31, 2017 selling, general, and administrative expenses increased by $0.9 million or 38.6%, which was due primarily to an increase in our salaries and benefits expense of $0.7 million resulting from an increase in variable compensation related to the increase in gross profit. Selling, general, and administrative expenses increased by $0.8 million or 9.1%,2022, due to an increase in our salaries and benefits expense of $1.1 million resulting from an increase in variable compensation related to the increase in gross profit, partially offset by lower professional fees and credit loss expenses for the nine months ended December 31, 2017. Our financing segment had 48 employees ashigher interest rates. As of December 31, ~~2017, compared to 51 employees as of December 31, 2016.~~

~~Interest and financing costs decreased $0.1 million to $0.3 million for the three months ended December 31, 2017, compared to the prior year, due to a decrease in the average total~~2023, our non-recourse notes payable ~~outstanding compared~~decreased to ~~the three months ended December 31, 2017. For the nine months ended December 31, 2017, interest and financing costs decreased by $0.3~~$48.4 million ~~to $0.9 million, or 22.0%. Total notes payable were $31.5~~from $48.5 million as of December 31, ~~2017, a decrease of $22.5 million or 41.7% compared to $54.0 million as of December 31, 2016.~~2022. Our weighted average interest rate for non-recourse notes payable was ~~3.73%~~6.64% and ~~3.38%,~~5.05% as of December 31, ~~2017~~2023, and 2022, respectively.

CONSOLIDATED

Other income, net: Other income, net, for both the three and nine months ended December 31, 2023, was a benefit of $0.4 million and $0.7 million, respectively, compared to a benefit of $2.9 million and a net expense of $3.1 million, for the three and nine months ended December 31, ~~2016,~~2022, respectively.

~~Table of Contents~~

~~Segment operating income: As a result of the foregoing, both operating income and Adjusted EBITDA increased $0.6 million or 12.6% to $5.0 million for both~~ For the three months ended December 31, ~~2017~~2023, the lower benefit was driven by decreased net foreign exchange gains and ~~2016.~~$1.9 million we received related to our claim in a class action lawsuit in the prior three-month period. For the nine months ended December 31, ~~2017, operating~~2023, the higher net gain was driven by increased interest income and ~~Adjusted EBITDA each increased $6.0 million or 54.8% and 54.7%~~decreased foreign exchange losses offset slightly by the gain related to ~~$17.0 million, respectively.~~our claim in a class action lawsuit in the prior nine-month period.

~~Consolidated~~

~~Other income:~~ ~~Other~~Provision for income and expense during the three months ended December 31, 2017 was a net expense of $0.1 million, which consists of interest income on cash and cash equivalents, more than offset by foreign currency transaction losses.

~~Income taxes:~~taxes: Our provision for income tax expense ~~was $0.7 million and $19.5 million~~ for the three and nine months ended December 31 ~~2017,~~, 2023, was $11.1 million and $36.1 million, respectively, as compared to ~~$8.7~~$13.7 million and ~~$27.3~~$34.1 million for the same three-and nine-month periods in the prior ~~year.~~year, respectively. Our effective income tax ~~rate~~rates for the three and nine months ended December 31 ~~2017 was 4.2%~~, 2023, were 29.0% and ~~29.7%~~27.8%, respectively, compared to ~~40.8%~~27.7% and ~~40.5%~~28.3% for the three and nine months ended December 31 ~~2016. The favorable change in our~~, 2022, respectively. Our effective ~~income~~ tax rate was ~~due primarily to a tax benefit of $3.4 million from the re-measurement of deferred tax assets and liabilities due to the change in the U.S. statutory rate~~higher for the three ~~and nine~~ months ended December 31 ~~2017, and~~, 2023, as compared to the same three-month period in the prior year, primarily due to an unfavorable return to provision adjustment in the three months ended December 31, 2023, compared to a favorable return to provision adjustment in same three-month period in the prior year. Our effective tax ~~benefit of $1.6 million on the vesting of restricted stock in~~rate was lower for the nine months ended December 31, 2023, as compared to the same nine-month period in the prior year, primarily due to lower state effective tax rates and less non-deductible executive compensation in the current period.

Net earnings: Net earnings for the three months ended December 31, ~~2017,~~2023, were $27.3 million, a decrease of 23.6% or $8.4 million, as compared to ~~a tax benefit of $0.5~~$35.7 million in the same three-month period in the prior year, mainly due to a decrease in operating profits from our technology business offset by an increase in operating profits within our financing business segment. In addition, we had a decrease in other income, net driven by higher foreign exchange gains and other income in the prior three-month period. These decreases were offset by lower income taxes. Net earnings for the nine months ended December 31, ~~2016.~~

~~Net earnings: The foregoing resulted in net earnings of $15.6~~2023, were $93.8 million, ~~and $46.2 million for the three and nine months ended December 31, 2017,~~ an increase of ~~23.5% and 15.4%,~~8.4% or $7.3 million, as compared to ~~$12.6~~$86.5 million in the same nine-month period in the prior year, mainly due to the increase in operating profits from our technology business, and ~~$40.1 million during the three~~an increase in other income, net driven by less foreign exchange losses. These increases were offset by higher income taxes.

Basic earnings per common share and ~~nine months ended December 31, 2016, respectively.~~

~~Basic and fully~~ diluted earnings per common share were ~~$1.12 and $1.11~~both $1.02 for the three months ended December 31, ~~2017, an increase~~2023, a decrease of ~~21.7% and 22.0%~~23.9%, as compared to ~~$0.92 and $0.91, respectively,~~$1.34 for ~~the three months ended December 31, 2016. For the nine months ended December 31, 2017,~~both our basic ~~and fully diluted~~ earnings per common share ~~were $3.34 and $3.30, an increase of 16.0% and 15.4% as compared to $2.88 and $2.86, respectively, for the same period in the prior year.~~

~~Weighted average common shares outstanding used in the calculation of basic~~ and diluted earnings per common share for the three months ended December 31, ~~2017 was 13.9 million and 14.0 million, respectively. Weighted average~~2022. Basic earnings per common ~~shares outstanding used in the calculation of the basic~~share and diluted earnings per common share were $3.53 and $3.52, respectively, for the ~~three~~nine months ended December 31, ~~2016 was 13.8 million~~2023, an increase of 8.3% and ~~13.9 million, respectively.~~8.6%, respectively, as compared to $3.26 and $3.24 for our basic earnings per common share and diluted earnings per common share, respectively, for the nine months ended December 31, 2022.

Weighted average common shares outstanding used in the calculation of basic earnings per common share and diluted earnings per common share were 26.6 million and 26.7 million, respectively, for the ~~nine~~three months ended December 31, ~~2017 was 13.8 million and 14.0 million, respectively.~~2023. Weighted average common shares outstanding used in the calculation of basic earnings per common share and diluted earnings per common share were both 26.6 million for the three months ended December 31, 2022. Weighted average common shares outstanding used in the calculation of basic earnings per common share and diluted earnings per common share for the nine months ended December 31, ~~2016 was 13.9~~2023, and 2022, were 26.6 million and ~~14.0~~26.7 million respectively.

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LIQUIDITY AND CAPITAL RESOURCES

~~Liquidity Overview~~LIQUIDITY OVERVIEW

~~Our primary sources of liquidity have historically been cash and cash equivalents, internally~~We finance our operations through funds generated ~~funds~~ from operations and ~~borrowings, both non-recourse and recourse.~~through borrowings. We ~~have used~~use those funds to meet our capital requirements, which have historically consisted primarily of working capital for operational needs, capital expenditures, purchases of equipment for lease, payments of principal and interest on indebtedness outstanding, acquisitions and the repurchase of shares of our common stock.

Our ~~subsidiary~~ ePlus Technology, inc., part of our technology segment, finances its operations with funds generated from operations, and with a credit facility with Wells Fargo Commercial Distribution Finance, LLC (“WFCDF”). e~~Plus Technology, inc.’s agreement with WFCDF has an aggregate credit limit of $250 million as of December 31, 2017.~~

There are two components of this facility: (1) a floor plan component; and (2) an accounts receivable component. After a customer places a purchase order with us and we have completed our credit check, we place an order for the equipment with one of our vendors. Generally, most purchase orders from us to our vendors are first financed under the floor plan component and reflected in “accounts payable—floor plan” in our consolidated balance sheets. Payments on the floor plan component are due on three specified dates each month, generally 30-60 days from the invoice date. On the due date of the invoices financed by the floor plan component, the invoices are paid by the accounts receivable component of the credit facility. The balance of the accounts receivable component is then reduced by payments from our available cash. The outstanding balance under the accounts receivable component is recorded as recourse notes payable on our consolidated balance sheets. There was no outstanding balance at December 31, 2017or March 31, 2017, while the maximum credit limit was $30.0 million for both periods. The borrowings and repayments under the floor plan component are reflected as “net borrowings on floor plan facility” in the cash flows from financing activities section of our consolidated statements of cash flows.

~~Most customer payments~~ in our technology business segments are through our WFCDF Credit Facility. Our borrowings in our financing business segment are ~~remitted to our lockboxes. Once payments are cleared, the monies in the lockbox accounts are automatically transferred to our operating account on a daily basis. On the due dates~~primarily through secured borrowings that involve transferring all or part of the ~~floor plan component, we make cash~~contractual payments due to ~~WFCDF. These payments from the accounts receivable component~~us to ~~the floor plan component and repayments from our cash are reflected as “net borrowings on floor plan facility” in the cash flows from~~third-party financing activities section of our consolidated statements of cash flows. We engage in this payment structure in order to minimize our interest expense and bank fees in connection with financing the operations of our technology segment.institutions.

We believe that cash on hand and funds generated from operations, together with available credit under our credit facility, will be ~~sufficient~~enough to finance our working capital, capital expenditures, and other requirements for at least the next ~~twelve calendar months.~~year.

Our ability to continue to ~~fund our planned growth,~~expand, both ~~internally~~organically and ~~externally,~~through acquisitions, is dependent upon our ability to generate ~~sufficient~~enough cash flow from operations or ~~to obtain additional funds through equity~~from borrowing or ~~debt financing, or from~~ other sources of financing as may be required. While at this time we do not anticipate requiring any additional sources of financing to fund operations, if demand for IT products declines, or if our supply of products is delayed or interrupted, our cash flows from operations may be substantially affected.

37CASH FLOWS

~~Table of Contents~~

~~Cash Flows~~

The following table summarizes our sources and uses of cash ~~over~~for the ~~periods indicated~~nine months ended December 31, 2023, and 2022 (in thousands):

Nine Months Ended December 31,
2017 2016
Net cash provided by operating activities $ 48,824 $ 29,702
Net cash used in investing activities (54,793 ) (47,040 )
Net cash used in financing activities (27,758 ) (8,205 )
Effect of exchange rate changes on cash 72 454

Net decrease in cash and cash equivalents $ (33,655 ) $ (25,089 )

	Nine Months Ended December 31,
	2023			2022
Net cash provided by (used in) operating activities	$	143,492		$	(147,038	)
Net cash used in investing activities		(55,838	)		(15,624	)
Net cash (used in) provided by financing activities		(48,651	)		103,555
Effect of exchange rate changes on cash		74			3,124
Net increase (decrease) in cash and cash equivalents	$	39,077		$	(55,983	)

Cash flows from operating activities~~. Cash~~: We had cash provided by operating activities ~~totaled~~ ~~$48.8~~ of $143.5 million during the nine months ended December 31, ~~2017. Net earnings adjusted for the impact of non-cash items was $46.1million. Net changes~~2023, compared to cash used in assets and liabilities resulted in a increase of cash and cash equivalents of $2.7 million, primarily due to net reductions in inventories of $43.3 million and increased in accounts payable of $18.4 million, mostly offset by additions to deferred costs, other intangible assets and other assets of $26.2 financing receivables of $13.0, accounts receivables of $10.3 million, and salaries and commissions payable and deferred revenues and other liabilities of $9.5 million.

~~Cash provided by~~ operating activities ~~totaled~~ ~~$29.7~~ of $147.0 million ~~during~~for the nine months ended December 31, ~~2016. Net earnings adjusted~~2022. See below for a breakdown of operating cash flows by business (in thousands):

	Nine Months Ended December 31,
	2023			2022
Technology business segments	$	150,030		$	(115,811	)
Financing business segment		(6,538	)		(31,227	)
Net cash provided by (used in) operating activities	$	143,492		$	(147,038	)

Technology business: For the ~~impact~~nine months ended December 31, 2023, our combined technology business segments had cash provided by operating activities of ~~non-cash items was $45.0 million. Net changes in assets and liabilities resulted in a decrease of cash and cash equivalents of $15.3~~$150.0 million primarily due to net ~~additions to accounts receivables of $62.0 million, inventories of $77.4 million, partially offset by increased~~earnings and increases in accounts payable ~~of $53.2 million,~~– trade and salaries and commissions payable, ~~deferred revenues~~offset by increases in our accounts receivable.

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For the nine months ended December 31, 2022, our combined technology business segments used $115.8 million from operating activities primarily due to increases in our accounts receivable and ~~other liabilities of $51.2 million.~~inventories, partially offset by net earnings.

~~In order to~~To manage our working capital, we monitor our cash conversion cycle for our ~~Technology segment,~~technology business segments, which is defined as days sales outstanding (“DSO”) in accounts receivable plus days of supply in inventory (“DIO”) minus days of purchases outstanding in accounts payable (“DPO”).

The following table presents the components of the cash conversion cycle for our ~~Technology segment:~~technology business segments:

	As of December 31,
	2017			2016			As of December 31,
							2023			2022
(DSO) Days sales outstanding (1)		52			52			71			62
(DIO) Days inventory outstanding (2)		12			23			27			30
(DPO) Days payable outstanding (3)		(40	)		(48	)		(44	)		(41	)
Cash conversion cycle		24			27			54			51

(1)	Represents the rolling three-month average of the balance of trade accounts receivable-trade, net for our ~~Technology segment~~technology business segments at the end of the period divided by ~~Adjusted gross~~Gross billings ~~of product and services~~ for the same three-month period.

(2)

Represents the rolling three-month average of the balance of inventory, net for our ~~Technology segment~~technology business segments at the end of the period divided by ~~Cost~~the direct cost of ~~adjusted gross billings of product~~products and services billed to our customers for the same three-month period.

(3)

Represents the rolling three-month average of the combined balance of accounts payable-trade and accounts payable-floor plan for our ~~Technology segment~~technology business segments at the end of the period divided by ~~Cost~~the direct cost of ~~adjusted gross billings of product~~products and services billed to our customers for the same three-month period.

Our cash conversion cycle ~~decreased~~increased to 2454 days at as of December 31 ~~2017,~~, 2023, as compared to 51 days as of December 31, 2022. Our standard payment term for customers is between 30-60 days; however, certain customer orders may be approved for extended payment terms. Our DSO increased 9 days to 71 days as of December 31, 2023, compared to 62 days as of December 31, 2022, reflecting higher sales to customers with terms greater than or equal to net 60 days. Our DIO decreased to 27 days atas of December 31, 2023, compared to 30 days as of December 31, 2022. Our DPO increased 3 days as of December 31, ~~2016,~~2023. Invoices processed through our WFCDF Credit Facility, or the A/P-floor plan balance, are typically paid within 45-60 days from the invoice date, while A/P trade invoices are typically paid within 30-60 days from the invoice date.

Financing business segment: For the nine months ended December 31, 2023, our financing business segment used $6.5 million from operating activities, primarily ~~driven by a decrease in DPO of 8 days~~ due to ~~DPO timing of payments. The higher cash conversion cycle for December 31, 2016 was due mainly to a significant~~an increase in financing receivables, offset by net earnings and an increase in accounts payable-trade. For the nine months ended December 31, 2022, our ~~inventories~~financing business segment used $31.2 million from operating activities, primarily due to ~~large projects for several of our major customers~~increases in ~~the prior year’s quarter.~~financing receivables-net, offset by net earnings.

Cash flows related to investing activities~~. Cash used in investing activities was $54.8 million during~~: For the nine months ended December 31 ~~2017. Cash~~, 2023, we used $55.8 million in investing activities, ~~during~~consisting of $48.6 million for the ~~nine months ended December 31, 2017 was primarily driven by acquisitions~~acquisition of ~~$37.7~~NSG, and $7.7 million net issuance and repayment of financing receivables of $79.1 million, purchases of assets to be leased or financed of $5.7 million, and purchases of property, equipment, software, and operating lease equipment of $6.3 million, which was partially offset by the sale of financing receivables of $64.1 million, and proceeds from sale of property, equipment and operating leases of $10.0 million.

~~Table of Contents~~

Cash used in investing activities was $47.0 million during the nine months ended December 31, 2016. Cash used in investing activities during the nine months ended December 31, 2016 was primarily driven by issuance of financing receivables of $114.7 million, cash used in acquisitions of $9.5 million,for purchases of property, equipment and operating lease equipment, ~~of $7.3 million, and purchases of assets to be leased or financed of $5.9 million, which was~~ partially offset by ~~cash proceeds from the repayment financing receivable~~$0.5 million of ~~$44.1 million, the sale of financing receivables of $39.9 million, and~~ proceeds from the sale of property, equipment, and operating lease ~~equipment of $6.4 million.~~

~~Cash flows from financing activities. Cash used in financing activities was $27.8 million during~~equipment. For the nine months ended December 31 ~~2017, which was primarily due to~~, 2022, we used $15.6 million in investing activities, consisting of $13.3 million in cash used in acquiring Future Com and $5.7 million for purchases of property, equipment, and operating lease equipment, partially offset by $3.3 million of proceeds from the sale of property, equipment, and operating lease equipment.

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Cash flows from financing activities: For the nine months ended December 31, 2023, we used $48.7 million in financing activities, consisting of $58.1 million in net ~~repayment~~repayments onthe floor plan ~~facility~~component of ~~$24.9~~our WFCDF Credit Facility and $9.8 million ~~cash used for the~~to repurchase outstanding shares of our common stock, partially offset by $16.2 million in net borrowings of non-recourse and recourse notes payable, and $3.0 million in proceeds of issuance of common stock to employees under an employee stock purchase plan. For the nine months ended December 31, 2022, cash provided by financing activities was $103.6 million, consisting of ~~$13.4 million, and~~ ~~repayment of financing of acquisitions of $1.6 million, partially offset by~~ net borrowings of non-recourse and recourse notes payable of ~~$12.1~~$101.6 million,. ~~Cash used in financing activities was $8.2 million during the nine months ended December 31, 2016, which was primarily due to $30.5~~ partially offset by $7.2 million in cash used ~~for the~~to repurchase outstanding shares of our common stock and $9.2 million in net ~~repayment~~repayments on the accounts payable floor plan facility.

Other than recourse borrowings under our WFCDF Credit Facility, our borrowing of ~~$5.6 million, partially offset by~~ ~~to net borrowings of~~recourse and non-recourse ~~and recourse~~ notes payable ~~of $28.6 million.~~

~~Non-Cash Activities~~

~~We assign~~primarily arises from our financing business segment when we transfer contractual payments due to us under lease and financing agreements to third-party financial ~~institutions, which are accounted~~institutions. When the transfers do not meet the requirements for asa sale, the proceeds paid to us represent borrowings of recourse or non-recourse notes payable. ~~As a condition to the assignment agreement, certain financial institutions may request that the customer remit their~~

Non-cash activities: We transfer contractual payments to a trust; rather than to us, and the trust pays the financial institution. Alternatively, if the structure of the agreement does not require a trustee, the customer will continue to make payments to us, and we will remit the payment to the financial institution. The economic impactdue to us under ~~either~~lease and financing agreements to third-party financial institutions. In certain assignment structure is similar, in that the assigned contractual payments are paid by the customer and remitted to the lender to pay down the corresponding non-recourse notes payable. However, these assignment structures are classified differently within our consolidated statements of cash flows. More specifically,agreements, we are required to exclude non-cash transactions from our consolidated statement of cash flows, so certain contractual payments made by the customer to the trust are excluded from our operating cash receipts and the corresponding repayment of the non-recourse notes payable from the trust tomay direct the third-party financial institution ~~are excluded~~to pay some of the proceeds from ~~our cash flows from financing activities. Contractual payments received by~~ the ~~trust and paid~~assignment directly to the ~~lender on our behalf are disclosed as a non-cash financing activity.~~

~~Liquidity and Capital Resources~~

~~We may utilize non-recourse notes payable to finance approximately 80% to 100% of the purchase price of~~vendor or vendors that have supplied the assets being leased or ~~financed by our customers. Any balance~~financed. In these situations, the portion of the ~~purchase price remaining after~~proceeds paid directly to our vendors are non-cash transactions.

SECURED BORROWINGS

We may finance all or most of the cost of the assets that we finance for customers by transferring all or part of the contractual payments due to us to third-party financing institutions. When we account for the transfer as a secured borrowing, we recognize the proceeds as either recourse or non-recourse ~~funding~~notes payable. Our customers are responsible for repaying the debt from a secured borrowing. The lender typically secures a lien on the financed assets at the time the financial assets are transferred and ~~any upfront payments received from~~releases it upon collecting all the transferred payments. We are not liable for the repayment of non-recourse loans unless we breach our representations and warranties in the loan agreements. The lender assumes the credit risk and their only recourse, upon default by the customer, ~~(our equity investment in~~is against the ~~equipment) must generally be financed by cash flows from our operations,~~customer and the ~~sale of the~~specific equipment ~~leased to third parties, or other internal means. Although~~under lease. While we expect that the credit quality of our financing arrangements and our residual return history will continue to allow us to obtain such financing, such financing may not be available on acceptable terms, or at all. Interest rates have been rising and may continue to rise. To preserve our expected internal rate of return, we generally quote rates that are indexed. Some of our lenders will not commit to rates for a length of time, resulting in exposure to us if the rates rise and we cannot pass such exposure to the customer.

CREDIT FACILITY

We finance the operations of our subsidiaries ePlus Technology, inc., ePlus Technology Services, inc. and SLAIT Consulting, LLC (collectively, the “Borrowers”) in our technology business segments through a credit facility with WFCDF. The ~~financing necessary~~WFCDF Credit Facility has a floor plan facility and a revolving credit facility.

Please refer to ~~support~~Note 8 “Notes Payable and Credit Facility” to the accompanying Consolidated Financial Statements included in “Part I, Item 1. Financial Statements” for additional information concerning our ~~lease~~WFCDF Credit Facility.

Floor plan facility: We finance most purchases of products for sale to our customers through the floor plan facility. Once our customer places a purchase order with us and we have approved their credit, we place an order for the desired products with one of our vendors. Our vendors are generally paid by the floor plan facility and our liability is reflected in “accounts payable—floor plan” in our consolidated balance sheets.

Most customer payments to us are remitted to our lockbox accounts. Once payments are cleared, the monies in the lockbox accounts are automatically and daily transferred to our operating account. We pay down the floor plan facility on three specified dates each month, generally 30-60 days from the invoice date. Our borrowings and repayments under the floor plan component are included in “net borrowings (repayments) on floor plan facility” within cash flows from the financing activities ~~has been provided by~~in our consolidated statements of cash and non-recourse borrowings. We monitor our exposure closely. We are able to obtain financing through our traditional lending sources which is primarily non-recourse borrowings from third party banks and finance companies. Non-recourse financings are loans whose repayment is the responsibility of a specific customer, although we may make representations and warranties to the lender regarding the specific contract or have ongoing loan servicing obligations. Under a non-recourse loan, we borrow from a lender an amount based on the present value of the contractually committed payments at a fixed rate of interest, and the lender secures a lien on the financed assets. When the lender is fully repaid, the lien is released and all further proceeds are ours. We are not liable for the repayment of non-recourse loans unless we breach our representations and warranties in the loan agreements. The lender assumes the credit risk, and the lender’s only recourse, upon default, is against the customer and the specific equipment.flows.

At December 31, 2017, our non-recourse notes payable decreased 13.8% to $31.5 million, as compared to $36.5 million at March 31, 2017. Recourse notes payable was zero as of December 31, 2017 compared to $0.9 million as of March 31, 2017.

Whenever desirable, we arrange for equity investment financing, which includes selling lease payments, including the residual portions, to third parties and financing the equity investment on a non-recourse basis. We generally retain customer control and operational services, and have minimal residual risk. We usually reserve the right to share in remarketing proceeds of the equipment on a subordinated basis after the investor has received an agreed-to return on its investment.

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~~Credit Facility — Technology~~

~~Our subsidiary,~~ ePlus Technology, inc., has a financing facility from WFCDF to finance its working capital requirements for inventories and accounts receivable. There are two components of this facility: (1) a floor plan component; and (2) an accounts receivable component. This facility has full recourse to e~~Plus Technology, inc. and is secured by a blanket lien against all its assets, such as chattel paper, receivables and inventory.~~ As of December 31, ~~2017,~~2023, and March 31, 2023, we had a maximum credit limit, including the ~~facility had an aggregate limit of the two components of $250.0 million with an accounts receivable sub-limit of $30.0 million.~~

~~On July 27, 2017, we executed an amendment to the WFCDF~~revolving credit facility, ~~which temporarily increased the aggregate limit~~ of ~~the two components from $250.0~~$500.0 million, ~~to $325.0 million from the date of the agreement through October 31, 2017,~~ and ~~provides us~~ an election beginning July 1 in each subsequent year to similarly temporarily increase the aggregate limit of the two components to $325.0 million ending the earlier of 90 days following the date of election and October 31 of that same year.

Availability under the facility may be limited by the asset value of equipment we purchase or accounts receivable, and may be further limited by certain covenants and terms and conditions of the facility. These covenants include but are not limited to a minimum excess availability of the facility and minimum earnings before interest, taxes, depreciation and amortization of ePlus Technology, inc. We were in compliance with these covenants as of December 31, 2017. Interest on the facility is assessed at a rate of the One Month LIBOR plus two and one half percent if the payments are not made on the three specified dates each month. The facility requires that financial statements of ePlus Technology, inc. be provided within 45 days of each quarter and 90 days of each fiscal year end and also requires other operational reports be provided on a regular basis. Either party may terminate the facility with 90 days advance written notice.

We are not, and do not believe that we are reasonably likely to be, in breach of the WFCDF credit facility. In addition, we do not believe that the covenants of the WFCDF credit facility materially limit our ability to undertake financing. In this regard, the covenants apply only to our subsidiary, e~~Plus Technology, inc. This credit facility is secured by the assets of only~~ e~~Plus Technology, inc. and the guaranty as described below.~~

~~The facility provided by WFCDF requires a guaranty of $10.5 million by~~ e~~Plus inc. The guaranty requires~~ ePlus inc. to deliver its annual audited financial statements by a certain date. We have delivered the annual audited financial statements for the year ended March 31, 2017, as required. The loss of the WFCDF credit facility could have a material adverse effect on our future results as we currently rely on this facility and its components for daily working capital and liquidity for our technology segment and as an operational function of our accounts payable process.

~~Floor Plan Component~~

~~Purchases by~~ ePlus Technology, inc. including computer technology products, software, maintenance and services, are in part financed through a floor plan component in which interest expense for the first thirty to ninety days, in general, is not charged. The floor plan liabilities are recorded as accounts payable—floor plan on our consolidated balance sheets, as they are normally repaid within the fifteen to ninety-day time frame and represent assigned accounts payable originally generated with the manufacturer/distributor. In some cases we are able to pay invoices early and receive a discount, but if the fifteen to ninety-day obligation is not paid timely, interest is then assessed at stated contractual rates.

~~The respective floor plan component credit limits and actual~~ outstanding balance ~~payables for the dates indicated were as follows (in thousands):~~

Maximum Credit Limit
at December 31, 2017

Balance as of
December 31, 2017

Maximum Credit Limit
at March 31, 2017

Balance as of
March 31, 2017

$ 250,000 $ 107,761 $ 250,000 $ 132,612

~~Accounts Receivable Component~~

~~Included within the credit facility,~~ e~~Plus Technology, inc. has an accounts receivable component from WFCDF, which has a revolving line of credit. On the due date of the invoices financed by~~on the floor plan ~~component,~~facility of $92.5 million and $134.6 million, respectively. On our balance sheet, our liability under the ~~invoices are paid by the~~floor plan facility is presented as part of accounts ~~receivable component of the~~payable – floor plan.

Revolving credit ~~facility. The balance of the accounts receivable component is then reduced by payments from our available cash.~~ facility: The outstanding balance under the ~~accounts receivable component~~revolving credit facility is ~~recorded~~presented as part of recourse notes ~~payable~~payable- current on our consolidated balance sheets. ~~There was no balance outstanding for~~Our borrowings and repayments under the ~~accounts receivable component at~~revolving credit facility are included in “borrowings of non-recourse and recourse notes payable” and “repayments of non-recourse and recourse notes payable,” respectively, within cash flows from the financing activities in our consolidated statements of cash flows.

As of December 31, ~~2017or~~2023, and March 31, ~~2017, while~~2023, we did not have any outstanding balance under the revolving credit facility. The maximum credit limit under this facility was ~~$30.0~~$200.0 million ~~for~~as of both ~~periods.~~December 31, 2023, and March 31, 2023, and is a sublimit of the $500.0 million facility.

40PERFORMANCE GUARANTEES

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~~Performance Guarantees~~

In the normal course of business, we may provide certain customers with performance guarantees, which are generally backed by surety bonds. In general, we would only be liable for ~~the amount of~~ these guarantees in the event of default in the performance of our obligations. We are in compliance with the performance obligations under all service contracts for which there is a performance guarantee, and we believe that any liability incurred in connection with these guarantees would not have a material adverse effect on our consolidated statements of operations.

~~Off-Balance Sheet Arrangements~~OFF-BALANCE SHEET ARRANGEMENTS

As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements, ~~as defined in Item 303(a) (4) (ii) of Regulation S-K~~ or other contractually narrow or limited purposes. As of December 31, ~~2017,~~2023, we were not involved in any unconsolidated special purpose entity transactions.

~~Adequacy of Capital Resources~~ADEQUACY OF CAPITAL RESOURCES

The continued implementation of our business strategy will require a significant investment in both resources and managerial focus. In addition, we may selectively acquire other companies that have attractive customer relationships and skilled sales and/or engineering forces. We may also ~~start offices~~open facilities in new geographic areas, which may require a significant investment of cash. We may also acquire technology companies to expand and enhance our geographic footprint, or the platform of bundled solutions to provide additional functionality and value-added services. We may require additional capital due to increases in inventory to accommodate our customers’ IT installation schedules. We may continue to use our internally generated funds to finance investments in leased assets or investments in notes ~~receivables~~receivable due from our customers. These actions may result in increased working capital needs as the business expands. As a result, we may require additional financing to fund our strategy, implementation, potential future acquisitions, and working capital needs, which may include additional debt and equity financing. While the future is uncertain, we do not believe our WFCDF Credit Facility will be terminated by WFCDF or us. Additionally, while our lending partners in our financing segment have become more discerning in their approval processes, we currently have funding resources available for our transactions.

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

~~Inflation~~

~~For the periods presented herein, inflation has been relatively low and we believe that inflation has not had a material effect on our results of operations.~~

~~Potential Fluctuations in Quarterly Operating Results~~

Our future quarterly operating results and the market price of our common stock may fluctuate. In the event our 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 our common 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, IT resellers, software competitors, or our major customers or vendors of ours.

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Our quarterly results of operations are susceptible to fluctuations for a number of reasons, including, but not limited to currency fluctuations, reduction in IT spending, shortages of product from our vendors due to material shortages, any reduction of expected residual values related to the equipment under our leases, the timing and mix of specific transactions, the reduction of manufacturer incentive programs, and other factors. Quarterly operating results could also fluctuate as a result of our sale of equipment in our lease portfolio to a lessee or third-party at the expiration of a lease term or prior to such expiration, ~~to a lessee or to a third party~~ and the transfer of financial assets. Sales of equipment and transfers of financial assets 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. See Part I, Item 1A, ~~“Risk~~“Risk Factors,” in our ~~2017~~2023 Annual Report, as supplemented in subsequently filed reports, including the Form 8-K that we filed with the SEC on October 6, 2023, and in Part II, Item 1A. “Risk Factors” in this Report.

We believe that comparisons of quarterly results of our operations are not necessarily meaningful and that results for one quarter should not be relied upon as an indication of future performance.

CRITICAL ACCOUNTING ESTIMATES

As disclosed in Note 2, “Recent Accounting Pronouncements,” we adopted a new standard on accounting for contract assets and contract liabilities from contracts with customers in a business combination in the second quarter of our fiscal year 2023. Under this new standard, we apply Accounting Standards Codification Topic 606, Contracts with Customers, to recognize and measure contract assets and contract liabilities from contracts with customers. Other than this change, our critical accounting estimates have not changed from those reported in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report.

Item 3.

~~Quantitative and Qualitative Disclosures About Market Risk~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our quantitative and qualitative disclosures about market risk during the nine months ended December 31, 2017 from our 2017 Annual Report. For a discussion of the Company's exposure to market risk, reference is made to disclosures set forth in Part II, Item 7A of our above-mentioned 2017 Annual Report.

Although a substantial portion of our liabilities are non-recourse, fixed-interest-rate instruments, we utilize ~~our~~ lines of credit and other financing facilities ~~which~~that are subject to fluctuations in short-term interest rates. ~~These~~Our non-recourse instruments, which are denominated in ~~U.S.~~US dollars, were entered ~~into~~ for other than trading purposes and ~~with the exception of amounts drawn under the WFCDF facility,~~ bear interest at a fixed rate. Because the interest rate on these instruments is fixed, changes in interest rates will not directly impact our cash flows. Financing transactions funded with our cash flows, not debt, are subject to interest rate risk. If the market interest rate exceeds our internal rate of return, we may not fund the transaction to obtain the proceeds. Borrowings under the WFCDF ~~facility~~Credit Facility bear interest at a market-based variable rate. As of December 31, ~~2017,~~2023, the aggregate fair value of our recourse and non-recourse borrowings approximated their carrying value.

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We have transactions in foreign currencies, primarily in British Pounds and in Euros. There is a potential for exposure to fluctuations in foreign currency rates resulting primarily from the translation exposure associated with the preparation of our consolidated financial statements. In addition, we have foreign currency exposure when transactions are not denominated in our subsidiaries’ functional currency, which include purchases and sales of the ~~subsidiary’s functional currency.~~products and services we provide, as well as loans with other ePlus entities. Additionally, we lease assets in foreign countries, including Canada, the UK, and several other European countries. As a lessor, we lease assets for amounts denominated in British Pounds, Euros, and Canadian dollars. To date, ~~our~~ foreign ~~operations are insignificant~~currency exposure associated with purchases and sales of the products and services we provide has not been significant. We have incurred foreign currency transaction gains and losses in ~~relation to total consolidated operations and we believe that potential fluctuations~~certain foreign subsidiaries on US dollar denominated loans. Fluctuations in currency exchange rates ~~will not have a material effect on our financial position.~~

~~The UK referendum (“Brexit”) to leave, the European Union could~~may impact revenue items, cost items, tax, goodwill impairments and liquidity, among others. The most obvious immediate impact is the effect of foreign exchange fluctuations on revenue and cost items. We have determined that our foreign currency exposure for our United Kingdom operations is insignificant in relation to total consolidated operations and we believe those potential fluctuations in currency exchange rates and other Brexit related economic and operational risks will not have a material effect on our results of operations and financial position.

~~We evaluate Brexit-related developments on a regular basis to determine if such developments are anticipated to have a material impact on the Company’s results on operations and financial position.~~

We have assets in Canada and Iceland. As a lessor, we have entered into lease contracts and non-recourse, fixed-interest-rate financing denominated in Canadian dollars and in Icelandic krona. In our fiscal year beginning April 1, 2016, we began entering in financing transactions and non-recourse, fixed-interest-rate financing denominated in British Pounds in the United Kingdom. To date, our foreign operations have been insignificant and we believe that potential fluctuations in currency exchange rates will not have a material effect on our financial position.

Item 4.

~~Controls and Procedures~~CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures, or “disclosure controls,” as defined in the Exchange Act Rule 13a-15(e). Disclosure controls are controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this ~~quarterly report,~~Quarterly Report, is recorded, processed, summarized, and reported within the ~~time~~ periods specified in the SEC’s rules and forms. Disclosure controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our disclosure controls include some, but not all, components of our internal control over financial reporting. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, ~~2017.~~2023.

~~Changes in Internal Controls~~

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CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have not been any changes in our internal control over financial reporting during the quarter ended December 31, ~~2017, which~~2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

42LIMITATIONS AND EFFECTIVENESS OF CONTROLS

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~~Limitations on the Effectiveness of Controls~~

Our management, including our CEO and CFO, ~~does~~do not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system cannot provide absolute assurance due to its inherent limitations; it is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. A control system also can be circumvented by collusion or improper management override. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of such limitations, disclosure controls and internal control over financial reporting cannot prevent or detect all misstatements, whether unintentional errors or fraud. However, these inherent limitations are known features of the financial reporting process; therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

PART II. OTHER INFORMATION

Item 1.

~~Legal Proceedings~~

LEGAL PROCEEDINGS

Please refer to Note 9, “Commitment and Contingencies” to the accompanying Consolidated Financial Statements included in “Part I, Item 1. Financial Statements”.

From time to time, we may be subject to legal proceedings that arise in the ordinary course of business. Legal proceedings which may arise in the ordinary course of business include preference payment claims asserted in customer bankruptcy proceedings, tax audits, claims of alleged infringement of patents, trademarks, copyrights and other intellectual property rights, claims of alleged non-compliance with contract provisions, employment-related claims, claims by competitors, vendors or customers, claims related to alleged violations of laws and regulations, and claims relating to alleged security or privacy breaches. We attempt to ameliorate the effect of potential litigation through insurance coverage and contractual protections such as rights to indemnifications and limitations of liability.

We provide for costs relating to contingencies when a loss is probable and the amount is reasonably determinable. In the opinion of management, there was not at least a reasonable possibility that the Company may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies for asserted legal and other claims. However, the outcome of legal proceedings and claims brought against us is subject to significant uncertainty. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be materially adversely affected.

Item 1A.

~~Risk Factors~~

RISK FACTORS

There has not been any material change in the risk factors ~~previously~~ disclosed in ~~Part~~“Part I, Item 1A1A. Risk Factors” of our ~~2017~~ Annual ~~Report.~~Report on Form 10-K for the fiscal year ended March 31, 2023, as updated in our Current Report on Form 8-K filed with the SEC on October 6, 2023.

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Item 2.

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

The following table provides information regarding our purchases of e~~Plus inc.~~ common stock during the ~~nine~~three months ended December 31, ~~2017.~~2023.

Period Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
April 1, 2017 through April 30, 2017 - $ - - 1,000,000 (2 )
May 1, 2017 through May 31, 2017 - $ - - 1,000,000 (3 )
June 1, 2017 through June 30, 2017 54,546 $ 75.72 - 1,000,000 (4 )
July 1, 2017 through July 31, 2017 3,179 $ 79.50 - 1,000,000 (5 )
August 1, 2017 through August 18, 2017 - $ - - 1,000,000 (6 )
August 19, 2017 through August 31, 2017 - $ - - 500,000 (7 )
September 1, 2017 through September 30, 2017 - $ - - 500,000 (8 )
October 1, 2017 through October 31, 2017 - $ - - 500,000 (9 )
November 1, 2017 through November 30, 2017 56,707 $ 78.21 - 443,293 (10 )
December 1, 2017 through December 31, 2017 68,898 $ 77.61 - 374,395 (11 )

Period	Total number of shares purchased (1)		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Maximum number of shares that may yet be purchased under the plans or programs (2)
Oct 1, 2023 through Oct 31, 2023		9,000	$	63.96		9,000		969,743
Nov 1, 2023 through Nov 30, 2023		11,355	$	61.92		11,355		958,388
Dec 1, 2023 through Dec 31, 2023		1,786	$	67.10		1,786		956,602
Total		22,141				22,141

(1)

~~Any~~

All shares were acquired ~~were~~ in open-market purchases, except for 54,546 shares, which were repurchased in June 2017, and 3,179 shares which were repurchased in July 2017, to satisfy tax withholding obligations that arose due to the vesting of shares of restricted stock.purchases.

(2)

The ~~share purchase authorization~~amounts presented in ~~place for~~this column are the ~~month ended April 30, 2017 had purchase limitations on the~~remaining number of shares ~~of up to 1,000,000 shares. As of April 30, 2017,~~that may be repurchased after repurchases during the ~~remaining authorized shares to be purchased were 1,000,000.~~

~~(3)~~

~~The share purchase authorization in place for the month ended May 31, 2017 had purchase limitations on the number of shares of up to 1,000,000 shares.~~month. As of May ~~31, 2017, the remaining authorized shares to be purchased were 1,000,000.~~

~~(4)~~

The share purchase authorization in place for the month ended June 30, 2017 had purchase limitations on the number of shares of up to 1,000,000 shares. As of June 30, 2017, the remaining authorized shares to be purchased were 1,000,000.

~~(5)~~

The share purchase authorization in place for the month ended July 31, 2017 had purchase limitations on the number of shares of up to 1,000,000 shares. As of July 31, 2017, the remaining authorized shares to be purchased were 1,000,000.

~~(6)~~

~~As of August 18, 2017~~27, 2023, the authorization under the ~~then existing~~then-existing share ~~purchase~~repurchase plan expired.

~~(7)~~

On ~~August 15, 2017, the~~March 22, 2023, our board of directors authorized the ~~company to~~ repurchase of up to ~~500,000~~1,000,000 shares of our outstanding common stock, ~~commencing on August 19, 2017 through August 18, 2018. As of August 31, 2017, the remaining authorized shares to be purchased were 500,000.~~over a 12-month period beginning May 28, 2023.

~~(8)~~

The share purchase authorization in place for the month ended September 30, 2017 had purchase limitations on the number of shares of up to 500,000 shares. As of September 30, 2017, the remaining authorized shares to be purchased were 500,000.

~~(9)~~

The share purchase authorization in place for the month ended October 31, 2017 had purchase limitations on the number of shares of up to 500,000 shares. As of October 31, 2017, the remaining authorized shares to be purchased were 500,000.

~~(10)~~

The share purchase authorization in place for the month ended November 30, 2017 had purchase limitations on the number of shares of up to 500,000 shares. As of November 30, 2017, the remaining authorized shares to be purchased were 443,293.

~~(11)~~

The share purchase authorization in place for the month ended December 31, 2017 had purchase limitations on the number of shares of up to 500,000 shares. As of December 31, 2017, the remaining authorized shares to be purchased were 374,395.

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The timing and expiration date of the current stock repurchase authorizations are included in Note ~~10, “Stockholders’ Equity~~11”, “Stockholders’ Equity” to our unaudited ~~condensed~~ consolidated financial statements included elsewhere in this report.

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Item 3.

~~Defaults Upon Senior Securities~~

DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

Item 4.

~~Mine Safety Disclosures~~

MINE SAFETY DISCLOSURES

Not Applicable.

Item 5.

~~Other Information~~OTHER INFORMATION

~~None.~~

Insider Trading Arrangements and Policies

During the three months ended December 31, 2023, no director or executive officer of ePlus inc. adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. Certain of our executive officers may participate in employee stock purchase plans that have been designed to comply with Rule 10b5-1(c) under the Exchange Act.

Item 6.

~~Exhibits~~EXHIBITS

~~10.1~~Exhibit Number		Exhibit Description

3.1		ePlus inc. Amended and Restated ~~Employment Agreement effective~~Certificate of Incorporation, as last amended September ~~6, 2017,~~18, 2023. (Incorporated herein by ~~and between ePlus inc. and Mark P. Marron.~~reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q for the period ended September 30, 2023).

3.2		Amended and Restated Bylaws of ePlus inc., as of March 2, 2022. (Incorporated herein by reference to Exhibit 3.2 to our Annual Report on Form 10-K for the fiscal year ended March 31, 2022).

10.1		Form of Cash Performance Award Agreement. (Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K as filed with the Securities and Exchange Commission on November 22, 2023).

10.2		Form of Performance Stock Unit Award Notice and Award Agreement. (Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K as filed with the Securities and Exchange Commission on November 22, 2023).

~~10.2~~31.1	~~Amended and Restated Employment Agreement effective December 12, 2017, by and between ePlus inc. and Phillip G. Norton.~~

~~10.3~~	~~Amended and Restated Employment Agreement effective September 6, 2017, by and between ePlus inc. and Elaine D. Marion.~~

~~31.1~~	Certification of the Chief Executive Officer of ePlus inc. pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a).

31.2		Certification of the Chief Financial Officer of ePlus inc. pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a).

32		Certification of the Chief Executive Officer and Chief Financial Officer of ePlus inc. pursuant to 18 U.S.C. § 1350.

101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH		Inline XBRL Taxonomy Extension Schema Document

Table of Contents

101.CAL
~~101.CAL~~	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Exhibit 101 Inline XBRL document)

Table of Contents

SIGNATURES~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ePlus inc.

Date: February ~~7, 2018~~6, 2024	/s/ MARK P. MARRON
	By: Mark P. Marron
	Chief Executive Officer and President
	(Principal Executive Officer)

Date: February ~~7, 2018~~6, 2024	/s/ ELAINE D. MARION
	By: Elaine D. Marion
	Chief Financial Officer
	(Principal Financial Officer)

Delaware		54-1817218
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	PLUS	NASDAQ Global Select Market

Large accelerated filer ☐☒	Accelerated filer ☒☐
Non-accelerated filer ~~☐(do not check if smaller reporting company)~~ ☐	Smaller reporting company ☐
	Emerging growth company ☐

	Number of Shares			Weighted Average Grant-date Fair Value

Nonvested April 1, 2023		314,860		$	49.57
Granted		165,985		$	56.43
Vested		(167,546	)	$	46.31
Forfeited		(2,509	)	$	55.60
Nonvested December 31, 2023		310,790		$	55.01

	Number of Shares			Weighted Average Grant-date Fair Value

Nonvested April 1, 2017		371,689		$	40.45
Granted		72,375		$	80.25
Vested		(156,240	)	$	38.52
Forfeited		(4,108	)	$	39.37
Nonvested December 31, 2017		283,716		$	51.68

Part I. Financial Information:

Item 1.		Financial Statements

		Unaudited ~~Condensed~~ Consolidated Balance Sheets as of December 31, ~~2017~~2023, and March 31, ~~2017~~2023	5

		Unaudited ~~Condensed~~ Consolidated Statements of Operations for the Three and Nine Months Ended December 31, ~~2017~~2023, and ~~2016~~2022	6

		Unaudited ~~Condensed~~ Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended December 31, ~~2017~~2023, and ~~2016~~2022	7

		Unaudited ~~Condensed~~ Consolidated Statements of Cash Flows for the Nine Months Ended December 31, ~~2017~~2023, and ~~2016~~2022	8

		Unaudited ~~Condensed~~ Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended December 31, ~~2017~~2023, and 2022	10

		Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements	11

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	2629

Item 3.		Quantitative and Qualitative Disclosures About Market Risk	4147

Item 4.		Controls and Procedures	4247

Part II. Other Information:

Item 1.		Legal Proceedings	4348

Item 1A.		Risk Factors	4348

Item 2.		Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	4448

Item 3.		Defaults Upon Senior Securities	4549

Item 4.		Mine Safety Disclosures	4549

Item 5.		Other Information	4549

Item 6.		Exhibits	4549

Signatures ~~& Certifications~~	46		51

	As of December 31, 2017			As of March 31, 2017
ASSETS	(in thousands, except per share data)

Current assets:
Cash and cash equivalents	$	76,105		$	109,760
Accounts receivable—trade, net		285,820			266,029
Accounts receivable—other, net		30,690			24,987
Inventories		51,295			93,557
Financing receivables—net, current		74,598			51,656
Deferred costs		24,740			7,971
Other current assets		25,970			43,364
Total current assets		569,218			597,324

Financing receivables and operating leases—net		72,575			71,883
Deferred tax assets—net		1,268			-
Property, equipment and other assets		17,632			11,956
Goodwill		76,546			48,397
Other intangible assets—net		27,414			12,160
TOTAL ASSETS	$	764,653		$	741,720

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Current liabilities:
Accounts payable	$	125,850		$	113,518
Accounts payable—floor plan		107,761			132,612
Salaries and commissions payable		20,568			18,878
Deferred revenue		50,739			65,312
Recourse notes payable—current		-			908
Non-recourse notes payable—current		27,649			26,085
Other current liabilities		26,116			19,179
Total current liabilities		358,683			376,492

Non-recourse notes payable—long term		3,840			10,431
Deferred tax liability—net		-			1,799
Other liabilities		18,518			7,080
TOTAL LIABILITIES		381,041			395,802

COMMITMENTS AND CONTINGENCIES (Note 8)

STOCKHOLDERS' EQUITY

Preferred stock, $.01 per share par value; 2,000 shares authorized; none outstanding		-			-
Common stock, $.01 per share par value; 25,000 shares authorized;14,046 outstanding at December 31, 2017 and 14,161 outstanding at March 31, 2017		142			142
Additional paid-in capital		128,392			123,536
Treasury stock, at cost		(14,165	)		-
Retained earnings		269,048			222,823
Accumulated other comprehensive income—foreign currency translation adjustment		195			(583	)
Total Stockholders' Equity		383,612			345,918
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	764,653		$	741,720

	Common Stock					Additional Paid-In		Treasury			Retained		Accumulated Other Comprehensive
	Shares			Par Value		Capital		Stock			Earnings		Income			Total

Balance, April 1, 2017		14,161		$	142	$	123,536	$	-		$	222,823	$	(583	)	$	345,918
Issuance of restricted stock awards		68			-		-		-			-		-			-
Share-based compensation		-			-		4,856		-			-		-			4,856
Repurchase of common stock		(183	)		-		-		(14,165	)		-		-			(14,165	)
Net earnings		-			-		-		-			46,225		-			46,225
Foreign currency translation adjustment		-			-		-		-			-		778			778

Balance, December 31, 2017		14,046		$	142	$	128,392	$	(14,165	)	$	269,048	$	195		$	383,612

	Nine Months Ended December 31, 2017							Nine Months Ended December 31, 2016
	Goodwill		Accumulated Amortization / Impairment Loss			Net Carrying Amount		Goodwill			Accumulated Amortization / Impairment Loss			Net Carrying Amount

Balance as of March 31	$	57,070	$	(8,673	)	$	48,397	$	50,824		$	(8,673	)	$	42,151
Acquisitions		27,996		-			27,996		7,636			-			7,636
Foreign currency translations		153		-			153		(315	)		-			(315	)
Balance as of December 31	$	85,219	$	(8,673	)	$	76,546	$	58,145		$	(8,673	)	$	49,472

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Unbilled Minimum Lease Payments		Total Minimum Lease Payments		Unearned Income			Non- Recourse Notes Payable			Net Credit Exposure

December 31, 2017

High CQR	$	188	$	90	$	907	$	1,185	$	18,238	$	30,496	$	49,919	$	(3,027	)	$	(14,420	)	$	32,472
Average CQR		30		36		216		282		124		22,697		23,103		(1,385	)		(11,413	)		10,305
Low CQR		-		-		-		-		-		-		-		-			-			-
Total	$	218	$	126	$	1,123	$	1,467	$	18,362	$	53,193	$	73,022	$	(4,412	)	$	(25,833	)	$	42,777

March 31, 2017

High CQR	$	379	$	224	$	230	$	833	$	406	$	32,532	$	33,771	$	(2,362	)	$	(12,924	)	$	18,485
Average CQR		113		20		113		246		91		23,622		23,959		(1,556	)		(13,353	)		9,050
Low CQR		-		-		142		142		-		-		142		(19	)		-			123
Total	$	492	$	244	$	485	$	1,221	$	497	$	56,154	$	57,872	$	(3,937	)	$	(26,277	)	$	27,658

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Unbilled Notes Receivable		Total Notes Receivable		Non- Recourse Notes Payable			Net Credit Exposure

December 31, 2017

High CQR	$	4	$	-	$	833	$	837	$	2,071	$	35,001	$	37,909	$	(21,971	)	$	15,938
Average CQR		1,086		4		599		1,689		8		19,776		21,473		(15,555	)		5,918
Low CQR		-		-		62		62		-		-		62		-			62
Total	$	1,090	$	4	$	1,494	$	2,588	$	2,079	$	54,777	$	59,444	$	(37,526	)	$	21,918

March 31, 2017

High CQR	$	183	$	663	$	755	$	1,601	$	1,165	$	23,359	$	26,125	$	(12,003	)	$	14,122
Average CQR		28		5		-		33		555		18,725		19,313		(13,732	)		5,581
Low CQR		-		-		3,086		3,086		-		-		3,086		-			3,086
Total	$	211	$	668	$	3,841	$	4,720	$	1,720	$	42,084	$	48,524	$	(25,735	)	$	22,789

	December 31, 2017		March 31, 2017
Other current assets:
Deposits & funds held in escrow	$	14,819	$	39,161
Prepaid assets		10,429		3,388
Other		722		815
Total other current assets	$	25,970	$	43,364

Property, equipment and other assets
Property and equipment, net	$	8,013	$	6,690
Deferred costs		7,326		3,536
Other		2,293		1,730
Total other assets - long term	$	17,632	$	11,956

	December 31, 2017		March 31, 2017
Other current liabilities:
Accrued expenses	$	7,907	$	7,450
Accrued income taxes payable		170		1,761
Contingent consideration		5,360		554
Other		12,679		9,414
Total other current liabilities	$	26,116	$	19,179

Other liabilities:
Deferred revenue	$	10,064	$	4,704
Contingent consideration long-term		7,765		1,500
Other		689		876
Total other liabilities - long term	$	18,518	$	7,080

	December 31, 2017		March 31, 2017
Recourse notes payable with interest rates ranging from 3.20% to 4.13% as of March 31, 2017.
Current	$	-	$	908

Non-recourse notes payable secured by financing receivables and investment in operating leases with interest rates ranging from 2.00% to 8.45% December 31, 2017, and ranging from 2.00% to 7.75% as of March 31, 2017.
Current	$	27,649	$	26,085
Long-term		3,840		10,431
Total non-recourse notes payable	$	31,489	$	36,516

	Three Months Ended
	December 31, 2017						December 31, 2016
	Technology		Financing		Total		Technology		Financing		Total

Sales of product and services	$	330,953	$	-	$	330,953	$	317,391	$	-	$	317,391
Financing revenue		-		9,592		9,592		-		8,190		8,190
Fee and other income		1,678		346		2,024		915		161		1,076
Net sales		332,631		9,938		342,569		318,306		8,351		326,657

Cost of sales, product and services		264,487		-		264,487		251,729		-		251,729
Direct lease costs		-		1,394		1,394		-		1,142		1,142
Cost of sales		264,487		1,394		265,881		251,729		1,142		252,871

Selling, general, and administrative expenses		53,836		3,298		57,134		47,780		2,380		50,160
Depreciation and amortization		2,893		1		2,894		1,908		2		1,910
Interest and financing costs		-		270		270		-		409		409
Operating expenses		56,729		3,569		60,298		49,688		2,791		52,479

Operating income	$	11,415	$	4,975	$	16,390	$	16,889	$	4,418	$	21,307

Selected Financial Data - Statement of Cash Flow
Depreciation and amortization	$	3,157	$	1,422	$	4,579	$	1,941	$	985	$	2,926
Purchases of property, equipment and operating lease equipment	$	2,018	$	844	$	2,862	$	849	$	3,282	$	4,131

Selected Financial Data - Balance Sheet
Total assets	$	595,584	$	169,069	$	764,653	$	546,728	$	189,950	$	736,678

	Acquisition Date Amount
Accounts receivable and other assets	$	14,353
Property and equipment		1,620
Identified intangible assets		13,650
Accounts payable and other current liabilities		(12,313	)
Total identifiable net assets		17,310
Goodwill		21,088
Total purchase consideration	$	38,398

	Acquisition Date Amount
Accounts receivable and other current assets	$	7,491
Property and equipment		1,045
Identified intangible assets		4,090
Accounts payable and other current liabilities		(5,786	)
Total identifiable net assets		6,840
Goodwill		6,227
Total purchase consideration	$	13,067

Quarter Ended	Sequential			Year over Year
December 31, 2017		(7.5	%)		4.3	%
September 30, 2017		0.2	%		(1.0	%)
June 30, 2017		11.1	%		23.1	%
March 31, 2017		1.3	%		10.3	%
December 31, 2016		(12.1	%)		10.3	%

	Twelve Months Ended December 31,
	2017			2016			Change
Revenue by customer end market:
Technology		25	%		22	%		3	%
SLED		17	%		21	%		(4	%)
Telecom, Media & Entertainment		14	%		16	%		(2	%)
Financial Services		16	%		12	%		4	%
Healthcare		13	%		11	%		2	%
Other		15	%		18	%		(3	%)
Total		100	%		100	%

Revenue by vendor:
Cisco Systems		44	%		49	%		(5	%)
HP Inc. & HPE		7	%		6	%		1	%
NetApp		4	%		5	%		(1	%)
Sub-total		55	%		60	%		(5	%)
Other		45	%		40	%		5	%
Total		100	%		100	%

Maximum Credit Limit at December 31, 2017				Balance as of December 31, 2017				Maximum Credit Limit at March 31, 2017				Balance as of March 31, 2017
$	250,000			$	107,761			$	250,000			$	132,612

Period	Total number of shares purchased (1)		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
April 1, 2017 through April 30, 2017		-	$	-		-		1,000,000	(2	)
May 1, 2017 through May 31, 2017		-	$	-		-		1,000,000	(3	)
June 1, 2017 through June 30, 2017		54,546	$	75.72		-		1,000,000	(4	)
July 1, 2017 through July 31, 2017		3,179	$	79.50		-		1,000,000	(5	)
August 1, 2017 through August 18, 2017		-	$	-		-		1,000,000	(6	)
August 19, 2017 through August 31, 2017		-	$	-		-		500,000	(7	)
September 1, 2017 through September 30, 2017		-	$	-		-		500,000	(8	)
October 1, 2017 through October 31, 2017		-	$	-		-		500,000	(9	)
November 1, 2017 through November 30, 2017		56,707	$	78.21		-		443,293	(10	)
December 1, 2017 through December 31, 2017		68,898	$	77.61		-		374,395	(11	)