UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

FORM 10-Q

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

For the quarterly period ended September 30, ~~2020~~2021

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

For the transition period from____ to ~~____ .~~____.

Commission file number: 1-34167

ePlus inc.

(Exact name of registrant as specified in its charter)

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

13595 Dulles Technology Drive, Herndon, VA 20171-3413

(Address, including zip code, of principal executive offices)

Registrant’s telephone number, including area code: (703) 984-8400

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares of common stock outstanding as of November ~~2, 2020~~5, 2021, was ~~13,507,214.~~13,508,469.

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TABLE OF CONTENTS

ePlus inc. AND SUBSIDIARIES

Part I. Financial Information:

Item 1.	Financial Statements

	Unaudited Consolidated Balance Sheets as of September 30, ~~2020~~2021, and March 31, ~~2020~~2021	5

	Unaudited Consolidated Statements of Operations for the Three and Six Months Ended September 30, ~~2020~~2021, and ~~2019~~2020	6

	Unaudited Consolidated Statements of Comprehensive Income for the Three and Six Months Ended September 30, ~~2020~~2021, and ~~2019~~2020	7

	Unaudited Consolidated Statements of Cash Flows for the Three and Six Months Ended September 30, ~~2020~~2021, and ~~2019~~2020	8

	Unaudited Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended September 30, ~~2020~~2021, and ~~2019~~2020	10

	Notes to Unaudited Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2625

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4341

Item 4.	Controls and Procedures	4442

Part II. Other Information:

Item 1.	Legal Proceedings	4443

Item 1A.	Risk Factors	4543

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4543

Item 3.	Defaults Upon Senior Securities	4543

Item 4.	Mine Safety Disclosures	4543

Item 5.	Other Information	4543

Item 6.	Exhibits	4644

Signatures ~~& Certifications~~		4745

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CAUTIONARY ~~STATEMENT CONCERNING~~LANGUAGE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q10-Q contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A27A of the Securities Act of 1933, as amended, and Section 21E21E of the Securities Exchange Act of 1934, as amended, or “Exchange Act,” and are made in reliance upon the protections provided by such acts for forward-looking statements. Such statements are not based on historical ~~fact;~~fact but are based upon numerous assumptions about future conditions that may not occur. Forward-looking statements are generally identifiable by use of forward-looking words such as “may,” “should,” “would,” “intend,” “estimate,” “will,” “potential,” “possible,” “could,” “believe,” “expect,” “intend,” “plan,” “anticipate,” “project,” and similar expressions. Readers are cautioned not to place undue reliance on any forward-looking statements made by us or on our behalf. Forward-looking statements are made based upon information that is currently available or management’s current expectations and beliefs concerning future developments and their potential effects upon us, speak only as of the date hereof, and are subject to certain risks and uncertainties. We do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur, or of which we hereafter become aware. Actual events, transactions and results may materially differ from the anticipated events, transactions, or results described in such statements. Our ability to consummate such transactions and achieve such events or results is subject to certain risks and uncertainties. Such risks and uncertainties include, but are not limited to, the matters set forth below:

the duration and ongoing impact of the novel coronavirus ~~pandemic~~ (“COVID-19”), pandemic, which could materially adversely affect our financial condition and results of operations and has resulted in governmental authorities imposing numerous unprecedented measures to try to contain the virus that has impacted and may further impact our workforce and operations, the operations of our customers, and those of our respective vendors, suppliers, and partners;

national and international political instability fostering uncertainty and volatility in the global economy including exposure to fluctuation in foreign currency rates, interest rates, and ~~downward~~ pressure on prices;

significant adverse changes in, reductions in, or loss of our largest volume customer or one or more of our large volume customers, or vendors;

the creditworthiness of our customers and our ability to reserve adequately for credit losses;

loss of our credit facility or credit lines with our vendors may restrict our current and future operations;

uncertainty regarding the phase out of LIBOR may negatively affect our operating results;

a possible decrease in the capital spending budgets of our customers or a decrease in purchases from us;

•

our ability to raise capital, maintain or increase as needed our lines of credit with vendors or floor planning facility, obtain debt for our financing transactions, or the effect of those changes on our common stock price;

reliance on third parties to perform some of our service obligations to our customers;

changes in the Information Technology (“IT”) industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service (“IaaS”), ~~and~~ software as a service (“SaaS”) and platform as a service (“PaaS”);

our dependency on continued innovations in hardware, software, and services offerings by our vendors and our ability to partner with them;

availability of products from our vendors;

significant and rapid inflation may cause price and wage increases, as well as increases in operating costs which may impact the arrangements that have pricing commitments over the term of the agreement.

future growth rates in our core businesses;

reduction of vendor incentives provided to us;

rising interest rates or the loss of key lenders or the constricting of credit markets;

the possibility of goodwill impairment charges in the future;

maintaining and increasing advanced professional services by recruiting and retaining highly skilled, competent personnel, and vendor certifications;

adapting to meet changes in markets and competitive developments;

increasing the total number of customers using integrated solutions by up-selling within our customer base and gaining new customers;

our ability to secure our own and our customers’ electronic and other confidential information, and remain secure during a cyber-security attack;

managing a diverse product set of solutions in highly competitive markets with a number of key vendors;

increasing the total number of customers who use our managed services and professional services and continuing to enhance our managed services offerings to remain competitive in the marketplace;

performing professional and managed services competently;

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our ability to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration, and other key strategies;

~~Table of Contents~~

changes to or loss of members of our senior management team and/or failure to successfully implement succession plans;

exposure to changes in, interpretations of, or enforcement trends in legislation and regulatory matters;

domestic and international economic regulations uncertainty (e.g., tariffs, and trade agreements);

our contracts may not be adequate to protect us, and we are subject to audit in which we may not pass, and our professional and liability insurance policies coverage may be insufficient to cover a claim;

failure to comply with public sector contracts, or applicable laws or regulations;

our dependence on key personnel to maintain certain customer relationships, and our ability to hire, train, and retain sufficient qualified personnel;

maintaining our proprietary software and updating our technology infrastructure to remain competitive in the marketplace;

disruptions or a security breach in our or our vendors’ IT systems and data and audio communication networks;

our ability to realize our investment in leased equipment;

our ability to successfully perform due diligence and integrate acquired businesses;

~~significant changes in accounting standards including changes~~our ability to protect our intellectual property rights and successfully defend any challenges to the ~~financial reporting~~validity of ~~leases, which could impact the demand for~~ our ~~leasing services,~~patents or ~~misclassification of products and services~~allegations that we ~~sell resulting in the misapplication of revenue recognition policies or inaccurate costs and completion dates for our services, which could affect our estimates; and~~

•

~~our ability to protect our intellectual property rights and successfully defend any challenges to the validity of our patents or allegations that we are infringing upon any~~ ~~third-party~~are infringing upon any third-party patents, and the costs associated with those actions, and, when appropriate, license required technology.

We cannot be certain that our business strategy will be successful or that we will successfully address these and other challenges, risks, and uncertainties. For a further list and description of various risks, relevant factors, and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see Item 1A,1A, “Risk Factors” and Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained elsewhere in this report, as well as other reports that we file with the Securities and Exchange Commission (“SEC”).

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PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	September 30, 2020			March 31, 2020			September 30, 2021			March 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	161,081		$	86,231		$	56,950		$	129,562
Accounts receivable—trade, net		369,037			374,998			457,308			391,567
Accounts receivable—other, net		40,832			36,570			57,346			41,053
Inventories		73,751			50,268			134,514			69,963
Financing receivables—net, current		92,766			70,169			80,082			106,272
Deferred costs		22,329			22,306			30,691			28,201
Other current assets		8,233			9,256			12,675			10,976
Total current assets		768,029			649,798			829,566			777,594

Financing receivables and operating leases—net		87,926			74,158			105,855			90,165
Deferred tax asset—net								1,469			1,468
Property, equipment and other assets		34,314			32,596			43,895			42,289
Goodwill		118,177			118,097			126,596			126,645
Other intangible assets—net		30,265			34,464			32,564			38,614
TOTAL ASSETS	$	1,038,711		$	909,113		$	1,139,945		$	1,076,775

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES

Current liabilities:
Accounts payable	$	104,893		$	82,919		$	121,263		$	165,162
Accounts payable—floor plan		218,970			127,416			145,880			98,653
Salaries and commissions payable		30,284			30,952			36,382			36,839
Deferred revenue		59,078			55,480			82,937			72,802
Recourse notes payable—current		2,286			37,256			35,548			5,450
Non-recourse notes payable—current		35,610			29,630			21,083			50,397
Other current liabilities		25,372			22,986			32,532			30,061
Total current liabilities		476,493			386,639			475,625			459,364

Non-recourse notes payable—long term		2,444			5,872
Deferred tax liability—net		3,762			2,730
Recourse notes payable - long-term								9,360			12,658
Non-recourse notes payable - long-term								4,315			5,664
Other liabilities		32,942			27,727			37,042			36,679
TOTAL LIABILITIES		515,641			422,968			526,342			514,365

COMMITMENTS AND CONTINGENCIES (Note 10)
COMMITMENTS AND CONTINGENCIES (Note 9)								0			0

STOCKHOLDERS' EQUITY
STOCKHOLDERS’ EQUITY

Preferred stock, $0.01 per share par value; 2,000 shares authorized; NaN outstanding		0			0
Common stock, $0.01 per share par value; 25,000 shares authorized; 13,537 outstanding at September 30, 2020 and 13,500 outstanding at March 31, 2020		145			144
Preferred stock, $0.01 per share par value; 2,000 shares authorized; NaN outstanding								0			0
Common stock, $0.01 per share par value; 25,000 shares authorized; 13,510 outstanding at September 30, 2021 and 13,503 outstanding at March 31, 2021								146			145
Additional paid-in capital		148,845			145,197			155,941			152,366
Treasury stock, at cost, 958 shares at September 30, 2020 and 896 shares at March 31, 2020		(72,911	)		(68,424	)
Treasury stock, at cost, 1,070 shares at September 30, 2021 and 993 shares at March 31, 2021								(82,246	)		(75,372	)
Retained earnings		447,425			410,219			539,547			484,616
Accumulated other comprehensive income—foreign currency translation adjustment		(434	)		(991	)		215			655
Total Stockholders' Equity		523,070			486,145
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,038,711		$	909,113
Total Stockholders’ Equity								613,603			562,410
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY							$	1,139,945		$	1,076,775

See Notes to Unaudited Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	Three Months Ended September 30,					Six Months Ended September 30,					Three Months Ended September 30,								Six Months Ended September 30,
	2020		2019			2020		2019			2021			2020		2021			2020

Net sales
Product	$	383,656	$	363,497		$	690,896	$	699,098		$	397,160		$	383,656	$	758,217		$	690,896
Services		49,425		48,068			97,216		93,839			60,857			49,425		116,449			97,216
Total		433,081		411,565			788,112		792,937			458,017			433,081		874,666			788,112
Cost of sales
Product		302,963		278,863			529,597		538,926			297,629			302,963		574,856			529,597
Services		31,156		29,671			60,996		58,341			37,386			31,156		71,296			60,996
Total		334,119		308,534			590,593		597,267			335,015			334,119		646,152			590,593

Gross profit		98,962		103,031			197,519		195,670			123,002			98,962		228,514			197,519

Selling, general, and administrative		66,889		70,523			136,356		136,310			74,504			66,889		143,279			136,356
Depreciation and amortization		3,341		3,557			6,857		7,020			3,853			3,341		7,779			6,857
Interest and financing costs		247		576			824		1,204			342			247		701			824
Operating expenses		70,477		74,656			144,037		144,534			78,699			70,477		151,759			144,037

Operating income		28,485		28,375			53,482		51,136			44,303			28,485		76,755			53,482

Other income (expense)		184		(40	)		282		(85	)		(325	)		184		(202	)		282

Earnings before tax		28,669		28,335			53,764		51,051			43,978			28,669		76,553			53,764

Provision for income taxes		8,823		8,237			16,558		14,765			12,565			8,823		21,622			16,558

Net earnings	$	19,846	$	20,098		$	37,206	$	36,286		$	31,413		$	19,846	$	54,931		$	37,206

Net earnings per common share—basic	$	1.48	$	1.51		$	2.79	$	2.72		$	2.36		$	1.48	$	4.12		$	2.79
Net earnings per common share—diluted	$	1.48	$	1.51		$	2.78	$	2.71		$	2.34		$	1.48	$	4.09		$	2.78

Weighted average common shares outstanding—basic		13,372		13,312			13,347		13,334			13,332			13,372		13,333			13,347
Weighted average common shares outstanding—diluted		13,391		13,350			13,394		13,408			13,432			13,391		13,431			13,394

See Notes to Unaudited Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Three Months Ended September 30,					Six Months Ended September 30,					Three Months Ended September 30,					Six Months Ended September 30,
	2020		2019			2020		2019			2021			2020		2021			2020

NET EARNINGS	$	19,846	$	20,098		$	37,206	$	36,286		$	31,413		$	19,846	$	54,931		$	37,206

OTHER COMPREHENSIVE INCOME, NET OF TAX:

Foreign currency translation adjustments		520		(350	)		557		(613	)		(506	)		520		(440	)		557

Other comprehensive income (loss)		520		(350	)		557		(613	)
Other comprehensive income												(506	)		520		(440	)		557

TOTAL COMPREHENSIVE INCOME	$	20,366	$	19,748		$	37,763	$	35,673		$	30,907		$	20,366	$	54,491		$	37,763

See Notes to Unaudited Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Six Months Ended September 30,
	2020			2019			Six Months Ended September 30,
							2021			2020
Cash flows from operating activities:
Net earnings	$	37,206		$	36,286		$	54,931		$	37,206

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization		9,460			10,077			12,044			9,460
Reserve for credit losses		1,766			631
Provision for credit losses								98			1,766
Share-based compensation expense		3,648			4,054			3,575			3,648
Deferred taxes		1,032			(3	)		(1	)		1,032
Payments from lessees directly to lenders—operating leases		(13	)		(34	)		(32	)		(13	)
Gain on disposal of property, equipment, and operaing lease equipment		(278	)		(436	)		(525	)		(278	)
Changes in:
Accounts receivable		1,755			(46,100	)		(85,463	)		1,755
Inventories-net		(23,381	)		(5,301	)		(64,661	)		(23,381	)
Financing receivables—net		(54,386	)		(76,423	)		(18,019	)		(54,386	)
Deferred costs and other assets		(1,052	)		(18,826	)		(6,115	)		(1,052	)
Accounts payable-trade		21,717			15,585			(43,375	)		21,717
Salaries and commissions payable, deferred revenue, and other liabilities		10,934			26,086			12,539			10,934
Net cash provided by (used in) operating activities		8,408			(54,404	)		(135,004	)		8,408

Cash flows from investing activities:
Proceeds from sale of property, equipment, and operating lease equipment		456			653			2,553			456
Purchases of property, equipment and operating lease equipment		(3,267	)		(4,888	)		(16,243	)		(3,267	)
Cash used in acquisitions, net of cash acquired		0			(13,815	)
Net cash used in investing activities		(2,811	)		(18,050	)		(13,690	)		(2,811	)

Cash flows from financing activities:
Borrowings of non-recourse and recourse notes payable		23,613			54,877			64,815			23,613
Repayments of non-recourse and recourse notes payable		(40,529	)		(5,629	)		(29,386	)		(40,529	)
Repurchase of common stock		(4,487	)		(13,692	)		(6,874	)		(4,487	)
Repayments of financing of acquisitions		(421	)		(785	)		0			(421	)
Net borrowings on floor plan facility		91,554			13,585
Net borrowings (repayments) on floor plan facility								47,227			91,554
Net cash provided by financing activities		69,730			48,356			75,782			69,730

Effect of exchange rate changes on cash		(477	)		114			300			(477	)

Net increase (decrease) in cash and cash equivalents		74,850			(23,984	)		(72,612	)		74,850

Cash and cash equivalents, beginning of period		86,231			79,816			129,562			86,231

Cash and cash equivalents, end of period	$	161,081		$	55,832		$	56,950		$	161,081

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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - continued

(in thousands)

	Six Months Ended September 30,						Six Months Ended September 30,
	2020			2019			2021			2020
Supplemental disclosures of cash flow information:
Cash paid for interest	$	739		$	1,115		$	683		$	739
Cash paid for income taxes	$	12,348		$	12,471		$	24,511		$	12,348
Cash paid for amounts included in the measurement of lease liabilities	$	2,975		$	2,566		$	2,280		$	2,975

Schedule of non-cash investing and financing activities:
Proceeds from sale of property, equipment, and leased equipment							$	100		$	0
Purchases of property, equipment, and operating lease equipment	$	(393	)	$	(396	)	$	(2,386	)	$	(393	)
Financing of acquisitions	$	0		$	(1,464	)
Borrowing of non-recourse and recourse notes payable	$	35,780		$	82,462		$	41,195		$	35,780
Repayments of non-recourse and recourse notes payable	$	(13	)	$	(34	)	$	(32	)	$	(13	)
Vesting of share-based compensation	$	7,916		$	8,972		$	8,398		$	7,916
New operating lease assets obtained in exchange for lease obligations	$	774		$	5,225		$	1,070		$	774

See Notes to Unaudited Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

	Six Months Ended September 30, 2020																		Six Months Ended September 30, 2021
	Common Stock					Additional Paid-In		Treasury			Retained		Accumulated Other Comprehensive						Common Stock					Additional Paid-In		Treasury			Retained		Accumulated Other Comprehensive
	Shares			Par Value		Capital		Stock			Earnings		Income			Total			Shares			Par Value		Capital		Stock			Earnings		Income			Total
Balance, March 31, 2020		13,500		$	144	$	145,197	$	(68,424	)	$	410,219	$	(991	)	$	486,145
Balance, March 31, 2021																				13,503		$	145	$	152,366	$	(75,372	)	$	484,616	$	655		$	562,410
Issuance of restricted stock awards		91			1		0		0			0		0			1			78			1		0		0			0		0			1
Share-based compensation		0			0		1,885		0			0		0			1,885			0			0		1,735		0			0		0			1,735
Repurchase of common stock		(38	)		0		0		(2,703	)		0		0			(2,703	)		(45	)		0		0		(4,111	)		0		0			(4,111	)
Net earnings		-			0		0		0			17,360		0			17,360			-			0		0		0			23,518		0			23,518
Foreign currency translation adjustment		-			0		0		0			0		37			37			-			0		0		0			0		66			66

Balance, June 30, 2020		13,553		$	145	$	147,082	$	(71,127	)	$	427,579	$	(954	)	$	502,725
Balance, June 30, 2021																				13,536		$	146	$	154,101	$	(79,483	)	$	508,134	$	721		$	583,619
Issuance of restricted stock awards		8			0		0		0			0		0			0			6			0		0		0			0		0			0
Share-based compensation		0			0		1,763		0			0		0			1,763			0			0		1,840		0			0		0			1,840
Repurchase of common stock		(24	)		0		0		(1,784	)		0		0			(1,784	)		(32	)		0		0		(2,763	)		0		0			(2,763	)
Net earnings		-			0		0		0			19,846		0			19,846			-			0		0		0			31,413		0			31,413
Foreign currency translation adjustment		-			0		0		0			0		520			520			-			0		0		0			0		(506	)		(506	)

Balance, September 30, 2020		13,537		$	145	$	148,845	$	(72,911	)	$	447,425	$	(434	)	$	523,070
Balance, September 30, 2021																				13,510		$	146	$	155,941	$	(82,246	)	$	539,547	$	215		$	613,603

	Six Months Ended September 30, 2019																		Six Months Ended September 30, 2020
	Common Stock					Additional Paid-In		Treasury			Retained		Accumulated Other Comprehensive						Common Stock					Additional Paid-In		Treasury			Retained		Accumulated Other Comprehensive
	Common Stock					Additional Paid-In		Treasury			Retained		Accumulated Other Comprehensive						Common Stock					Additional Paid-In		Treasury			Retained		Accumulated Other Comprehensive
	Shares			Par Value		Capital		Stock			Earnings		Income			Total			Shares			Par Value		Capital		Stock			Earnings		Income			Total
Balance, March 31, 2019		13,611		$	143	$	137,243	$	(53,999	)	$	341,137	$	(271	)	$	424,253
Balance, March 31, 2020																				13,500		$	144	$	145,197	$	(68,424	)	$	410,219	$	(991	)	$	486,145
Issuance of restricted stock awards		86			1		0		0			0		0			1			91			1		0		0			0		0			1
Share-based compensation		0			0		1,919		0			0		0			1,919			0			0		1,885		0			0		0			1,885
Repurchase of common stock		(188	)		0		0		(13,455	)		0		0			(13,455	)		(38	)		0		0		(2,703	)		0		0			(2,703	)
Net earnings		-			0		0		0			16,188		0			16,188			-			0		0		0			17,360		0			17,360
Foreign currency translation adjustment		-			0		0		0			0		(263	)		(263	)		-			0		0		0			0		37			37

Balance, June 30, 2019		13,509		$	144	$	139,162	$	(67,454	)	$	357,325	$	(534	)	$	428,643
Balance, June 30, 2020																				13,553		$	145	$	147,082	$	(71,127	)	$	427,579	$	(954	)	$	502,725
Issuance of restricted stock awards		7			0		0		0			0		0			0			8			0		0		0			0		0			0
Share-based compensation		(3	)		0		2,135		0			0		0			2,135			0			0		1,763		0			0		0			1,763
Repurchase of common stock		0			0		0		(237	)		0		0			(237	)		(24	)		0		0		(1,784	)		0		0			(1,784	)
Net earnings		-			0		0		0			20,098		0			20,098			-			0		0		0			19,846		0			19,846
Foreign currency translation adjustment		-			0		0		0			0		(350	)		(350	)		-			0		0		0			0		520			520

Balance, September 30, 2019		13,513		$	144	$	141,297	$	(67,691	)	$	377,423	$	(884	)	$	450,289
Balance, September 30, 2020																				13,537		$	145	$	148,845	$	(72,911	)	$	447,425	$	(434	)	$	523,070

See Notes to Unaudited Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

NOTES TO UNAUDITED 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,” or “ePlus.” ePlus inc. is a holding company that through its subsidiaries provides information technology solutions ~~which~~that enable organizations to optimize their IT environment and supply chain processes. We also provide consulting, professional and managed services and complete lifecycle management services including flexible financing solutions. We focus on selling to medium and large enterprises in North America, the United Kingdom (“UK”), and other European countries.

BASIS OF PRESENTATION — The unaudited consolidated financial statements include the accounts of 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 consolidated financial statements from the dates of acquisition.

INTERIM FINANCIAL STATEMENTS — The unaudited consolidated financial statements for the six months ended September 30, ~~2020,~~2021, and ~~2019,~~2020, were prepared by us 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 six months ended September 30, ~~2020,~~2021, and ~~2019~~2020 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending March 31, ~~2021,~~2022, or any other future period. These unaudited consolidated financial statements do not include all disclosures required by the accounting principles generally accepted in the United States (“US GAAP”) for annual financial statements. Our audited consolidated financial statements are contained in our annual report on Form 10-K for the year ended March 31, ~~2020~~2021 (“~~2020~~2021 Annual Report”), which should be read in conjunction with these interim consolidated financial statements.

USE OF ESTIMATES — The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as 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, 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.

CONCENTRATIONS OF RISK — A substantial portion of our sales are products from Cisco Systems, which were ~~41%~~40% and ~~43%~~41% of our technology segment’s net sales for the three months ended September 30, ~~2020,~~2021, and ~~2019,~~2020, respectively, and ~~40%~~41% and ~~42%~~40% of our technology segment’s net sales for the six months ended September 30, ~~2020,~~2021, and ~~2019,~~2020, 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 year ended March 31, ~~2020,~~2021 ~~except for changes from the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update ("ASU")~~ ~~2016~~-~~13,Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended~~ ~~(“ASU~~ ~~2016~~-13”). ~~The updates~~ ~~to our accounting policies from adopting ASU~~ ~~2016~~-13 ~~are provided below.~~

ALLOWANCE FOR CREDIT LOSSES — We maintain an allowance for credit losses related to our accounts receivable and financing receivables. We record an expense in the amount necessary to adjust the allowance for credit losses to our current estimate of expected credit losses on financial assets. We estimate expected credit losses based on our internal rating of the customer’s credit quality, our historical credit losses, current economic conditions, and other relevant factors. Prior to providing credit, we assign an internal rating for each customer’s credit quality based on the customer’s financial status, rating agency reports and other financial information. We review our internal ratings for each customer at least annually or when there is an indicator of a change in credit quality, such as a delinquency or bankruptcy. We charge off uncollectable financing receivables when we stop pursuing collection.

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2.	~~RECENT ACCOUNTING PRONOUNCEMENTS~~

~~CREDIT LOSSES~~ — We adopted ASU 2016-13 on April 1, 2020. The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Our adoption of this update, including the cumulative-effect adjustment to retained earnings, is not significant to our financial statements. Refer to ~~Note 7, “Allowance for Credit Losses” for additional information.~~

3.2.

REVENUES

~~Contract balances~~CONTRACT BALANCES

Accounts receivable – trade consists entirely of amounts due from contracts with customers. In addition, we had $~~41.3~~53.8 million and $~~33.1~~54.6 million of receivables from contracts with customers included within financing receivables as of September 30~~30,~~, ~~2020,~~2021, and March 31, ~~2020,~~2021, respectively. The following table provides the balance of contract liabilities from contracts with customers (in thousands):

Contract liabilities	September 30, 2020		March 31, 2020
					September 30, 2021		March 31, 2021
Current (included in deferred revenue)	$	58,267	$	54,486	$	82,184	$	72,299
Non-current (included in other liabilities)	$	18,794	$	16,395	$	27,813	$	26,042

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Revenue recognized from the beginning contract liability balance was $14.6 million and $36.1 million for the three and six months ended September 30, 2021, respectively, and $11.3 million and $26.9 million for the three and six months ended September 30, 2020, ~~respectively, and $13.6 million and $29.4 million for the three and six months ended September 30, 2019,~~ respectively.

~~Performance obligations~~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 Year ending March 31, 2021 $ 20,527
Year Ending March 31, 2022 18,889
Year Ending March 31, 2023 8,385
Year Ending March 31, 2024 2,026
Year Ending March 31, 2025 516
Year Ending March 31, 2026 and thereafter 111
Total remaining performance obligations $ 50,454

Remainder of the year ending March 31, 2022	$	26,309
Year ending March 31, 2023		24,656
Year ending March 31, 2024		12,595
Year ending March 31, 2025		2,920
Year ending March 31, 2026 and thereafter		1,467
Total remaining performance obligations	$	67,947

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.

4.3.	FINANCING RECEIVABLES AND OPERATING LEASES

Our financing receivables and operating leases consist primarily of leases of IT and communication equipment and notes receivable from financing customer purchases of third-party software, maintenance, and services. Our leases often include elections for the lessee to purchase the underlying asset at the end of the lease term. ~~Occasionally,~~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 six months ended September 30, ~~2020,~~2021, and ~~2019~~2020 (in thousands):

									Three months ended September 30,				Six months ended September 30,
	Three months ended September 30, 2020		Three months ended September 30, 2019		Six months ended September 30, 2020		Six months ended September 30, 2019		2021		2020		2021		2020
Net sales	$	7,655	$	3,133	$	17,818	$	7,987	$	5,962	$	7,655	$	9,779	$	17,818
Cost of sales		5,402		2,702		10,729		6,652		4,926		5,402		8,291		10,729
Gross profit	$	2,253	$	431	$	7,089	$	1,335	$	1,036	$	2,253	$	1,488	$	7,089

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The following table provides interest income in aggregate on our sales-type leases and lease income on our operating leases for the three and six months ended September 30, ~~2020,~~2021, and ~~2019~~2020 (in thousands):

									Three months ended September 30,				Six months ended September 30,
	Three months ended September 30 2020		Three months ended September 30, 2019		Six months ended September 30, 2020		Six months ended September 30, 2019		2021		2020		2021		2020
Interest income on sales-type leases	$	1,884	$	1,495	$	4,103	$	3,590	$	1,000	$	1,884	$	2,290	$	4,103
Lease income on operating leases	$	3,900	$	5,059	$	7,738	$	10,418	$	6,634	$	3,900	$	11,844	$	7,738

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FINANCING RECEIVABLES—NET

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

September 30, 2020	Notes Receivable			Lease Receivables			Financing Receivables

September 30, 2021										Notes Receivable			Lease Receivables			Financing Receivables
Gross receivables	$	90,002		$	76,700		$	166,702		$	104,066		$	54,261		$	158,327
Unguaranteed residual value (1)		0			20,213			20,213			0			13,411			13,411
Initial direct costs, net of amortization		364			0			364			271			0			271
Unearned income		0			(11,329	)		(11,329	)		0			(7,095	)		(7,095	)
Reserve for credit losses (2)		(1,337	)		(1,227	)		(2,564	)
Allowance for credit losses (2)											(1,687	)		(672	)		(2,359	)
Total, net	$	89,029		$	84,357		$	173,386		$	102,650		$	59,905		$	162,555
Reported as:
Current	$	52,397		$	40,369		$	92,766		$	55,928		$	24,154		$	80,082
Long-term		36,632			43,988			80,620			46,722			35,751			82,473
Total, net	$	89,029		$	84,357		$	173,386		$	102,650		$	59,905		$	162,555

(1)

Includes unguaranteed residual values of ~~$12,644~~$8,081 thousand that we retained after selling the related lease receivable.

(2)

Refer to Note 7,6, “Allowance for Credit Losses” for details.

March 31, 2020	Notes Receivable			Lease Receivables			Financing Receivables

Minimum payments	$	55,417		$	69,492		$	124,909
Estimated unguaranteed residual value (1)		0			21,862			21,862
March 31, 2021										Notes Receivable			Lease Receivables			Financing Receivables
Gross receivables										$	112,641		$	68,393		$	181,034
Unguaranteed residual value (1)											0			14,876			14,876
Initial direct costs, net of amortization		212			247			459			425			0			425
Unearned income		0			(11,612	)		(11,612	)		0			(8,393	)		(8,393	)
Reserve for credit losses (2)		(798	)		(610	)		(1,408	)
Allowance for credit losses (2)											(1,212	)		(1,171	)		(2,383	)
Total, net	$	54,831		$	79,379		$	134,210		$	111,854		$	73,705		$	185,559
Reported as:
Current	$	31,181		$	38,988		$	70,169		$	73,175		$	33,097		$	106,272
Long-term		23,650			40,391			64,041			38,679			40,608			79,287
Total, net	$	54,831		$	79,379		$	134,210		$	111,854		$	73,705		$	185,559

(1)

Includes unguaranteed residual values of $~~14,972~~9,453 thousand ~~for sales type leases, which have been sold and accounted for as sales.~~that we retained after selling the related lease receivable.

(2)

Refer to Note 76, “Allowance for Credit Losses” for details.

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~~The following table provides the future scheduled minimum lease payments for investments in sales-type leases as of September~~ ~~30,2020~~ ~~(in~~ ~~thousands):~~

Remainder of the Year ending March 31, 2021 $ 46,006
Year Ending March 31, 2022 19,376
Year Ending March 31, 2023 8,196
Year Ending March 31, 2024 2,205
Year Ending March 31, 2025 and thereafter 917
Total $ 76,700

OPERATING LEASES—NET

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

	September 30, 2020			March 31, 2020
							September 30, 2021			March 31, 2021
Cost of equipment under operating leases	$	19,578		$	21,276		$	34,082		$	18,748
Accumulated depreciation		(12,272	)		(11,159	)		(10,700	)		(7,870	)
Investment in operating lease equipment—net (1)	$	7,306		$	10,117		$	23,382		$	10,878

(1)

Amounts include estimated unguaranteed residual values of ~~$2.5~~$4.6 million and ~~$3.1~~$2.5 million as of September 30, ~~2020,~~2021, and March 31, ~~2020,~~2021, respectively.

~~The following table provides the future scheduled minimum lease rental payments for operating leases as of September~~ ~~30,2020~~ ~~(in~~ ~~thousands):~~

Remainder of the Year ending March 31, 2021 $ 1,534
Year Ending March 31, 2022 1,927
Year Ending March 31, 2023 1,436
Year Ending March 31, 2024 477
Year Ending March 31, 2025 and thereafter 35
Total $ 5,409

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.

For transfers accounted for as a secured borrowing, the corresponding investments serve as collateral for non-recourse notes payable. As of September 30, ~~2020,~~2021, and March 31, ~~2020,~~2021, we had financing receivables of $~~33.7~~$22.6 million and $~~34.6~~$60.5 million, respectively, and operating leases of $~~4.9~~$8.1 million and $~~6.7~~$3.3 million, respectively, which were collateral for non-recourse notes payable. See Note 9~~, “Notes Payable~~8, ‘'Credit Facility and ~~Credit Facility.”~~Notes Payable.'’

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For transfers accounted for as sales, 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 September 30, ~~2020,~~2021, and ~~2019,~~2020, we recognized net gains of ~~$4.5~~$10.1 million and ~~$4.1~~$4.5 million, respectively, and total proceeds from these sales were ~~$118.5~~$615.0 million and ~~$95.1~~$118.5 million, respectively. For the year to date periods ended September 30, ~~2020,~~2021, and ~~2019,~~2020, we recognized net gains of ~~$7.0~~$13.3 million and ~~$7.5~~$7.0 million, respectively, and total proceeds from these sales were ~~$191.7~~$690.3 million and ~~$172.0~~$191.7 million, respectively.

When we retain servicing 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~~ September 30, ~~2020,~~2021, and March 31, ~~2020,~~2021, we had deferred revenue of ~~$0.4~~$0.5 million and $0.3 million, respectively, for servicing obligations.

In a limited number of transfers accounted for as sales, we indemnified the assignee ~~in the event that~~if the lessee ~~elected~~elects to early terminate the lease. As of September 30, ~~2020, our maximum~~2021, the total potential ~~future~~ payments ~~related to such guarantees~~that could result from these indemnities is immaterial. ~~We believe the likelihood of making any such payments to be remote.~~

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5.4.	LESSEE ACCOUNTING

We lease office space for periods up to 6six years. 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 of ~~$1.5~~$1.3 million as part of selling, general and administrative expenses for ~~both~~ the three months ended September 30, ~~2020,~~2021, and ~~September 30, 2019, and $3.1~~$1.5 million for ~~both~~ the ~~six~~three months ending September 30, 2020, and $2.6 million and $3.1 million for the six months ended September 30, ~~2019.~~

~~The following table provides supplemental information about the remaining lease terms~~2021, and ~~discount rates applied as of September~~ ~~30,~~2020, ~~and March~~ ~~31,2020~~: respectively.

Lease term and Discount Rate September 30, 2020 March 31, 2020
Weighted average remaining lease term (months) 34 38
Weighted average discount rate 3.8 % 3.9 %

~~The following table provides our future lease payments under our operating leases as of September~~ ~~30, 2020~~ ~~(in~~ ~~thousands):~~

September 30, 2020
Remainder of the year ending March 31, 2021 $ 2,432
Year ending March 31, 2022 4,319
Year ending March 31, 2023 3,093
Year ending March 31, 2024 1,249
Year ending March 31, 2025 and thereafter 813
Total lease payments $ 11,906
Less: interest (617 )
Present value of lease liabilities $ 11,289

6.5.	GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL

The following table summarizes the changes in the carrying ~~value~~amount of goodwill ~~was $118.2 and $118.1 million as of September 30, 2020, and March 31, 2020, respectively. There was no significant activity in the balance during~~for the six months ended September 30, ~~2020, other than change in foreign currency translation of $0.1 million.~~2021 (in thousands):

	Six months ended September 30, 2021
	Goodwill			Accumulated Impairment Loss			Net Carrying Amount
Beginning balance	$	135,318		$	(8,673	)	$	126,645
Foreign currency translations		(49	)		-			(49	)
Ending balance	$	135,269		$	(8,673	)	$	126,596

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 entire balance as of September 30, ~~2020, and March 31, 2020,~~2021, relates to our technology ~~reportable~~ segment, which we also determined to be 1 reporting unit. The change in our goodwill balance during the six months ended September 30, 2021, is due solely to foreign currency translation.

We test goodwill for impairment on an annual basis, as of the first day of our third fiscal quarter, and between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying value.

In our annual test as of October 1, ~~2019,~~2020, we performed a qualitative assessment of goodwill and concluded that, more likely than not, the fair value of our technology reporting unit continued to substantially exceed its carrying ~~value.~~

During the fourth quarter of fiscal year 2020, we determined that the uncertainty associated with the economic environment stemming from the COVID-19 pandemic was a triggering event and we elected to perform a quantitative goodwill impairment test. We concluded that the fair value of our technology reporting unit substantially exceeded its carrying value as of March 31, 2020. Our conclusions would not be impacted by a 10percent change in our estimate of the fair value of the reporting unit..

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OTHER INTANGIBLE ASSETS

~~Our~~Our other intangible assets consist of the following on September 30, ~~2020,~~2021, and March 31, ~~2020~~2021 (in thousands):

	September 30, 2020							March 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		September 30, 2021							March 31, 2021
															Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships & other intangibles	$	63,093	$	(37,467	)	$	25,626	$	63,006	$	(33,000	)	$	30,006	$	77,281	$	(47,424	)	$	29,857	$	77,335	$	(42,115	)	$	35,220
Capitalized software development		11,176		(6,537	)		4,639		10,385		(5,927	)		4,458		10,491		(7,784	)		2,707		10,553		(7,159	)		3,394
Total	$	74,269	$	(44,004	)	$	30,265	$	73,391	$	(38,927	)	$	34,464	$	87,772	$	(55,208	)	$	32,564	$	87,888	$	(49,274	)	$	38,614

Customer relationships and other intangibles are generally amortized between 5 to 10 years. Capitalized software development is generally amortized over 5 years.

Total amortization expense for customer relationships and other intangible assets was $3.0 million and $2.5 million for ~~both~~ the three months ended September 30, ~~2020,~~2021, and ~~2019,~~September 30, 2020, respectively, and ~~$5.0~~$6.0 million and ~~$4.9~~$5.0 million for the six months ended September 30, ~~2020,~~2021, and ~~2019,~~2020, respectively.

7.6.	ALLOWANCE FOR CREDIT LOSSES

The following table provides the activity in our allowance for credit losses for the six months ended September 30, ~~2020,~~2021, and ~~2019~~2020 (in thousands):

	Accounts Receivable			Notes Receivable			Lease Receivables			Total			Accounts Receivable			Notes Receivable			Lease Receivables			Total
Balance April 1, 2020	$	1,781		$	798		$	610		$	3,189
Balance April 1, 2021													$	2,064		$	1,212		$	1,171		$	4,447
Provision for credit losses		576			566			624			1,766			116			479			(497	)		98
Write-offs and other		(27	)		(27	)		(7	)		(61	)		(64	)		(4	)		(2	)		(70	)
Balance September 30, 2020	$	2,330		$	1,337		$	1,227		$	4,894
Balance September 30, 2021													$	2,116		$	1,687		$	672		$	4,475

	Accounts Receivable			Notes Receivable		Lease Receivables			Total			Accounts Receivable			Notes Receivable			Lease Receivables			Total
Balance April 1, 2019	$	1,579		$	505	$	530		$	2,614
Balance April 1, 2020												$	1,781		$	798		$	610		$	3,189
Provision for credit losses		311			15		(27	)		299			576			566			624			1,766
Write-offs and other		(42	)		0		(3	)		(45	)		(27	)		(27	)		(7	)		(61	)
Balance September 30, 2019	$	1,848		$	520	$	500		$	2,868
Balance September 30, 2020												$	2,330		$	1,337		$	1,227		$	4,894

The following table provides the amortized cost basis of our ~~allowance for~~financing receivables by credit ~~losses~~quality rating “CQR” and ~~minimum payments associated with our notes receivables and lease-related receivables disaggregated based on our impairment method~~by credit origination year as of ~~March 31, 2020~~September 30, 2021 (in thousands):

March 31, 2020

Notes
Receivable

Lease
Receivables

Allowance for credit losses:
Ending balance: collectively evaluated for impairment $ 736 $ 610
Ending balance: individually evaluated for impairment 62 0
Ending balance $ 798 $ 610

Minimum payments:
Ending balance: collectively evaluated for impairment $ 55,005 $ 69,492
Ending balance: individually evaluated for impairment 412 0
Ending balance $ 55,417 $ 69,492

	Amortized cost basis by origination year ending March 31,
	2022		2021		2020		2019		2018		2017		Total		Transfers (2)			Net credit exposure
Notes receivable:
High CQR	$	38,015	$	42,542	$	2,256	$	517	$	226	$	10	$	83,566	$	(35,004	)	$	48,562
Average CQR		12,933		4,794		2,104		342		3		0		20,176		(2,655	)		17,521
Low CQR		0		0		0		324		0		0		324		0			324
Total	$	50,948	$	47,336	$	4,360	$	1,183	$	229	$	10	$	104,066	$	(37,659	)	$	66,407

Lease receivables:
High CQR	$	12,716	$	10,504	$	4,253	$	1,424	$	168	$	48	$	29,113	$	(6,911	)	$	22,202
Average CQR		8,906		9,261		2,266		233		141		22		20,829		(5,641	)		15,188
Low CQR		1,497		1,057		0		0		0		0		2,554		0			2,554
Total	$	23,119	$	20,822	$	6,519	$	1,657	$	309	$	70	$	52,496	$	(12,552	)	$	39,944

Total amortized cost (1)	$	74,067	$	68,158	$	10,879	$	2,840	$	538	$	80	$	156,562	$	(50,211	)	$	106,351

(1)

Unguaranteed residual values of $8,081 thousand that we retained after selling the related lease receivable and initial direct costs of notes receivable of $271 thousand are excluded from amortized cost.

(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.

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We evaluate our customers using an internally assigned ~~credit quality rating (“CQR”):~~CQR:

•	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 generally in the range of 2% to 10%.

•	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 generally in the range of 10% to 100%.

The following table provides the amortized cost basis of our financing receivables by CQR and by credit origination year as of ~~September 30, 2020~~March 31, 2021 (in thousands):

	Amortized cost basis by origination year ending March 31,																			Amortized cost basis by origination year ending March 31,
	2021		2020		2019		2018		2017		2016 and prior		Total		Transfers (2)			Net credit exposure		2021		2020		2019		2018		2017		Total		Transfers (2)			Net credit exposure

Notes receivable:

High CQR	$	64,678	$	9,744	$	2,434	$	947	$	38	$	0	$	77,841	$	(35,867	)	$	41,974	$	93,793	$	6,250	$	769	$	771	$	19	$	101,602	$	(63,471	)	$	38,131
Average CQR		6,189		4,697		837		52		0		0		11,775		(3,651	)		8,124		7,689		2,468		550		8		0		10,715		(2,896	)		7,819
Low CQR		0		0		324		0		0		62		386		0			386		0		0		324		0		0		324		0			324
Total	$	70,867	$	14,441	$	3,595	$	999	$	38	$	62	$	90,002	$	(39,518	)	$	50,484	$	101,482	$	8,718	$	1,643	$	779	$	19	$	112,641	$	(66,367	)	$	46,274

Lease receivables:

High CQR	$	21,650	$	11,826	$	3,609	$	998	$	314	$	8	$	38,405	$	(9,518	)	$	28,887	$	28,898	$	5,885	$	1,798	$	463	$	125	$	37,169	$	(7,468	)	$	29,701
Average CQR		22,447		9,415		1,921		646		106		0		34,535		(11,409	)		23,126		23,445		3,482		1,017		270		40		28,254		(4,592	)		23,662
Low CQR		0		0		0		0		0		0		0		0			0		0		0		0		0		0		0		0			0
Total	$	44,097	$	21,241	$	5,530	$	1,644	$	420	$	8	$	72,940	$	(20,927	)	$	52,013	$	52,343	$	9,367	$	2,815	$	733	$	165	$	65,423	$	(12,060	)	$	53,363

Total amortized cost (1)	$	114,964	$	35,682	$	9,125	$	2,643	$	458	$	70	$	162,942	$	(60,445	)	$	102,497	$	153,825	$	18,085	$	4,458	$	1,512	$	184	$	178,064	$	(78,427	)	$	99,637

(1)

Unguaranteed residual values of $~~12,644~~9,453 thousand that we retained after selling the related lease receivable and initial direct costs of notes receivable of $~~364~~425 thousand are excluded from amortized cost.

(2)

The following table provides an aging analysis of our financing receivables as of September 30, ~~2020~~2021 (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		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	$	925	$	270	$	823	$	2,018	$	10,105	$	12,123	$	77,879	$	90,002	$	653	$	1,658	$	713	$	3,024	$	6,737	$	9,761	$	94,305	$	104,066
Lease receivables		660		2,049		1,771		4,480		1,754		6,234		66,706		72,940		323		493		726		1,542		2,480		4,022		48,474		52,496
Total	$	1,585	$	2,319	$	2,594	$	6,498	$	11,859	$	18,357	$	144,585	$	162,942	$	976	$	2,151	$	1,439	$	4,566	$	9,217	$	13,783	$	142,779	$	156,562

The following table provides an aging analysis of our ~~lease~~financing receivables ~~by CQR~~ as of March 31, ~~2020~~2021 (in thousands):

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

High CQR $ 951 $ 105 $ 922 $ 1,978 $ 1,181 $ 33,581 $ 36,740 $ (4,766 ) $ (19,823 ) $ 12,151
Average CQR 46 107 112 265 1,106 31,381 32,752 (3,646 ) (18,693 ) 10,413
Low CQR 0 0 0 0 0 0 0 0 0 0
Total $ 997 $ 212 $ 1,034 $ 2,243 $ 2,287 $ 64,962 $ 69,492 $ (8,412 ) $ (38,516 ) $ 22,564

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~~The following table provides an aging analysis of our notes receivable by CQR as of March 31,~~ ~~2020~~ ~~(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

High CQR $ 1,332 $ 2 $ 280 $ 1,614 $ 2,878 $ 29,057 $ 33,549 $ (18,341 ) $ 15,208
Average CQR 140 44 142 326 1,135 19,995 21,456 (16,636 ) 4,820
Low CQR 63 0 152 215 0 197 412 0 412
Total $ 1,535 $ 46 $ 574 $ 2,155 $ 4,013 $ 49,249 $ 55,417 $ (34,977 ) $ 20,440

	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	$	648	$	910	$	673	$	2,231	$	3,240	$	5,471	$	107,170	$	112,641
Lease receivables		804		132		643		1,579		2,566		4,145		61,278		65,423
Total	$	1,452	$	1,042	$	1,316	$	3,810	$	5,806	$	9,616	$	168,448	$	178,064

Our financial assets on nonaccrual status were not significant as of September 30, ~~2020,~~2021, and March 31, ~~2020.~~2021.

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8.7.	PROPERTY, EQUIPMENT, OTHER ASSETS AND LIABILITIES

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

	September 30, 2020		March 31, 2020		September 30, 2021		March 31, 2021
Other current assets:
Deposits & funds held in escrow	$	339	$	926	$	453	$	759
Prepaid assets		7,640		7,946		11,703		9,939
Other		254		384		519		278
Total	$	8,233	$	9,256	$	12,675	$	10,976

Property, equipment and other assets
Property and equipment, net	$	7,258	$	7,153	$	7,368	$	7,388
Deferred costs - non-current		12,568		10,957		19,770		19,063
Right-of-use assets		11,069		13,066		7,562		8,763
Other		3,419		1,420		9,195		7,075
Total	$	34,314	$	32,596	$	43,895	$	42,289


Other current liabilities:
Accrued expenses	$	10,639	$	10,024	$	13,856	$	13,598
Accrued income taxes payable		3,021		406		2,146		4,439
Contingent consideration - current		0		220
Short-term lease liability		4,698		4,815		3,835		3,934
Other		7,014		7,521		12,695		8,090
Total	$	25,372	$	22,986	$	32,532	$	30,061

Other liabilities:
Deferred revenue	$	19,074	$	16,693
Deferred revenue - non-current					$	28,174	$	26,309
Long-term lease liability		6,590		8,326		3,816		5,040
Other		7,278		2,708		5,052		5,330
Total	$	32,942	$	27,727	$	37,042	$	36,679

In the above table, deposits and funds held in escrow relate to financial assets that were sold to third-party banks. In conjunction with those sales, a portion of the proceeds was placed in escrow and will be released to us upon payment of outstanding invoices related to the underlying financing arrangements that were sold.

9.8.	CREDIT FACILITY AND NOTES PAYABLE

~~Credit Facility~~

CREDIT FACILITY

~~Within our technology segment,~~

Throughout the current fiscal year and until October 12, 2021, ePlus Technology, inc. and certain of its subsidiaries ~~finance~~(the “Borrowers”), which are part of our technology segment, financed their operations, ~~with~~in addition to funds generated from operations, ~~and~~ with a credit facility with Wells Fargo Commercial Distribution Finance, LLC (“WFCDF”). This facility ~~provides~~provided short-term capital for our technology segment. There ~~are~~were 2 components of the WFCDF credit facility: (1) a floor plan component, and (2) an accounts receivable component.

~~Table of Contents~~

Under ~~the floor plan component, we had outstanding balances of $219.0 million and $127.4 million~~ ~~as of September 30, 2020~~, ~~and March 31, 2020~~, ~~respectively, and are presented as accounts payable – floorplan. The fair value of the outstanding balance under the credit facility was equal to its carrying value as of September 30, 2020~~, ~~and March 31, 2020~~.

~~On May 15, 2020, we executed an amendment to~~ the WFCDF credit facility, ~~that increased the~~there was an aggregate limit ~~of the two~~for the 2 components, except during a temporary uplift, ~~to $275.0~~of $275 million. ~~Additionally, we have an election~~We could elect to temporarily increase the aggregate limit to ~~$350.0~~ $350 million for a period of not less than 30 days, provided that all such periods ~~shall~~ not exceed 150 days in the aggregate in any calendar year. ~~Further,~~Additionally, the ~~amendment increased the~~WFCDF credit facility had a limit on the accounts receivable component of ~~the~~$100 million. WFCDF ~~credit facility to $100.0 million, changed the~~charged us an interest rate equal to two percent (2.00%) plus the greater of one month LIBOR or seventy-five hundredths of one percent (0.75%)~~, and modified certain restrictions on~~ e~~Plus Technology, inc.’s ability to pay dividends to~~ e~~Plus inc.~~.

As of September 30, ~~2020,~~2021, the limit of the 2 components of the credit facility was ~~$275~~$350 million as result of our election to temporarily uplift the aggregate limit.

Our borrowing availability under the credit facility varied, based upon the value of the receivables and inventory of the Borrowers. We had outstanding balances of $145.9 million and $98.7 million under the floor plan component as of September 30, 2021, and March 31, 2021, respectively. This component is presented as part of as accounts ~~receivable component had a sub-limit of $100 million.~~ payable – floorplan. Under the accounts receivable component, we had $29 million as of September 30, 2021 and 0 outstanding balance as of ~~September 30, 2020 and~~ ~~$35 million~~ ~~outstanding as of~~ March 31, ~~2020~~. ~~The accounts receivable~~2021. This component is presented as part of recourse notes payable – current.

The fair value of the outstanding balances under the WFCDF credit facility iswere approximately equal to their carrying value as of September 30, 2021, and March 31, 2021.

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The WFCDF credit facility was secured by the assets of e~~Plus Technology, inc. and certain of its subsidiaries, and varies available borrowing based upon~~ the ~~value of their receivables and inventory.~~Borrowers. Additionally, the credit facility ~~requires~~required a guaranty ofof $10.5 million by ePlus inc.

~~The~~The WFCDF credit facility ~~restricts~~restricted the ability of e~~Plus Technology, inc. and certain of its subsidiaries~~the Borrowers to pay dividends to ePlus inc. unless their available borrowing ~~meets~~met certain thresholds. As of September 30, ~~2020,~~2021, and March 31, 2021, their available borrowing met the threshold such that there were no restricted net assets of ePlus Technology, ~~inc.~~inc.

~~The~~The credit facility ~~requires~~required that financial statements of e~~Plus Technology, inc. and certain of its subsidiaries~~the Borrowers be provided ~~within~~within 45 days of each quarter and 90 days of each fiscal year end and ~~requires~~required that other operational reports be provided on a regular basis. Either party ~~may~~could terminate with 90 days’ ~~advance~~written notice.

On October 13, 2021, we entered into a First Amended and Restated Credit Agreement by and among the Borrowers, WFCDF, as administrative agent thereunder, various banks and other financial institutions (including WFCDF) who are parties thereto as lenders (collectively, the “Lenders”) and others, pursuant to which, among other things, the Lenders established for the benefit of the Borrowers a discretionary senior secured floorplan facility in the aggregate principal amount of up to $375 million, together with a sublimit for a revolving credit facility for up to $100 million (collectively, the “2021 Credit Facility”).

The loss of the ~~WFCDF credit facility, including during circumstances related to COVID-19,~~2021 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.

~~On October 1, 2020, we elected to exercise the temporary increase in the aggregate limit of the WFCDF credit facility to $350.0 million for a period of 30 days.~~RECOURSE NOTES PAYABLE

~~Recourse Notes Payable~~

Recourse notes payable consist of borrowings that, in the event of default, the lender has recourse against ~~us in addition to the assets serving as collateral.~~

us. As of September 30, ~~2020, and March 31, 2020,~~2021, we had ~~$2.3~~$44.9 million ofin recourse borrowings ~~that were collateralized by investments in notes receivable~~which includes $29.0 million outstanding under our revolving credit facility with WFCDF, and ~~leases.~~$15.9 million arising from one installment payment arrangement. Our ~~principal and interest~~ payments under this installment agreement are ~~generally~~ due ~~monthly~~quarterly in amounts that ~~equal~~are correlated to the ~~total~~ payments due to us from ~~the~~a customer under ~~the leases or~~a related notes ~~receivable that collateralize the notes payable. The weighted average~~receivable. We discounted our payments to calculate our payable balance using an interest rate ~~for these borrowings was 2.55%~~ of 3.50% as of both September 30, ~~2020,~~2021, and March 31, ~~2020.~~2021.

~~Non-recourse Notes Payable~~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 the assets serving as collateral, but not against us. As of September 30, ~~2020,~~2021, and March 31, ~~2020,~~2021, we had ~~$38.1~~$25.4 million and ~~$35.5~~$56.1 million, respectively, of non-recourse borrowings that were collateralized by investments in notes and leases. Principal and interest payments are generally due monthly 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 ~~3.15%~~3.59% and ~~3.84%~~3.35%, as of September 30, ~~2020,~~2021, and March 31, ~~2020,~~2021, respectively.

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~~10.~~9.

COMMITMENTS AND CONTINGENCIES

~~Legal Proceedings~~LEGAL PROCEEDINGS

~~From time~~We are subject to ~~time, the Company may be involved in routine~~various legal proceedings, as well as demands, claims and threatened litigation, that arise in the normal course of our ~~business.~~business and have not been fully resolved. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect the Company’s financial condition, results of operations and liquidity. In addition, the ultimate outcome of any litigation is uncertain. When a loss related to a legal proceeding or claim is probable and reasonably estimable, we accrue our best estimate for the ultimate resolution of the matter. If one or more legal matters are resolved against us in a reporting period for amounts above management’s expectations, our financial condition and operating results for that period could be adversely affected. Any outcome, whether favorable or unfavorable, may materially and adversely affect ~~the Company~~us due to legal costs and expenses, diversion of management attention and other factors. ~~The Company expenses~~We expense legal costs in the period incurred. ~~The Company~~We cannot assure that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against the ~~Company~~us in the future, and these matters could relate to prior, current or future transactions or ~~events.~~events.

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~~11.~~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.

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 six months ended September 30, ~~2020,~~2021, and ~~2019,~~2020, respectively (in thousands, except per share data).

	Three Months Ended September 30,				Six Months Ended September 30,				Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019		2021		2020		2021		2020

Net earnings attributable to common shareholders - basic and diluted	$	19,846	$	20,098	$	37,206	$	36,286	$	31,413	$	19,846	$	54,931	$	37,206
																��
Basic and diluted common shares outstanding:
Weighted average common shares outstanding — basic		13,372		13,312		13,347		13,334		13,332		13,372		13,333		13,347
Effect of dilutive shares		19		38		47		74		100		19		98		47
Weighted average shares common outstanding — diluted		13,391		13,350		13,394		13,408		13,432		13,391		13,431		13,394

Earnings per common share - basic	$	1.48	$	1.51	$	2.79	$	2.72	$	2.36	$	1.48	$	4.12	$	2.79

Earnings per common share - diluted	$	1.48	$	1.51	$	2.78	$	2.71	$	2.34	$	1.48	$	4.09	$	2.78

STOCK SPLIT

On November 9, 2021, our Board of Directors declared a 2-for-one stock split effected in the form of a stock dividend. The stock split will be in the form of a 100 percent stock dividend payable on December 13, 2021, to shareholders of record at the close of business on November 29, 2021. We expect that our common stock will begin trading at the split-adjusted price on December 14, 2021.

All references made to share or per share amounts in the accompanying unaudited consolidated financial statements and applicable disclosures herein, other than the table immediately below, are presented on a pre-split basis. The following table provides pro forma earnings per share, giving retroactive effect to the stock split (in thousands, except per share data):

	Three Months Ended September 30,				Six Months Ended September 30,
	2021		2020		2021		2020
Earnings per common share:
Basic - pro forma		1.18		0.74		2.06		1.39
Diluted - pro forma		1.17		0.74		2.04		1.39

Weighted average common shares outstanding:
Basic - pro forma		26,664		26,744		26,666		26,694
Diluted - pro forma		26,864		26,782		26,862		26,788

As a result of the stock split, all historical per share data and number of shares outstanding presented in future financial statements will be retroactively adjusted.

~~12.~~11.

STOCKHOLDERS’ EQUITY

~~Share Repurchase Plan~~SHARE REPURCHASE PLAN

On ~~May 24, 2019,~~March 18, 2021, our board of directors authorized the repurchase of up to 500,000 shares of our outstanding common stock over a 12-month period beginning on May 28, ~~2019,~~2021, and ending on May 27, ~~2020.~~2022. The plan authorized purchases to be made from time to time in the open market, or in privately negotiated transactions, subject to availability. Any repurchased shares will have the status of treasury shares and may be used, when needed, for general corporate purposes.

On May 20, 2020, our board of directors authorized the repurchase of up to 500,000 shares of our outstanding common stock over a 12-month period beginning on May 28, 2020, and ending on May 27, 2021. The plan authorized purchases to be made from time to time in the open market, or in privately negotiated transactions, subject to availability. Any repurchased shares will have the status of treasury shares and may be used, when needed, for general corporate purposes.

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During the six months ended September 30, 2021, we purchased 49,028 shares of our outstanding common stock at a value of $4.3 million under the share repurchase plan; we also purchased 27,715 shares of common stock at a value of $2.6 million to satisfy tax withholding obligations relating to the vesting of employees’ restricted stock.

During the six months ended September 30, 2020, we purchased 24,318 shares of our outstanding common stock at a value of $1.8 million under the share repurchase plan; we also purchased 37,640 shares of common stock at a value of $2.7 million to satisfy tax withholding obligations relating to the vesting of employees’ restricted stock.

During the six months ended September 30, 2019, we purchased 149,044 shares of our outstanding common stock at a value of $10.7 million under the share repurchase plan; we also purchased 41,817 shares of common stock at a value of $3.0 million to satisfy tax withholding obligations relating to the vesting of employees’ restricted stock.

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~~13.~~12.

SHARE-BASED COMPENSATION

~~Share-Based Plans~~SHARE-BASED PLANS

ePlus’ 2021 Employee Long-Term Incentive Plan (“2021 Employee LTIP”) was approved by our shareholders on September 16, 2021. The 2021 Employee LTIP is effective October 1, 2021 and replaces the ePlus inc. 2012 Employee Long-Term Incentive Plan (“2012 Employee LTIP”), as approved by our stockholders on September 13, 2012. Beginning October 1, 2021, 0 further shares will be granted under the 2012 Employee LTIP.

As of September 30, ~~2020,~~2021, we had share-based awards outstanding under the following plans: (1) the 2017 Non-Employee Director Long-Term Incentive Plan (“2017 Director LTIP”), and (2) ~~the~~ 2012 Employee ~~Long-Term Incentive Plan ("2012 Employee LTIP").~~ LTIP.

These share-based plans define fair market value as the ~~previous~~closing sales price of a share of common stock as quoted on any established stock exchange for such date or the most recent trading ~~day's closing price when the grant~~day preceding such date ~~falls~~if there were no trades on ~~a date the stock was not traded.~~such date.

~~Restricted Stock Activity~~RESTRICTED STOCK ACTIVITY

For the six months ended September 30, 2021, we granted 6,393 shares under the 2017 Director LTIP, and 77,861 restricted shares under the 2012 Employee LTIP. For the six months ended September 30, 2020, we granted 9,309 ~~restricted~~ shares under the 2017 Director LTIP, and 89,873 restricted shares under the 2012 Employee LTIP. ~~For the six months ended September 30, 2019, we granted 8,132 restricted shares under the 2017 Director LTIP, and 85,132 restricted shares under the 2012 Employee LTIP.~~ A summary of the ~~restricted shares~~grants is as follows:

Number of
Shares

Weighted
Average Grant-
date Fair Value

Nonvested April 1, 2020 193,580 $ 73.74
Granted 99,182 $ 71.81
Vested (110,155 ) $ 70.00
Forfeited 0 $ 0
Nonvested September 30, 2020 182,607 $ 74.95

	Number of Shares			Weighted Average Grant-date Fair Value

Nonvested April 1, 2021		183,378		$	74.97
Granted		84,254		$	92.99
Vested		(92,093	)	$	78.12
Nonvested September 30, 2021		175,539		$	82.00

Upon each vesting period of the restricted stock awards, employees are subject to minimum tax withholding obligations. Under the 2012 Employee LTIP, we ~~may purchase a sufficient number of~~purchased enough shares due to ~~the participant~~participants to satisfy ~~their~~the minimum tax withholding requirements on employee stock awards. For the six months ended September 30, ~~2020, the Company~~2021, we withheld ~~37,640~~27,715 shares of common stock at a value of ~~$2.7~~$2.6 million, which was included in treasury stock.

~~Compensation Expense~~COMPENSATION EXPENSE

We recognize compensation cost for awards of restricted stock with graded vesting on a straight-line basis over the requisite service period. There are no additional conditions for vesting other than service conditions. ~~During~~Share-based compensation expense for both the three ~~months ended September 30, 2020,~~ and ~~2019, we recognized $1.8 million and $2.1 million of total share-based compensation expense, respectively. During the~~ six months ended September 30, 2021, and 2020, were $1.8 million and ~~2019, we recognized~~ $3.6 million, ~~and $4.1 million of total share-based compensation expense,~~ respectively. Unrecognized compensation expense related to non-vested restricted stock was ~~$11.6~~$12.4 million as of September 30, ~~2020,~~2021, which will be fully recognized over the next 33 months.

We also provide our employees with a contributory 401(k) profit sharing plan, to which we may contribute from time to time at our sole discretion. Employer contributions to the plan are always fully ~~vested at all times.~~vested. Our estimated contribution expense for the plan for ~~both~~ the three months ended September 30, 2021, and 2020, ~~and 2019,~~ was ~~$0.7~~$1.0 million and ~~$1.4~~$0.7 million, ~~for both~~respectively. For the six months ended September 30, ~~2020,~~2021, and ~~2019.~~2020, our estimated contribution expense for the plan was $1.8 million and $1.4 million, respectively.

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~~14.~~13.

INCOME TAXES

We account for our tax positions in accordance with Codification 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 September 30, ~~2020,~~2021, and September 30, ~~2019.~~2020. We had 0 additions or reductions to our gross unrecognized tax benefits during the six months ended September 30, ~~2020.~~2021. We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.

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~~15.~~14.

FAIR VALUE OF FINANCIAL INSTRUMENTS

We account for the fair values of our assets and liabilities in accordance with Codification Topic 820, Fair Value Measurement and Disclosure. The following table summarizes the fair value hierarchy of our financial instruments as of September 30, ~~2020~~2021, and March 31, ~~2020~~2021 (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)

September 30, 2020

Assets:
Money market funds $ 45,132 $ 45,132 $ 0 $ 0

March 31, 2020

Assets:
Money market funds $ 128 $ 128 $ 0 $ 0

Liabilities:
Contingent consideration $ 220 $ 0 $ 0 $ 220

For the three and six months ended September 30, 2020, we did 0t record significant adjustments to our liability for contingent consideration arising from a past business combination. In August 2020, we paid $219 thousand to fully satisfy the obligations of our contingent consideration arrangement.

For the three and six months ended September 30, 2019, we recorded adjustments to operating expenses of $1.1 million and $1.5 million, respectively, that increased our liability for contingent consideration arising from our past business combinations. In September 2019, we reached a settlement in full of one of our contingent consideration arrangements in the amount of $9.6 million, that was paid in October 2019. Additionally, in September 2019, we paid $0.5 million to satisfy certain current obligations in another of these arrangements.

			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)
September 30, 2021
Assets:
Money market funds	$	136	$	136	$	0	$	0

March 31, 2021
Assets:
Money market funds	$	45,134	$	45,134	$	0	$	0

~~16.~~15.

BUSINESS COMBINATIONS

~~ABS Technology~~SYSTEMS MANAGEMENT PLANNING, INC. (SMP)

On ~~August 23, 2019,~~December 31, 2020, our subsidiary, ePlus Technology, inc., acquired certain assets and liabilities of ~~ABS Technology, a Virginia Beach, Virginia- headquartered~~SMP, an established provider of technology solutions ~~provider with deep expertise~~and services in ~~managed services, networking,~~upstate New York and the Northeast. The acquisition enhances ePlus’ footprint across the region, broadens our technology solution offerings especially in the areas of collaboration and ~~security solutions. ABS Technology enhances~~ supporting virtual employees, and adds to ePlus’ ~~existing solutions portfolio~~set of commercial, enterprise and ~~market position in Richmond~~state, local, and ~~southern Virginia.~~education customers.

Our sum of consideration transferred was $~~15.3~~$27.0 million consisting of $~~13.8~~$29.0 million paid in cash at closing ~~plus $1.7~~less $2.0 million that was paid ~~primarily during the year~~back to us in our quarter ended March 31, ~~2020, upon the collection of certain accounts receivable and less $0.2~~ ~~million that was repaid to us in December 2019 due~~2021, related to a working capital adjustment. 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		9,208		$	14,526
Other assets		743			3,344
Identified intangible assets		5,720			14,280
Accounts payable and other current liabilities		(6,715	)		(11,424	)
Performance obligation		(1,140	)

Performance obligations					(2,020	)
Total identifiable net assets		7,816			18,706
Goodwill		7,461			8,328

Total purchase consideration	$	15,277		$	27,034

The identified intangible assets of ~~$5.7~~$14.3 million ~~consist~~consists of customer relationships with an estimated useful life of seven ~~(7)~~ years. The fair value of acquired receivables equals the gross contractual amounts receivable. We expect to collect all acquired receivables.

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We recognized goodwill related to this transaction of ~~$7.5~~$8.3 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 current reporting period as though the acquisition date had been April 1, ~~2019,~~2020, is not material.

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~~17.~~16.

SEGMENT REPORTING

Our operations are conducted through 2 operating segments that are also both reportable segments. Our technology segment includes sales of IT 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.

Our reportable segment information for the ~~three- and~~three-and six-month periods ended September 30, ~~2020,~~2021, and ~~2019~~2020 are summarized in the following ~~tables~~table (in thousands):

	Three Months Ended													Three Months Ended
	September 30, 2020						September 30, 2019							September 30, 2021							September 30, 2020
	Technology		Financing		Total		Technology		Financing		Total			Technology		Financing		Total			Technology		Financing		Total

Sales
Product	$	369,934	$	13,722	$	383,656	$	349,650	$	13,847	$	363,497		$	375,444	$	21,716	$	397,160		$	369,934	$	13,722	$	383,656
Service		49,425		0		49,425		48,068		0		48,068			60,857		0		60,857			49,425		0		49,425
Net sales		419,359		13,722		433,081		397,718		13,847		411,565			436,301		21,716		458,017			419,359		13,722		433,081

Cost of Sales
Product		301,006		1,957		302,963		276,475		2,388		278,863			293,837		3,792		297,629			301,006		1,957		302,963
Service		31,156		0		31,156		29,671		0		29,671			37,386		0		37,386			31,156		0		31,156
Total cost of sales		332,162		1,957		334,119		306,146		2,388		308,534			331,223		3,792		335,015			332,162		1,957		334,119

Gross Profit		87,197		11,765		98,962		91,572		11,459		103,031			105,078		17,924		123,002			87,197		11,765		98,962

Selling, general, and administrative		62,586		4,303		66,889		67,189		3,334		70,523			70,803		3,701		74,504			62,586		4,303		66,889
Depreciation and amortization		3,313		28		3,341		3,529		28		3,557			3,825		28		3,853			3,313		28		3,341
Interest and financing costs		1		246		247		0		576		576			199		143		342			1		246		247
Operating expenses		65,900		4,577		70,477		70,718		3,938		74,656			74,827		3,872		78,699			65,900		4,577		70,477

Operating income		21,297		7,188		28,485		20,854		7,521		28,375			30,251		14,052		44,303			21,297		7,188		28,485

Other income						184						(40	)
Other income (expense)																			(325	)						184

Earnings before tax					$	28,669					$	28,335						$	43,978						$	28,669

Net Sales
Contracts with customers	$	412,357	$	1,028	$	413,385	$	394,585	$	1,411	$	395,996		$	430,339	$	1,776	$	432,115		$	412,357	$	1,028	$	413,385
Financing and other		7,002		12,694		19,696		3,133		12,436		15,569			5,962		19,940		25,902			7,002		12,694		19,696
Net Sales	$	419,359	$	13,722	$	433,081	$	397,718	$	13,847	$	411,565		$	436,301	$	21,716	$	458,017		$	419,359	$	13,722	$	433,081

Selected Financial Data - Statement of Cash Flow

Depreciation and amortization	$	3,499	$	1,182	$	4,681	$	3,658	$	1,455	$	5,113		$	4,074	$	1,888	$	5,962		$	3,499	$	1,182	$	4,681
Purchases of property, equipment and operating lease equipment	$	990	$	0	$	990	$	1,426	$	1,944	$	3,370		$	948	$	8,301	$	9,249		$	990	$	0	$	990

Selected Financial Data - Balance Sheet

Total assets	$	812,633	$	226,078	$	1,038,711	$	690,648	$	223,618	$	914,266		$	902,070	$	237,875	$	1,139,945		$	812,633	$	226,078	$	1,038,711

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	Six Months Ended
	September 30, 2021							September 30, 2020
	Technology		Financing		Total			Technology		Financing		Total

Sales
Product	$	720,210	$	38,007	$	758,217		$	663,367	$	27,529	$	690,896
Service		116,449		0		116,449			97,216		0		97,216
Net sales		836,659		38,007		874,666			760,583		27,529		788,112

Cost of Sales
Product		564,852		10,004		574,856			525,549		4,048		529,597
Service		71,296		0		71,296			60,996		0		60,996
Total cost of sales		636,148		10,004		646,152			586,545		4,048		590,593

Gross Profit		200,511		28,003		228,514			174,038		23,481		197,519

Selling, general, and administrative		136,956		6,323		143,279			128,142		8,214		136,356
Depreciation and amortization		7,723		56		7,779			6,801		56		6,857
Interest and financing costs		358		343		701			266		558		824
Operating expenses		145,037		6,722		151,759			135,209		8,828		144,037

Operating income		55,474		21,281		76,755			38,829		14,653		53,482

Other income (expense)						(202	)						282

Earnings before tax					$	76,553						$	53,764

Net Sales
Contracts with customers	$	826,880	$	7,194	$	834,074		$	746,344	$	1,988	$	748,332
Financing and other		9,779		30,813		40,592			14,239		25,541		39,780
Net Sales	$	836,659	$	38,007	$	874,666		$	760,583	$	27,529	$	788,112

Selected Financial Data - Statement of Cash Flow

Depreciation and amortization	$	8,177	$	3,867	$	12,044		$	7,133	$	2,327	$	9,460
Purchases of property, equipment and operating lease equipment	$	2,255	$	13,988	$	16,243		$	3,101	$	166	$	3,267

Selected Financial Data - Balance Sheet

Total assets	$	902,070	$	237,875	$	1,139,945		$	812,633	$	226,078	$	1,038,711

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Six Months Ended
September 30, 2020 September 30, 2019
Technology Financing Total Technology Financing Total

Sales
Product $ 663,367 $ 27,529 $ 690,896 $ 672,414 $ 26,684 $ 699,098
Service 97,216 0 97,216 93,839 0 93,839
Net sales 760,583 27,529 788,112 766,253 26,684 792,937

Cost of Sales
Product 525,549 4,048 529,597 534,529 4,397 538,926
Service 60,996 0 60,996 58,341 0 58,341
Total cost of sales 586,545 4,048 590,593 592,870 4,397 597,267
Gross Profit 174,038 23,481 197,519 173,383 22,287 195,670

Selling, general, and administrative 128,142 8,214 136,356 129,856 6,454 136,310
Depreciation and amortization 6,801 56 6,857 6,936 84 7,020
Interest and financing costs 266 558 824 0 1,204 1,204
Operating expenses 135,209 8,828 144,037 136,792 7,742 144,534

Operating income 38,829 14,653 53,482 36,591 14,545 51,136

Other income 282 (85 )

Earnings before tax $ 53,764 $ 51,051

Net Sales
Contracts with customers $ 746,344 $ 1,988 $ 748,332 $ 758,266 $ 2,200 $ 760,466
Financing and other 14,239 25,541 39,780 7,987 24,484 32,471
Net Sales $ 760,583 $ 27,529 $ 788,112 $ 766,253 $ 26,684 $ 792,937

Selected Financial Data - Statement of Cash Flow

Depreciation and amortization $ 7,133 $ 2,327 $ 9,460 $ 7,283 $ 2,794 $ 10,077
Purchases of property, equipment and operating lease equipment $ 3,101 $ 166 $ 3,267 $ 2,675 $ 2,213 $ 4,888

Selected Financial Data - Balance Sheet

Total assets $ 812,633 $ 226,078 $ 1,038,711 $ 690,648 $ 223,618 $ 914,266

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~~Technology Segment Disaggregation of Revenue~~TECHNOLOGY SEGMENT DISAGGREGATION OF REVENUE

We analyze net sales for our technology segment by customer end market and by vendor, as opposed to discrete product and service categories, which are summarized for the three and six month periods ended September 30, ~~2020,~~2021, and ~~2019~~2020 in the tables below (in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,						Three Months Ended September 30,						Six Months Ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Customer end market:
Telecom, Media & Entertainment													$	115,784		$	96,927		$	227,976		$	153,579
Technology	$	76,321		$	97,502		$	146,288		$	173,682			53,752			76,321			122,892			146,288
Telecom, Media & Entertainment		96,927			71,044			153,579			133,510
Financial Services		46,732			44,605			94,153			92,847
State and local government and educational institutions		76,492			71,866			147,055			143,057			68,662			76,492			134,077			147,055
Healthcare		59,252			59,818			105,788			115,926			88,237			59,252			142,925			105,788
Financial Services														37,036			46,732			67,047			94,153
All others		63,635			52,883			113,720			107,231			72,830			63,635			141,742			113,720
Net sales		419,359			397,718			760,583			766,253			436,301			419,359			836,659			760,583

Less: Revenue from financing and other		(7,002	)		(3,133	)		(14,239	)		(7,987	)		(5,962	)		(7,002	)		(9,779	)		(14,239	)

Revenue from contracts with customers	$	412,357		$	394,585		$	746,344		$	758,266		$	430,339		$	412,357		$	826,880		$	746,344

	Three Months Ended September 30,						Six Months Ended September 30,						Three Months Ended September 30,						Six Months Ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Vendor
Cisco Systems	$	173,166		$	172,605		$	301,098		$	318,786		$	174,072		$	173,166		$	340,974		$	301,098
Dell / EMC														43,498			15,349			69,838			46,430
Juniper Networks														18,438			24,716			43,152			38,295
HP Inc. & HPE														14,038			16,395			31,240			33,433
Arista Networks														8,047			13,443			19,545			20,263
NetApp		9,914			9,771			25,335			23,198			29,536			9,914			39,993			25,335
HP Inc. & HPE		16,395			18,986			33,433			42,099
Dell EMC		15,349			12,494			46,430			26,275
Arista Networks		13,443			26,766			20,263			47,716
Juniper Networks		24,716			24,370			38,295			31,424
All others		166,376			132,726			295,729			276,755			148,672			166,376			291,917			295,729
Net sales		419,359			397,718			760,583			766,253			436,301			419,359			836,659			760,583

Less: Revenue from financing and other		(7,002	)		(3,133	)		(14,239	)		(7,987	)		(5,962	)		(7,002	)		(9,779	)		(14,239	)

Revenue from contracts with customers	$	412,357		$	394,585		$	746,344		$	758,266		$	430,339		$	412,357		$	826,880		$	746,344

~~Financing Segment Disaggregation of Revenue~~FINANCING SEGMENT DISAGGREGATION OF REVENUE

We analyze our revenues within our financing segment based on the nature of the ~~arrangement, and our~~arrangement. Our revenues from contracts with customers within our financing segment consist entirely of proceeds from the sale 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 RESULT 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 financial statements included in this quarterly report on Form 10-Q and our ~~2020~~2021 Annual Report. 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 ~~2020~~2021 Annual ~~Report.,~~Report, as supplemented in subsequently filed reports, and in Part II, Item 1A. “Risk Factors” in this Report.

EXECUTIVE OVERVIEW

~~Business Description~~BUSINESS DESCRIPTION

We are a leading solutions provider that delivers actionable outcomes for organizations by using IT and consulting solutions to drive business agility and innovation. Leveraging 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 enable e~~Plus~~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 provide consulting, staffing, professional, managed, IT staff augmentation, and complete lifecycle management services including flexible financing and solutions in the areas of security, cloud, networking, data center, collaboration and emerging technologies. We have been in the business of selling, leasing, financing, and managing IT and other assets for more than 30 years.

Our primary focus is to deliver integrated solutions that address our customers’ business needs, leveraging the appropriate technologies, both on-premise and in the cloud. Our approach is to lead with advisory consulting to understand our customers’ needs, and then design, deploy and manage solutions aligned to their objectives. Underpinning the broader areas of Cloud, Security, Networking, Data Center and Collaboration are specific skills in orchestration and automation, application modernization, DevOps, data management, data visualization, analytics, network modernization, edge compute and other advanced and emerging technologies. These solutions are comprised of ~~class leading~~class-leading technologies from partners such as Amazon Web Services, Arista Networks, ~~Blue Coat,~~ Check Point, Cisco Systems, Citrix, Commvault, Dell EMC, ~~Extreme Networks,~~ F5 Networks, Fortinet, Gigamon, HPE, Juniper Networks, Lenovo, Microsoft, NetApp, Nutanix, NVIDIA, Oracle, Palo Alto Networks, ~~Proofpoint,~~ Pure Storage, ~~Qumulo,~~ Rubrik, Splunk, ~~Symantec~~Varonis, and VMware, among many others. 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 to stay ~~current with emerging~~on the forefront of technology trends. Our expertise in core and emerging technologies, buttressed by our robust portfolio of consulting, professional, and managed services, has enabled ePlus to remain a trusted advisor for our customers. 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, ~~are~~is unique in the industry. This broad portfolio enables us to deliver a unique customer experience that spans the continuum from fast delivery of competitively priced products, services, subsequent management and upkeep, through to end-of-life disposal services. This approach permits ePlus to deploy ~~ever-more-sophisticated~~sophisticated solutions enabling our customers’ business outcomes.

Our go-to-market strategy focuses primarily on diverse end-markets for middle market to large enterprises. ~~For the trailing twelve-month period ended September 30, 2020, the percentage of revenue by customer end market within our technology segment includes technology industry 19%, telecommunications,~~We serve customers in markets including telecom, media and entertainment, ~~20%,~~technology, state and local government and educational institutions (“SLED”) ~~16%~~, healthcare, ~~15%,~~ and financial ~~services 13%. The majority of our sales were generated within~~ services. We sell to customers in the United States (“US”)~~; however, we have the ability~~, which accounts for most of our sales, and to ~~support our~~ customers ~~nationally and internationally,~~in select international markets including ~~physical locations in~~ the United Kingdom (“UK”), the European Union (“EU”), India, and ~~India.~~Singapore. Our technology segment accounts for ~~97%~~96% of our net sales, and ~~73%~~72% of our operating income, while our financing segment accounts for 3%4% of our net sales, and ~~27%~~28% of our operating income, for the six months ended September 30, ~~2020.~~2021.

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~~Impact of COVID-19 on Our Business Operations~~BUSINESS TRENDS

COVID-19 pandemic update: The ~~COVID-19~~novel coronavirus (“COVID-19”) pandemic continues to have widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices. Federal, state and local governments and public health authorities have required and may in the future require measures to contain the virus, including vaccine mandates, social distancing, travel restrictions, border closures, limitations on public gatherings, work from home, safety-related modifications to workplaces, supply chain logistical changes, and closure of non-essential businesses.

As COVID-19 impacts continue ~~to expand~~ across the country and globe, we have been adjusting our business activities for the safety of our employees and to best serve our customers in this rapidly evolving environment. WeMost of our offices are open, with required health and safety protocols in place. However, we have implemented a flexible work from home strategy applicable to all offices and operational continuity plans to provide sufficient resources to continue supporting our ~~customers. For employees who wish~~customers, and we will continue to ~~return~~evaluate returning to the office we have reopened our headquarters with limited capacity and required health and safety protocols in place. We plan to reopen our other offices using a phased approach but currently have not set a schedule to do so.on an ongoing basis. Our configuration centers have remained open with our employees working in them following required health and safety protocols. In addition, we also have a procedure to review ~~and approve~~our employees’ business-related ~~travel.~~travel in accordance with health regulations and guidance. Our managed service teams are distributed across the US with the ability to leverage technology to provide coverage while working from home. While we and many of our customers and vendor partners have restricted travel, we are leveraging video and other collaborative tools to continue to be responsive.

Our account relationship teams are actively engaging with our customers, to ensure they have the support needed in adjusting to changes in the business environment and government directives. ~~In addition, we granted a limited number of customers temporary payment term extensions.~~ Also, we are working closely with our vendor partners to address varying impacts on their supply ~~chain to satisfy infrastructure needs. Certain of our vendor partners extended payment terms to us and our competitors.~~chains, which have been impacted by materials shortages.

We continue to execute against and adjust our business continuity plans to maximize our ability to support our employees and customers in concert with our vendor partners. We have an internal resource page to support specific customer inquiries from security to collaboration to financing options. We remain committed to driving positive business outcomes.

The extent to which the COVID-19 pandemic impacts our business going forward will depend on numerous evolving factors we cannot reliably predict, including the duration and scope of the ~~pandemic;~~pandemic including the impact of variants; governmental, business, and ~~individuals'~~individuals’ actions in response to the pandemic; the efficacy of vaccines and boosters, the duration of the vaccination distribution, the willingness of people to be inoculated, and potential vaccine mandates; and the impact on economic activity including the possibility of recession, inflation, or financial market instability. These factors may adversely impact business and government spending on technology as well as our ~~customers'~~customers’ ability to pay for our products and services on an ongoing basis. This uncertainty also affects management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these estimates and assumptions. Refer to Part I, Item 1A, “Risk Factors,” in our ~~2020~~2021 Annual ~~Report.~~Report, as supplemented in subsequently filed reports, and in Part II, Item 1A. “Risk Factors” in this Report.

~~Key Business Metrics~~Supply constraints: A worldwide shortage of certain IT products is resulting from, among other things, shortages in semiconductors and other components of those products. Like others, we are experiencing ongoing supply constraints that have affected, and could continue to further affect, lead times for delivery of products, the costs 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 persist for at least the next few quarters.

KEY BUSINESS METRICS

Our management monitors ~~a number of~~several financial and non-financial measures and ratios on a regular basis to track the progress of our business. We believe that the most important of these measures and ratios include net sales, gross margin, operating income margin, net earnings, net earnings per common share, ~~adjusted~~Adjusted EBITDA, ~~adjusted~~Adjusted EBITDA margin, ~~adjusted~~Adjusted gross billings, and ~~non-GAAP net~~Non-GAAP Net earnings per share. We 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.

These key indicators include financial information that is prepared in accordance with US GAAP and presented in our unaudited ~~condensed~~ consolidated financial statements, as well as ~~non-GAAP~~Non-GAAP performance measurement tools. Generally, a ~~non-GAAP~~Non-GAAP financial measure is a numerical measure of a company’s performance or financial position that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with US GAAP. Non-GAAP measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

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Our key business metrics for the three- and six-month periods ended September 30, ~~2020,~~2021, and ~~2019~~2020 are summarized in the following tables (dollars in thousands):

	Three Months Ended September 30,						Six Months Ended September 30,						Three Months Ended September 30,						Six Months Ended September 30,
Consolidated	2020			2019			2020			2019			2021			2020			2021			2020
Net sales	$	433,081		$	411,565		$	788,112		$	792,937		$	458,017		$	433,081		$	874,666		$	788,112

Gross profit	$	98,962		$	103,031		$	197,519		$	195,670		$	123,002		$	98,962		$	228,514		$	197,519
Gross margin		22.9	%		25.0	%		25.1	%		24.7	%		26.9	%		22.9	%		26.1	%		25.1	%
Operating income margin		6.6	%		6.9	%		6.8	%		6.4	%		9.7	%		6.6	%		8.8	%		6.8	%

Net earnings	$	19,846		$	20,098		$	37,206		$	36,286		$	31,413		$	19,846		$	54,931		$	37,206
Net earnings margin		4.6	%		4.9	%		4.7	%		4.6	%		6.9	%		4.6	%		6.3	%		4.7	%
Net earnings per common share - diluted	$	1.48		$	1.51		$	2.78		$	2.71		$	2.34		$	1.48		$	4.09		$	2.78

Non-GAAP: Net earnings (1)	$	22,470		$	24,228		$	42,677		$	43,687		$	34,806		$	22,470		$	61,159		$	42,677
Non-GAAP: Net earnings per common share - diluted (1)	$	1.68		$	1.81		$	3.19		$	3.26		$	2.59		$	1.68		$	4.55		$	3.19

Adjusted EBITDA (2)	$	33,561		$	35,405		$	64,275		$	63,972		$	50,195		$	33,561		$	88,467		$	64,275
Adjusted EBITDA margin		7.7	%		8.6	%		8.2	%		8.1	%		11.0	%		7.7	%		10.1	%		8.2	%

Purchases of property and equipment used internally	$	990		$	1,426		$	3,101		$	2,675		$	948		$	990		$	2,255		$	3,101
Purchases of equipment under operating leases		-			1,944			166			2,213			8,301			-			13,988			166
Total capital expenditures	$	990		$	3,370		$	3,267		$	4,888		$	9,249		$	990		$	16,243		$	3,267


Technology Segment
Net sales	$	419,359		$	397,718		$	760,583		$	766,253		$	436,301		$	419,359		$	836,659		$	760,583
Adjusted gross billings (3)	$	601,064		$	579,084		$	1,147,458		$	1,127,447		$	664,124		$	601,064		$	1,297,131		$	1,147,458

Gross profit	$	87,197		$	91,572		$	174,038		$	173,383		$	105,078		$	87,197		$	200,511		$	174,038
Gross margin		20.8	%		23.0	%		22.9	%		22.6	%		24.1	%		20.8	%		24.0	%		22.9	%

Operating income	$	21,297		$	20,854		$	38,829		$	36,591		$	30,251		$	21,297		$	55,474		$	38,829
Adjusted EBITDA (2)	$	26,275		$	27,789		$	49,436		$	49,208		$	36,059		$	26,275		$	67,017		$	49,436

Financing Segment
Net sales	$	13,722		$	13,847		$	27,529		$	26,684		$	21,716		$	13,722		$	38,007		$	27,529

Gross profit	$	11,765		$	11,459		$	23,481		$	22,287		$	17,924		$	11,765		$	28,003		$	23,481

Operating Income	$	7,188		$	7,521		$	14,653		$	14,545
Operating income													$	14,052		$	7,188		$	21,281		$	14,653
Adjusted EBITDA (2)	$	7,286		$	7,616		$	14,839		$	14,764		$	14,136		$	7,286		$	21,450		$	14,839

(1)

Non-GAAP ~~net~~Net earnings and ~~non-GAAP net~~Non-GAAP Net earnings per common share – diluted is based on net earnings calculated in accordance with GAAP, adjusted to exclude other income (expense), ~~share based~~share-based compensation, and acquisition and integration expenses, and the related tax effects.

We use ~~non-GAAP net~~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 other income ~~(expense), share-based compensation,~~ and acquisition-related amortization expense in calculating ~~non-GAAP net~~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~~Non-GAAP Net earnings per common share provide useful information to investors and others ~~to understand~~in understanding and ~~evaluate~~evaluating our operating results. However, our use of ~~non-GAAP~~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 GAAP. In addition, other companies, including companies in our industry, might calculate similar ~~non-GAAP net~~Non-GAAP Net earnings and ~~non-GAAP net~~Non-GAAP Net earnings per common share or similarly titled measures differently, which may reduce their usefulness as comparative measures.

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	Three Months Ended September 30,					Six Months Ended September 30,					Three Months Ended September 30,					Six Months Ended September 30,
	2020			2019		2020			2019		2021		2020			2021		2020
GAAP: Earnings before tax	$	28,669		$	28,335	$	53,764		$	51,051	$	43,978	$	28,669		$	76,553	$	53,764
Share based compensation		1,764			2,135		3,671			4,077		1,840		1,764			3,575		3,671
Acquisition and integration expense		(30	)		1,338		(1	)		1,739		-		(30	)		-		(1	)
Acquisition related amortization expense		2,172			2,345		4,400			4,532		2,661		2,172			5,357		4,400
Other (income) expense		(184	)		40		(282	)		85		325		(184	)		202		(282	)
Non-GAAP: Earnings before provision for income taxes		32,391			34,193		61,552			61,484		48,804		32,391			85,687		61,552

GAAP: Provision for income taxes		8,823			8,237		16,558			14,765		12,565		8,823			21,622		16,558
Share based compensation		541			624		1,128			1,183		528		541			1,024		1,128
Acquisition and integration expense		(9	)		391		-			506		-		(9	)		-		-
Acquisition related amortization expense		648			663		1,315			1,270		750		648			1,507		1,315
Other (income) expense		(56	)		12		(86	)		25		93		(56	)		58		(86	)
Tax (expense) benefit on restricted stock		(26	)		38		(40	)		48
Tax benefit (expense) on restricted stock												62		(26	)		317		(40	)
Non-GAAP: Provision for income taxes		9,921			9,965		18,875			17,797		13,998		9,921			24,528		18,875

Non-GAAP: Net earnings	$	22,470		$	24,228	$	42,677		$	43,687	$	34,806	$	22,470		$	61,159	$	42,677

GAAP: Net earnings per common share - diluted	$	1.48		$	1.51	$	2.78		$	2.71	$	2.34	$	1.48		$	4.09	$	2.78

Non-GAAP: Net earnings per common share - diluted	$	1.68		$	1.81	$	3.19		$	3.26	$	2.59	$	1.68		$	4.55	$	3.19

	Three Months Ended September 30,				Six Months Ended September 30,					Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020			2019		2021		2020		2021			2020
GAAP: Net earnings per common share - diluted	$	1.48	$	1.51	$	2.78		$	2.71	$	2.34	$	1.48	$	4.09		$	2.78

Share based compensation		0.09		0.11		0.19			0.22		0.09		0.09		0.18			0.19
Acquisition and integration expense		-		0.07		-			0.09
Acquisition related amortization expense		0.11		0.12		0.23			0.24		0.14		0.11		0.29			0.23
Other (income) expense		-		-		(0.01	)		-		0.02		-		0.01			(0.01	)
Tax benefit on restricted stock		-		-		-			-
Tax benefit (expense) on restricted stock											-		-		(0.02	)		-
Total non-GAAP adjustments - net of tax		0.20		0.30		0.41			0.55		0.25		0.20		0.46			0.41

Non-GAAP: Net earnings per common share - diluted	$	1.68	$	1.81	$	3.19		$	3.26	$	2.59	$	1.68	$	4.55		$	3.19

(2)

We define ~~adjusted~~Adjusted EBITDA as net earnings calculated in accordance with GAAP, adjusted for the following: interest expense, depreciation and amortization, ~~share based~~share-based compensation, acquisition and integration expenses, provision for income taxes, and other ~~income (expense).~~income. Segment ~~adjusted~~Adjusted EBITDA is defined as operating income calculated in accordance with GAAP, adjusted for interest expense, ~~share based~~share-based compensation, acquisition and integration expenses, and depreciation and amortization. We consider the interest on notes payable from our financing 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~~Adjusted EBITDA calculation. We provide below a reconciliation of ~~adjusted~~Adjusted EBITDA to net earnings, which is the most directly comparable financial measure to this ~~non-GAAP~~Non-GAAP financial measure. Adjusted EBITDA margin is our calculation of ~~adjusted~~Adjusted EBITDA divided by net sales. The presentation of Adjusted EBITDA has been changed from prior period presentations to include adjustments for expenses related to acquisitions such as legal, accounting, tax, and adjustments to the fair value of contingent purchase price consideration as well as stock compensation.

We use ~~adjusted~~Adjusted EBITDA as a supplemental measure of our performance to gain insight into our operating performance. We believe that the exclusion of other income in calculating ~~adjusted~~Adjusted EBITDA and ~~adjusted~~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~~Adjusted EBITDA and ~~adjusted~~Adjusted EBITDA margin provide useful information to investors and others ~~to understand~~in understanding and ~~evaluate~~evaluating our operating results. However, our use of ~~adjusted~~Adjusted EBITDA and ~~adjusted~~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 GAAP. In addition, other companies, including companies in our industry, might calculate ~~adjusted~~Adjusted EBITDA and ~~adjusted~~Adjusted EBITDA margin or similarly titled measures differently, which may reduce their usefulness as a comparative ~~measure.~~measures.

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	Three Months Ended September 30,					Six Months Ended September 30,					Three Months Ended September 30,					Six Months Ended September 30,
Consolidated	2020			2019		2020			2019		2021		2020			2021		2020
Net earnings	$	19,846		$	20,098	$	37,206		$	36,286	$	31,413	$	19,846		$	54,931	$	37,206
Provision for income taxes		8,823			8,237		16,558			14,765		12,565		8,823			21,622		16,558
Share based compensation		1,764			2,135		3,671			4,077		1,840		1,764			3,575		3,671
Interest and financing costs		1			-		266			-		199		1			358		266
Acquisition and integration expense		(30	)		1,338		(1	)		1,739		-		(30	)		-		(1	)
Depreciation and amortization		3,341			3,557		6,857			7,020		3,853		3,341			7,779		6,857
Other (income) expense		(184	)		40		(282	)		85
Other income (expense)												325		(184	)		202		(282	)
Adjusted EBITDA	$	33,561		$	35,405	$	64,275		$	63,972	$	50,195	$	33,561		$	88,467	$	64,275

Technology Segment
Operating income	$	21,297		$	20,854	$	38,829		$	36,591	$	30,251	$	21,297		$	55,474	$	38,829
Depreciation and amortization		3,313			3,529		6,801			6,936		3,825		3,313			7,723		6,801
Share based compensation		1,694			2,068		3,541			3,942		1,784		1,694			3,462		3,541
Interest and financing costs		1			-		266			-		199		1			358		266
Acquisition and integration expense		(30	)		1,338		(1	)		1,739		-		(30	)		-		(1	)
Adjusted EBITDA	$	26,275		$	27,789	$	49,436		$	49,208	$	36,059	$	26,275		$	67,017	$	49,436


Financing Segment
Operating income	$	7,188		$	7,521	$	14,653		$	14,545	$	14,052	$	7,188		$	21,281	$	14,653
Depreciation and amortization		28			28		56			84		28		28			56		56
Share based compensation		70			67		130			135		56		70			113		130
Adjusted EBITDA	$	7,286		$	7,616	$	14,839		$	14,764	$	14,136	$	7,286		$	21,450	$	14,839

(3)

We define ~~adjusted~~Adjusted gross billings as our technology segment net sales calculated in accordance with US GAAP, adjusted to exclude the costs incurred related to sales of third-party maintenance, software assurance, ~~and~~ subscription/SaaS licenses, and services. We have provided below a reconciliation of ~~adjusted~~Adjusted gross billings to technology segment net sales, which is the most directly comparable financial measure to this ~~non-GAAP~~Non-GAAP financial measure. ~~The presentation of adjusted gross billings has been updated to align with net sales for our technology segment.~~

	Three Months Ended September 30,				Six Months Ended September 30,
	2021		2020		2021		2020
Technology segment net sales	$	436,301	$	419,359	$	836,659	$	760,583
Costs incurred related to sales of third party maintenance, software assurance and subscription/Saas licenses, and services		227,823		181,705		460,472	$	386,875
Adjusted gross billings	$	664,124	$	601,064	$	1,297,131	$	1,147,458

We use ~~adjusted~~Adjusted gross billings as a supplemental measure of our performance to gain insight into the volume of business generated by our technology segment, and to analyze the changes to our accounts receivable and accounts payable. Our use of ~~adjusted~~Adjusted gross billings as an analytical tool has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate ~~adjusted~~Adjusted gross billings or a similarly titled measure differently, which may reduce its usefulness as a comparative measure.

Three Months Ended
September 30,

Six Months Ended
September 30,

2020 2019 2020 2019
Technology segment net sales $ 419,359 $ 397,718 $ 760,583 $ 766,253
Costs incurred related to sales of third party maintenance, software assurance and subscription/Saas licenses, and services 181,705 181,366 386,875 $ 361,194
Adjusted gross billings $ 601,064 $ 579,084 $ 1,147,458 $ 1,127,447

~~Consolidated Results of Operations~~CONSOLIDATED RESULTS OF OPERATIONS

During the three months ended September 30, ~~2020,~~2021, net sales increased ~~5.2%~~5.8%, or ~~$21.5~~$24.9 million, to ~~$433.1~~$458.0 million, as compared to ~~$411.6~~$433.1 million for the same period in the prior ~~fiscal~~ year. Product sales for the three months ended September 30, ~~2020,~~2021, increased ~~5.5%~~3.5% to ~~$383.7~~$397.2 million, or an increase of ~~$20.2~~$13.5 million from ~~$363.5~~$383.7 million infor the same period in the prior ~~year. Services~~year, due to increased demand from our technology segment customers as well as higher financing revenue. Service sales during the three months ended September 30, ~~2020,~~2021, increased ~~2.8%~~23.1% to ~~$49.4~~$60.9 million, or an increase of ~~$1.4~~$11.4 million over prior year services sales of ~~$48.1~~$49.4 million ~~primarily~~ due to ~~an increase~~increases in both managed services and professional services. ~~The increase in products sales was due to a shift in mix of higher hardware and third-party software licenses sales which~~In the technology segment, we ~~recognize on a gross basis, and a lower proportion of sales of maintenance, software assurance, subscriptions/SaaS licenses, and services where we recognize revenue on a net basis. We~~ saw increases in net sales from customers in the healthcare, telecom, media and entertainment, ~~SLED, financial services,~~ and ~~all the~~smaller other categories of customers, which was partially offset by decreases in net sales from ~~our~~customers in technology, ~~customers,~~financial services and ~~a small decrease from health care customers,~~SLED, during the three months ended September 30, ~~2020,~~2021, compared to the same period in the prior year.

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For the six months ended September 30, ~~2020,~~2021, net sales ~~decreased 0.6%~~increased 11.0%, or ~~$4.8~~$86.6 million, to ~~$788.1~~$874.7 million, compared to ~~$792.9~~$788.1 million in the same period in the prior ~~fiscal~~ year. Product sales for the six months ended September 30, ~~2020, decreased 1.2%~~2021, increased 9.7%, or ~~$8.2~~$67.3 million, to ~~$690.9~~$758.2 million, compared to ~~$699.1~~$690.9 million in the same period in the prior year. Services sales during the six months ended September 30, ~~2020,~~2021, increased ~~3.6%~~19.8%, or ~~$3.4~~$19.2 million, to ~~$97.2~~$116.4 million compared to prior year services sales of ~~$93.8~~$97.2 million. The ~~decrease~~increase in net sales was due to ~~reductions in~~increased demand from ~~the~~ our customers in ~~the technology~~telecom, media and ~~health care~~entertainment, healthcare and manufacturing markets, which were ~~mostly~~partially offset by ~~increases~~decreases in demand from our customers in ~~the telecom, media and entertainment, SLED,~~technology, financial services, SLED, and all other category of customers, during the six months ended September 30, ~~2020,~~2021, compared to the prior year.

Adjusted gross billings increased ~~3.8%~~10.5%, or ~~$22.0~~$63.1 million, to ~~$601.1~~$664.1 million for the three months ended September 30, ~~2020,~~2021, from ~~$579.1~~$601.1 million for the same period in the prior ~~fiscal~~ year. There was an increase in adjusted gross billings from our customers in ~~the~~ telecom, media and entertainment, ~~SLED,~~healthcare, and ~~health care customers~~financial services industries, which was partially offset by decreases in demand from ~~the technology, financial services,~~our customers in SLED and ~~all the other categories of customers.~~technology. For the six months ended September 30, ~~2020,~~2021, adjusted gross billings increased ~~1.8%~~13.0%, or ~~$20.1~~$149.7 million, to ~~$1,147.5~~$1,297.1 million, from ~~$1,127.4~~$1,147.5 million for the same period in the prior ~~fiscal~~ year. The increase in adjusted gross billings is due, in part, to the Systems Management Planning, Inc. (“SMP”) acquisition as well as higher demand from ~~the same customer end markets that were previously identified for the increase~~our customers in ~~net sales with the exception of health care~~telecom, media and entertainment, and healthcare, which was partially offset by decreases in demand from our customers ~~which declined for the six-month period.~~in technology and SLED.

Consolidated gross profit for the three months ended September 30, ~~2020, decreased $4.1~~2021, increased $24.0 million, or ~~3.9%~~24.3%, to ~~$99.0~~$123.0 million, compared with ~~$103.0~~$99.0 million infor the same period in the prior year. Consolidated gross margins were ~~22.9%~~26.9% for the three months ended September 30, ~~2020,~~2021, which is ~~a decrease~~an increase of ~~210~~400 basis points compared to ~~25.0%~~22.9% for the same period in the prior ~~fiscal~~ year. The ~~decrease~~increase in margins ~~for the three-month period~~ was primarily due to a shift in product mix, as we sold a higher proportion ~~hardware and third-party licenses which are recognized on a gross basis and therefore have lower product margins, and a lower proportion~~ of ~~our product mix was from~~ third-party maintenance, software assurance and subscription/SaaS licenses, ~~and services,~~ which ~~are recorded~~was recognized on a net basis, as well as higher service revenue and ~~were partially offset by slightly~~service margin, and higher gross profit from of our financing segment.

For the six months ended September 30, ~~2020,~~2021, consolidated gross profit increased ~~$1.8~~$31.0 million, or ~~0.9%~~15.7%, to ~~$197.5~~$228.5 million, compared with ~~$195.7~~$197.5 million for the same period in the prior ~~fiscal~~ year. Consolidated gross margins were ~~25.1%~~26.1% for the six months ended September 30, ~~2020,~~2021, an increase of 40100 basis points compared to ~~24.7%~~25.1% for the same period in the prior ~~fiscal~~ year. The increase in gross margin for the six-month period was due to a shift in product mix, as we sold a higher proportion of third-party maintenance, software assurance and subscription/SaaS licenses, ~~and services. Also contributing to the gross margin improvement was~~which is recognized on a net basis, as well as higher service ~~revenues,~~revenue and service margins, and higher ~~post-contract revenue~~gross profit from of our financing segment.

Our operating expenses for the three months ended September 30, ~~2020, decreased 5.6%~~2021, increased $8.2 million, or 11.7%, to ~~$70.5~~$78.7 million, as compared to ~~$74.7~~$70.5 million for the prior year period. ~~The majority of this decrease reflects~~ ~~reductions~~This increase is primarily due to an increase in ~~selling,~~variable compensation, salaries and benefits driven by increased headcount and higher general and administrative expense ~~of 5.2% or $3.6 million,~~due to ~~$66.9 million as compared to $70.5 million in the same period in the prior year, due in part to reductions in~~higher professional fees, software license and maintenance, and travel and entertainment ~~general office related~~ expenses, ~~employee salaries and benefits, which were partially offset by an increase in allowance for credit losses. Our prior year results benefit~~as travel restrictions from ~~having only incurred a partial quarter of salaries and benefits from employees acquired from ABS Technology.~~COVID-19 have started to ease. As of September 30, ~~2020,~~2021, we had 1,554 employees, an increase of 57 from 1,497 as of September 30, 2020. Our headcount is higher primarily due to the addition of 102 employees ~~a decrease~~joining ePlus from our December 31, 2020, acquisition of ~~132 from 1,629 last year.~~SMP.

For the six months ended September 30, ~~2020,~~2021, operating expenses ~~decreased $0.5~~increased $7.7 million, or ~~0.3%~~5.4%, to ~~$144.0~~$151.8 million, as compared to ~~$144.5~~$144.0 million in the same period in the prior year. The ~~decrease~~increase in operating expenses for the six months ended September 30, ~~2020,~~2021, is due to ~~the reductions~~an increase in ~~interest~~variable compensation, salaries and benefits driven by increased headcount and higher general and administrative expense due to higher professional fees, software license and maintenance, and travel and entertainment expenses, as travel restrictions from COVID-19 have started to ease. These increases are partially offset by a decrease in our provision for credit losses.

Depreciation and amortization expense increased $0.5 million and $0.9 million for three and six months ended September 30, 2021, respectively, primarily due to our December 31, 2020, acquisition of SMP. Interest and financing costs increased $0.1 million for the three months ended September 30, 2021 and ~~depreciation and amortization expense. Selling, general, and administrative expense~~decreased $0.1 million for the six months ended September 30, ~~2020, increased slightly to $136.4 million,~~2021, primarily driven by the timing of borrowings from our credit facility with ~~increases~~Wells Fargo Commercial Distribution Finance, LLC (“WFCDF”) offset by a decrease in ~~salaries and benefits, variable compensation, and reserve for credit losses, offset almost entirely by reductions in general and administrative expense and acquisition related expenses.~~

~~Depreciation and amortization expense decreased $0.2 million for both the three and six months ended September 30, 2020. Interest~~interest and financing costs ~~decreased $0.3 million and $0.4 million, for the three and six months ended September 30, 2020, respectively, due to a decrease~~ in ~~the average balance of non-recourse notes payable outstanding during the three and six months ended September 30, 2020, as compared to the prior year.~~our financing segment.

As a result, operating income for the three months ended September 30, ~~2020,~~2021, increased ~~$0.1~~$15.8 million, or ~~0.4%~~55.5%, to ~~$28.5~~$44.3 million as compared to ~~$28.4~~$28.5 million for the same period in the prior year. For the six months ended September 30, ~~2020,~~2021, operating income increased ~~$2.3~~$23.3 million, or ~~4.6%~~43.5%, to ~~$53.5~~$76.8 million, as compared to ~~$51.1~~$53.5 million for the same period in the prior year.

Our effective tax rate for the three and six months ended September 30, 2020, was 30.8%, compared with 29.1% and 28.9%, respectively, for the same periods in the prior year. The change in our effective tax rate was due to an adjustment to the federal benefit from state taxes.

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Consolidated net earnings for the three months ended September 30, ~~2020,~~2021, were ~~$19.8~~$31.4 million, ~~a decrease~~an increase of ~~1.3%~~58.3%, or ~~$0.3~~$11.6 million, over the prior year’s results, due to the ~~decrease~~increase in gross profit ~~partially~~and offset by ~~a reduction in~~increased operating ~~expenses.~~ expenses and the provision for income taxes. For the six months ended September 30, ~~2020,~~2021, the consolidated net earnings were ~~$37.2~~$54.9 million, an increase of ~~2.5%~~47.6%, or ~~$0.9~~$17.7 million, compared to the prior year’s results, due to the increase in revenues and gross profit ~~and other income~~ mostly offset by an increase in operating expenses and the provision for income taxes.

Our effective tax rate for the three and six months ended September 30, 2021, was 28.6% and 28.2% respectively, compared with 30.8% for the same periods in the prior year. The change in our effective income tax rate was primarily due to an adjustment to the federal benefit from state taxes in the prior year period.

Adjusted EBITDA ~~decreased $1.8~~increased $16.6 million, or ~~5.2%~~49.6%, to ~~$33.6~~$50.2 million and ~~adjusted~~Adjusted EBITDA margin ~~decreased 90~~increased 330 basis points to ~~7.7%~~11.0% for the three months ended September 30, ~~2020,~~2021, as compared to the prior year period of ~~8.6%~~7.7%. For the six months ended September 30, ~~2020,~~2021, adjusted EBITDA increased ~~$0.3~~$24.2 million, or ~~0.5%~~37.6%, to ~~$64.3~~$88.5 million and the adjusted EBITDA margin increased 10190 basis points to ~~8.2%~~10.1% as compared to the prior year period of ~~8.1% for the six months ended September 30, 2020, compared to the prior year period.~~8.2%.

Diluted earnings per share ~~decreased 2.0%~~increased 58.1%, or ~~$0.03,~~$0.86, to $2.34 per share for the three months ended September 30, 2021, as compared to $1.48 per share for the three months ended September 30, ~~2020, as compared~~2020. Non-GAAP diluted earnings per share increased 54.2%, or $0.91, to ~~$1.51 per share~~$2.59 for the three months ended September 30, ~~2019. Non-GAAP diluted earnings per share decreased 7.2%, or $0.13,~~2021, as compared to $1.68 for the three months ended September 30, ~~2020, as compared to $1.81 for the three months ended September 30, 2019.~~ 2020. For the six months ended September 30, ~~2020,~~2021, diluted earnings per share increased ~~2.6%~~47.1%, or ~~$0.07,~~$1.31, to ~~$2.78~~$4.09 per share, as compared to ~~$2.71~~$2.78 per share ~~compared to~~in the prior year period. Non-GAAP diluted earnings per share ~~decreased 2.1%~~increased 42.6%, or ~~$0.07,~~$1.36, to $4.55 for the six months ended September 30, 2021, as compared to $3.19 for the six months ended September 30, ~~2020, as compared to $3.26 for the six months ended September 30, 2019.~~2020.

Cash and cash equivalents ~~increased $74.9~~decreased by 56.0% to $57.0 million ~~or 86.8% to $161.1 million at~~as of September 30, ~~2020,~~2021, as compared to ~~$86.2~~$129.6 million as of March 31, ~~2020. The increase is~~2021, primarily ~~the result of the extension of payment terms by 30 days from certain vendor partners that deferred $76.3 million~~due to increases in ~~payments~~our accounts receivable and inventory and a ~~payroll tax deferral under~~decrease in accounts payable—trade, partially offset by net borrowings on the ~~Coronavirus Aid, Relief, and Economic Security (“CARES”) Act that deferred $4.8~~floor plan component of our credit facility. Additional uses of cash during the three months ended September 30, 2021, included cash paid of $6.9 million ~~in payments that will be paid in December 2021 and December 2022~~.to repurchase outstanding shares of our common stock. Our cash on hand, funds generated from operations, amounts available under our credit facility, and the ~~possible monetization of~~ability to monetize our investment portfolio have provided sufficient liquidity for our business.

The extent of the impact of COVID-19 is uncertain and may impact our liquidity position over the longer term. As credit markets have tightened as a result of COVID-19, we may have difficulty funding our financing transactions with lenders, which may result in the use of our cash or a decrease in financing originations.

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~~Segment Overview~~SEGMENT OVERVIEW

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

~~Technology Segment~~TECHNOLOGY SEGMENT

The technology segment ~~sells IT equipment~~derives revenue from sales of product, project-related advanced professional services, managed services and ~~software and related services~~staff augmentation. The technology segment sells primarily to corporate customers, state and local governments, and higher education institutions on a nationwide basis, with geographic concentrations relating to our physical locations. The technology segment also provides Internet-based business-to-business supply chain management solutions for ITinformation technology products.

Our technology segment derives revenue from the sales of new equipment and service engagements. Included in net sales 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 may have a customer master ~~agreements, or CMAs,~~agreement (“CMA”) with our company, which ~~stipulate~~stipulates the terms and conditions of the 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. 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 through incentive programs provided by vendors and distributors. The programs ~~for which~~ 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;~~change and, therefore, there is no guarantee of future reductions of costs provided by these vendor consideration programs.

~~Financing Segment~~

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FINANCING SEGMENT

Our financing segment offers financing solutions to corporations, governmental entities, and educational institutions nationwide ~~as well as internationally~~and in Canada, the UK, ~~Canada, Iceland,~~ and ~~Spain.~~several other European countries. The financing segment derives revenue from leasing IT and medical equipment and the disposition of that equipment at the end of the lease. The financing 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;

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 and remarketing fees from certain residual value investments.

~~Fluctuations in Operating Results~~FLUCTUATIONS IN OPERATING RESULTS

Our results of operations are susceptible to fluctuations for a number of reasons, including, without limitation, customer demand for our products and services, supplier costs, product availability, changes in vendor incentive programs, interest rate fluctuations, decision to sell 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 other post-term events.

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We expect to continue to expand by opening new ~~sales locations~~offices and warehouses and by hiring additional staff for specific targeted market areas whenever we can find both experienced personnel and desirable geographic areas over the longer term, which may reduce our results from operations. COVID-19 may negatively affect market demand, which will likely lower our financial results, and may adversely impact our ability to expand. We are uncertain as to the extent and duration of ~~the~~COVID-19’s impact to demand in the IT market ~~demand~~ for our products and services.

CRITICAL ACCOUNTING ESTIMATES

~~As disclosed in~~ ~~Note 2~~, “Recent Accounting Pronouncements,” we adopted a new credit loss standard on April 1, 2020. Under this new standard, we estimate an allowance for credit losses related to accounts receivable for future expected credit losses by using relevant information such as historical information, current conditions, and reasonable and supportable forecasts. The allowance is measured on a collective basis when similar risk characteristics exist, and a loss-rate for each group with similar risk characteristics is determined using historical credit loss experience as the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current conditions, as well as changes in forecasted macroeconomic conditions. Our ~~allowance reflects the forecasted credit deterioration due to the COVID-19 pandemic.~~

~~Our other~~ 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 ~~2020~~2021 Annual Report.

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SEGMENT RESULTS OF OPERATIONS

The three and six months ended September 30, ~~2020,~~2021, compared to the three and six months ended September 30, ~~2019~~2020

~~Technology Segment~~TECHNOLOGY SEGMENT

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

	Three Months Ended September 30,				Six Months Ended September 30,				Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Net sales
Product	$	369,934	$	349,650	$	663,367	$	672,414	$	375,444	$	369,934	$	720,210	$	663,367
Services		49,425		48,068		97,216		93,839		60,857		49,425		116,449		97,216
Total		419,359		397,718		760,583		766,253		436,301		419,359		836,659		760,583

Cost of sales
Product		301,006		276,475		525,549		534,529		293,837		301,006		564,852		525,549
Services		31,156		29,671		60,996		58,341		37,386		31,156		71,296		60,996
Total		332,162		306,146		586,545		592,870		331,223		332,162		636,148		586,545

Gross profit		87,197		91,572		174,038		173,383		105,078		87,197		200,511		174,038

Selling, general, and administrative		62,586		67,189		128,142		129,856		70,803		62,586		136,956		128,142
Depreciation and amortization		3,313		3,529		6,801		6,936		3,825		3,313		7,723		6,801
Interest and financing costs		1		-		266		-		199		1		358		266
Operating expenses		65,900		70,718		135,209		136,792		74,827		65,900		145,037		135,209

Operating income	$	21,297	$	20,854	$	38,829	$	36,591	$	30,251	$	21,297	$	55,474	$	38,829

Adjusted gross billings	$	601,064	$	579,084	$	1,147,458	$	1,127,447	$	664,124	$	601,064	$	1,297,131	$	1,147,458
Adjusted EBITDA	$	26,275	$	27,789	$	49,436	$	49,208	$	36,059	$	26,275	$	67,017	$	49,436

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Net sales: Net sales for the three months ended September 30, ~~2020,~~2021, were $~~419.4~~$436.3 million compared to ~~$397.7~~$419.4 million infor the same period in the prior year, an increase of ~~5.4%~~4.0% or ~~$21.6~~$16.9 million, due to increases in net sales tofrom customers in the healthcare, telecom, media and entertainment, ~~SLED, financial services,~~ and ~~all the~~smaller other ~~customer~~ categories of customers, which was partially offset by ~~a decrease~~decreases in net sales from customers in technology, financial services and ~~healthcare customer categories.~~SLED. Product sales increased ~~5.8%~~1.5%, or ~~$20.3~~$5.5 million, to ~~$369.9~~$375.4 million. Services revenues increased 23.1%, or $11.4 million compared to the same period in the prior year to $60.9 million due to a shift in mix to sales of hardware and third-party licenses, partially offset by reductions in third-party maintenance, software assurance, subscriptions/SaaS licenses, and services where we recognize revenue on a net basis. Services revenues increased 2.8%, or $1.4 million to $49.4 million to due to an increase in managed ~~services.~~and professional services for the three months ended September 30, 2021.

For the six months ended September 30, ~~2020,~~2021, net sales ~~decreased 0.7%~~increased 10.0%, or ~~$5.7~~$76.1 million to ~~$760.6~~$836.7 million compared to ~~$766.3~~$760.6 million during the same period in the prior year. Product sales for the six months ended September 30, ~~2020, decreased 1.3%~~2021, increased 8.6%, or ~~$9.0~~$56.8 million to ~~$663.4~~$720.2 million, ~~due to a higher proportion of sales from third party services that are recognized on a net basis, partially offset~~and service revenue increased by ~~the increase in services revenues by 3.6%~~19.8%, or ~~$3.4~~$19.2 million, to ~~$97.2~~$116.4 million compared to ~~$93.8~~$97.2 million during the same period in the prior year.

Adjusted gross billings increased ~~3.8%~~10.5%, or ~~$22.0~~$63.1 million, to ~~$601.1~~$664.1 million for the three months ended September 30, ~~2020,~~2021, from ~~$579.1~~$601.1 million for the same period in the prior ~~fiscal~~ year. ~~There was an~~The increase in adjusted gross billings was due, in part, to the SMP acquisition as well as higher demand from our customers in the telecom, media and entertainment, SLED, and health care customers which was partially offset by decreases in demand from the technology, financial services, and all the other categories ofcurrent customers. For the six months ended September 30, ~~2020,~~2021, adjusted gross billings increased ~~1.8%~~13.0%, or ~~$20.1~~$149.7 million, to ~~$1,147.5~~$1,297.1 million, from ~~$1,127.4~~$1,147.5 million for the same period in the prior ~~fiscal~~ year. The increase in adjusted gross billings is due to higher demand from the same customer end markets that were previously identified for the increase in net ~~sales with the exception of health care customers which declined for the six-month period.~~sales.

We rely on our vendors to fulfill a large majority of shipments to our customers. As of September 30, 2021, we had open orders of $707.1 million and deferred revenue of $110.0 million. As of September 30, 2020, we had open orders of $389.7 million and deferred revenue of $77.1 ~~million. As of September 30, 2019, we had open orders of $210.7 million and deferred revenues of $66.5~~ million.

We analyze net sales by customer end market and by vendor, as opposed to discrete product and service categories. The percentage of net sales by industry and vendor for the twelve-month periods ended September 30, ~~2020,~~2021, and ~~2019~~2020 are summarized below:

Twelve Months Ended
September 30,

2020 2019 Change
Revenue by customer end market:
Technology 19 % 22 % (3 %)
Telecom, Media & Entertainment 20 % 16 % 4 %
SLED 16 % 17 % (1 %)
Healthcare 15 % 15 % 0 %
Financial Services 13 % 14 % (1 %)
All others 17 % 16 % 1 %
Total 100 % 100 %

Twelve Months Ended
September 30,

2020 2019 Change
Revenue by vendor:
Cisco Systems 39 % 41 % (2 %)
NetApp 4 % 3 % 1 %
HP Inc. & HPE 4 % 6 % (2 %)
Dell/EMC 7 % 4 % 3 %
Juniper Networks 5 % 4 % 1 %
Arista Networks 3 % 5 % (2 %)
All others 38 % 37 % 1 %
Total 100 % 100 %

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	Twelve Months Ended September 30,
	2021			2020			Change
Revenue by customer end market:
Telecom, Media & Entertainment		28	%		20	%		8	%
SLED		15	%		16	%		(1	%)
Healthcare		15	%		15	%		0	%
Technology		14	%		19	%		(5	%)
Financial Services		11	%		13	%		(2	%)
All others		17	%		17	%		0	%
Total		100	%		100	%

	Twelve Months Ended September 30,
	2021			2020			Change
Revenue by vendor:
Cisco Systems		36	%		39	%		(3	%)
Dell / EMC		8	%		7	%		1	%
Juniper Networks		6	%		5	%		1	%
NetApp		5	%		4	%		1	%
HP Inc. & HPE		4	%		4	%		0	%
Arista Networks		3	%		3	%		0	%
All others		38	%		38	%		0	%
Total		100	%		100	%

Our revenues by customer end market have remained consistent over the year with over 80% of our revenues generated from customers within the five end markets identified above. During the trailing twelve-month period ended September 30, ~~2020,~~2021, we had an increase in the percentage of total revenues from customers in the telecom, media and entertainment industry, and ~~all other customer category, and~~ decreases in the percentage of total revenues in the technology, ~~SLED,~~financial services, and ~~financial services~~SLED markets. These changes were driven by ~~changes caused by the COVID-19 pandemic,~~ changes in customer buying cycles, and the timing of specific IT related initiatives, rather than the acquisition or loss of a customer or set of customers.

~~The majority~~Most of our revenues by vendor are derived from our top six suppliers, which, when combined, ~~is a fairly constant percentage of~~accounted for over 60% of total revenues for the twelve-month periods ended September 30, ~~2020,~~2021, and ~~2019.~~2020. None of the vendors included within the “other” category exceeded 5% of total revenues.

Cost of ~~sales:~~sales: ~~For the three months ended September 30, 2020, cost~~Cost of sales ~~increased 8.5%, or $26.0 million, due to~~ ~~a shift in product mix, as we sold a higher proportion of hardware and third-party software licenses which we recognize on a gross basis.~~ ~~Due to this shift in product mix, our gross margin decreased 220 basis points to 20.8%~~ for the three months ended September 30, ~~2020,~~2021, decreased 0.3% or $1.0 million to $331.2 million compared to ~~23.0% in~~$332.2 million for the same period in the prior year. Our gross margin increased 330 basis points to 24.1% for the three months ended September 30, 2021, compared to 20.8% for the same period in the prior year. The increase in gross margin was driven by higher product margin, where a higher proportion of sales of third-party maintenance, software assurance, subscription/SaaS licenses, and services are recognized on a net basis, and higher service margin. Cost of sales for the six months ended September 30, ~~2020, decreased 1.1%~~2021, increased 8.5% or ~~$6.3~~$49.6 million which is in-line with the ~~decrease~~increase in net sales. For the six months ended September 30, 2021, gross margin increased by 110 basis points to 24.0%, as compared to 22.9% for the prior year period, primarily due to higher service margin, and a higher proportion of sales of third-party maintenance, software assurance, subscription/SaaS licenses, and services, which are recognized on a net basis.

Selling, general, and administrative: Selling, general, and administrative expenses of $70.8 million for the three months ended September 30, 2021, increased by $8.2 million, or 13.1% from $62.6 million for the same period in the prior year. Salaries and benefits increased $7.1 million, or 13.1% to $60.8 million, compared to $53.8 million during the prior year mainly due to an increase in the number of employees. Our technology segment had 1,522 employees as of September 30, 2021, an increase of 62 from 1,460 as of September 30, 2020. Our headcount as of September 30, 2021 incorporates the addition of 102 employees from the December 31, 2020, acquisition of SMP. For the six months ended September 30, 2020, gross margin increased by 30 basis points to 22.9%, as compared to 22.6% for the prior year period; product margin also increased by 30 basis points to 20.8%, compared to 20.5% in the same period in the prior year. Vendor incentives earned as a percentage of sales decreased 70 basis points and 20 basis points for the three and six months ended September 30, 2020, respectively, resulting in an unfavorable impact on gross margin, as compared to same periods in the prior year.

~~Selling, general, and administrative:~~ Selling, general, and administrative expenses of $62.6 million for the three months ended September 30, 2020, decreased by $4.6 million, or 6.9% from $67.2 million in the same period in the prior year. Salaries and benefits decreased $0.8 million, or 1.5% to $53.8 million, compared to $54.6 million during the same period in the prior year due to a decrease variable compensation and fringe benefits, more than offsetting an increase in salaries. ~~Our prior year results benefit from having only incurred a partial quarter of salaries and benefits from employees acquired from ABS Technology.~~ ~~Our technology segment had 1,460 employees as of September 30, 2020, a decrease of 135 from 1,595 at September 30, 2019.~~ ~~For the six months ended September 30, 2020,~~2021, selling, general, and administrative expenses ~~decreased~~increased by ~~$1.7~~$8.8 million, or ~~1.3%~~6.9%, to $137.0 million compared to $128.1 million ~~compared to $129.9 million in~~for the same period in the prior year. Salaries and benefits increased ~~$4.7~~$7.9 million, or ~~4.5%~~7.2% to ~~$110.8~~$119.0 million, compared to ~~$106.1~~$110.8 million during the same period in the prior year.

General and administrative expenses ~~decreased $4.0~~increased $1.3 million, or ~~31.7%~~14.6%, to ~~$8.7~~$9.9 million during the three months ended September 30, ~~2020,~~2021, compared to ~~$12.7 million in~~ the same period in the prior year, due to ~~a decrease~~higher professional fees, software license and maintenance, and travel and entertainment expenses, as travel restrictions from COVID-19 have started to ease. For the six months ended September 30, 2021, general and administrative expenses increased $1.4 million, or 8.2%, to $18.1 million. The increase in selling, general and administrative expenses was primarily due to an increase in travel and entertainment expenses, ~~advertising~~legal and ~~marketing,~~ professional fees and ~~other general office related expenses resulting~~software license and maintenance. The provision for credit losses was $0.5 million lower than for the same period in ~~part from restrictions on travel~~the prior year.

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Depreciation and amortization: Depreciation and amortization increased $0.5 million, or 15.5%, to $3.8 million during the three months ended September 30, 2021, as compared to $3.3 million in the prior year period primarily due to the ~~COVID-19 pandemic,~~amortization of the intangible assets acquired in our acquisition of SMP. For the six months ended September 30, 2021, depreciation and ~~$1.1~~amortization increased $0.9 million, or 13.6%, to $7.7 million as compared to $6.8 million for the same period in ~~lower acquisition related expenses than~~the prior year.

Interest and financing costs:Interest and financing costs were $0.2 million, and $0.4 million for the three and six months ended September 30, 2021, an increase of $0.2 million and $0.1 million, respectively, as compared to the same periods in the prior year. The increase is primarily due to timing of our borrowings from our WFCDF credit facility and borrowings on an installment payment arrangement, for which there were no comparable borrowing as of September 30, 2020.

Segment operating income: As a result of the foregoing, operating income was $30.3 million, an increase of $9.0 million, or 42.0%, for the three months ended September 30, 2021, as compared to $21.3 million for the same period in the prior year. For the six months ended September 30, ~~2020, general and administrative expenses decreased $6.8 million, or 28.9%, to $16.8 million. The decrease in selling, general and administrative expenses was primarily due to~~ decrease in travel and entertainment expenses, advertising and marketing, professional fees, and other general office related expenses resulting from travel restrictions due in part to the COVID-19 pandemic, and $1.5 million in lower acquisition related expenses than the prior year.

~~Depreciation and amortization:~~ ~~Depreciation and amortization decreased $0.2 million, or 6.1%, to $3.3 million during the three months ended September 30, 2020,~~ ~~and decreased $0.1 million, or 1.9%, to $6.8 million for the six months ended September 30, 2020, compared to the prior year periods~~.

~~Interest and financing costs:~~ Interest and financing costs were insignificant in the three months ended September 30, 2020, and $0.3 million for the six months ended September 30, 2020, compared to none in the same period in the prior year. This is due to $35.0 million in borrowings ~~under the accounts receivable component of our Technology segment credit facility during the first quarter of the fiscal year.~~

~~Segment operating income:~~ ~~As a result of the foregoing,~~2021, operating income was $21.3 million, an increase of $0.4 million, or 2.1%, for the three months ended September 30, 2020, as compared to $20.9 million in the same period in the prior year. For the six months ended September 30, 2020, operating income was $38.8$55.5 million, compared to ~~$36.6~~$38.8 million for the same period in the prior year, an increase of ~~$2.2~~$16.6 million, or ~~6.1%~~42.9%.

For the three months ended September 30, ~~2020, adjusted EBITDA was $26.3 million, a decrease of $1.5 million, or 5.4%, compared to $27.8 million in the same period in the prior year.~~2021, Adjusted EBITDA was ~~$49.4~~$36.1 million, an increase of ~~$0.2~~$9.8 million, or ~~0.5%~~37.2%, ~~for the six months ended September 30, 2020,~~ compared to ~~$49.2~~$26.3 million for the same period in the prior year.Adjusted EBITDA was $67.0 million, an increase of $17.6 million, or 35.6%, for the six months ended September 30, 2021, compared to $49.4 million for the same period in the prior year.

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~~Financing Segment~~FINANCING SEGEMENT

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

	Three Months Ended September 30,				Six Months Ended September 30,				Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Net sales	$	13,722	$	13,847	$	27,529	$	26,684	$	21,716	$	13,722	$	38,007	$	27,529

Cost of sales		1,957		2,388		4,048		4,397		3,792		1,957		10,004		4,048

Gross profit		11,765		11,459		23,481		22,287		17,924		11,765		28,003		23,481

Selling, general, and administrative		4,303		3,334		8,214		6,454		3,701		4,303		6,323		8,214
Depreciation and amortization		28		28		56		84		28		28		56		56
Interest and financing costs		246		576		558		1,204		143		246		343		558
Operating expenses		4,577		3,938		8,828		7,742		3,872		4,577		6,722		8,828

Operating income	$	7,188	$	7,521	$	14,653	$	14,545	$	14,052	$	7,188	$	21,281	$	14,653

Adjusted EBITDA	$	7,286	$	7,616	$	14,839	$	14,764	$	14,136	$	7,286	$	21,450	$	14,839

Net sales: Net sales ~~decreased~~increased by ~~$0.1~~$8.0 million, or ~~0.9%~~58.3%, to ~~$13.7~~$21.7 million for the three months ended September 30, ~~2020,~~2021, as compared to prior year results due to ~~a reduction in~~higher post contract earnings and ~~portfolio earnings, which were mostly offset by~~ higher ~~other financing revenues and~~ transactional gains. During the ~~three months~~quarter ended September 30, ~~2020, and 2019,~~2021, we recognized net gains on sales of financial assets of ~~$4.5~~$10.1 million, ~~and $4.1 million, respectively,~~which included several large transactions that closed in July 2021, and the ~~fair value of assets~~proceeds received from these sales were ~~$118.5~~$615.0 million. Net gains on the sale of financial assets for the quarter ended September 30, 2020, was $4.5 million and ~~$95.1 million, respectively.~~the proceeds from these sales were $118.5 million.

For the six months ended September 30, ~~2020,~~2021, net sales increased to ~~$27.5~~$38.0 million, an increase of ~~$0.8~~$10.5 million, or ~~3.2%~~38.1% as compared to the same period in the prior year of ~~$26.7~~$27.5 million due to higher ~~other financing revenues~~post contract earnings and ~~portfolio earnings,~~higher transactional gains, which were partially offset by lower ~~post-contract earnings and transactional gains.~~other financing revenues. During the six months ended September 30, ~~2020,~~2021, we recognized net gains on sales of financial assets of $13.3 million, which included several large transactions that closed in July 2021, and ~~2019,~~the proceeds received from these sales were $690.3 million. For the six months ended September 30, 2020, we recognized net gains on sales of financial assets of $7.0 million, and ~~$7.5 million, respectively, and~~ the ~~fair value of assets received~~proceeds from these sales were $191.7 ~~million and $172.0 million, respectively.~~ million.

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At September 30, ~~2020,~~2021, we had ~~$180.7~~$166.9 million in financing receivables and operating leases, compared to ~~$188.2~~$180.7 million as of September 30, ~~2019,~~2020, a decrease of ~~$7.5~~$13.8 million, or ~~4.0%~~7.6%.

Cost of sales: Cost of sales ~~decreased $0.4~~increased $1.8 million and ~~$0.3~~$6.0 million for the three and six months ended September 30, ~~2020,~~2021, respectively, ~~which consists~~compared to the prior year results due to higher cost of sales on off-lease equipment and higher depreciation expense from operating leases. Gross profit increased by ~~2.7%~~52.4% to ~~$11.8~~$17.9 million for the three months ended September 30, ~~2020,~~2021, and increased by ~~5.4%~~19.3% to ~~$23.5~~$28.0 million, for the six months ended September 30, ~~2020,~~2021, as compared to the prior year periods.

Selling, general and administrative: For the three and six months ended September 30, ~~2020,~~2021, selling, general and administrative expenses ~~increased by $1.0~~decreased $0.6 million ~~or 29.1%,~~ and ~~$1.8~~$1.9 million, ~~or 27.3%,~~ respectively, ~~which was~~compared to the prior year periods, primarily due ~~primarily~~ to ~~an increase~~decrease in ~~allowance~~the provision for credit losses ~~of $0.8 million~~ and ~~$1.1 million for the three and six months ended September 30, 2020, as compared to the same periods~~decrease in ~~the prior year. Variable compensation also increased due to higher gross profit for both the three and six months ended September 30, 2020.~~variable compensation.

Interest and financing costs: Interest and financing costs decreased by ~~57.3%~~41.9% to ~~$0.2~~$0.1 million for the three months ended September 30, ~~2020,~~2021, and decreased by ~~53.7%~~38.5% to ~~$0.6~~$0.3 million for the six months ended September 30, ~~2020,~~2021, compared to ~~the same periods in~~ the prior year, due to a decrease in the average balance ~~and interest rate~~ on total notes payable outstanding. Total notes payable for the financing segment was $25.4 million as of September 30, 2021, a decrease of $14.9 million, or 37.0%, as compared to $40.3 million as of September 30, ~~2020, a decrease of $45.7 million, or 53.1%, as compared to $86.0 million as of September 30, 2019.~~2020. Our weighted average interest rate for non-recourse notes payable was ~~3.15%~~3.59% and ~~3.98%~~3.15%, as of September 30, 2021, and 2020, ~~and 2019,~~ respectively. Our weighted average interest rate for recourse notes payable was 2.55% as of September 30, 2020. We did not have any recourse debt as of September 30, 2021.

Segment operating income: As a result of the foregoing, both operating income and ~~adjusted~~Adjusted EBITDA ~~both decreased $0.3~~increased $6.9 million ~~or 4.4% and 4.3%,~~ to ~~$7.2~~$14.1 million, ~~and $7.3 million, respectively,~~ for the three months ended September 30, ~~2020, over~~2021, as compared to the prior year period. For the six months ended September 30, ~~2020,~~2021, both operating income and ~~adjusted~~Adjusted EBITDA ~~both~~ increased ~~$0.1~~by $6.6 million to $21.3 million and $21.5 million, respectively, ~~or 0.7% and 0.5%,~~as compared to ~~$14.7 million and $14.8 million, respectively.~~the same period in the prior year.

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~~Consolidated~~CONSOLIDATED

Other ~~income:~~ income: Other income ~~increased to $0.2 million~~ and ~~$0.3 million due to the favorable foreign exchange rate during~~expense for both the three and six months ended September 30, ~~2020,~~2021, was an expense of $0.3 million and $0.2 million, respectively, due to unfavorable foreign exchange rates, compared to an ~~expense~~income of ~~$40 thousand~~$0.2 million and ~~$85 thousand due to the unfavorable foreign exchange rate~~$0.3 million in the three and six month periods in the prior year, respectively.

Income ~~taxes:~~taxes: Our provision for income tax expense was ~~$8.8~~$12.6 million and ~~$16.6~~$21.6 million for the three and six months ended September 30, ~~2020,~~2021, as compared to ~~$8.2~~$8.8 million and ~~$14.8~~$16.6 million for the same periods in the prior year. Our effective income tax rates for ~~both~~the three and six months ended September 30, 2021, were 28.6% and 28.2%, compared to 30.8% for the three and six months ended September 30, 2020, ~~was 30.8%, compared to 29.1% and 28.9% for the three and six months ended September 30, 2019.~~ respectively. The change in our effective income tax rate was primarily due to an adjustment to the federal benefit from state ~~taxes.~~taxes in the prior year period.

Net earnings: The foregoing resulted in net earnings of ~~$19.8~~$31.4 million for the three months ended September 30, ~~2020, a decrease~~2021, an increase of ~~$0.3~~$11.6 million, or ~~1.3%~~58.3%, as compared to ~~$20.1~~$19.8 million ofduring the ~~same period in the prior year.~~three months ended September 30, 2020. For the six months ended September 30, ~~2020,~~2021, net earnings were ~~$37.2~~$54.9 million, an increase of ~~$0.9~~$17.7 million, or ~~2.5%~~47.6%, as compared to ~~$36.3~~$37.2 million infor the same period in the prior year.

Basic and fully diluted earnings per common share was ~~$1.48~~$2.36 and $2.34, respectively, for the three months ended September 30, ~~2020, a decrease~~2021, an increase of ~~2.0%~~59.5% and 58.1% as compared to ~~$1.51~~$1.48 for both ~~the~~ basic and fully diluted earnings per common share, for the ~~same period in the prior year.~~three months ended September 30, 2020. For the six months ended September 30, ~~2020,~~2021, basic and fully diluted earnings per common share were ~~$2.79~~$4.12 and ~~$2.78,~~$4.09, an increase ~~for both~~ of ~~0.3%~~47.7% and 47.1%, as compared to ~~$2.72~~$2.79 and ~~$2.71,~~$2.78, respectively, for the same period in the prior year.

Non-GAAP diluted earnings per share ~~decreased 7.2%~~increased 54.2% to $2.59 for the three months ended September 30, 2021, as compared to $1.68 for the three months ended September 30, ~~2020, as compared to $1.81 for the three months ended September 30, 2019.~~2020. Non-GAAP diluted earnings per share ~~decreased 2.1%~~increased 42.6% to $4.55 for the six months ended September 30, 2021, as compared to $3.19 for the six months ended September 30, ~~2020, as compared to $3.26 for the six months ended September 30, 2019.~~2020.

Weighted average common shares outstanding ~~used~~was 13.3 million in the calculation of basic ~~and diluted~~ earnings per common share for both the ~~three months~~three- and six-months ending September 30, ~~2020 was $13.4~~2021 and 13.4 million ~~and for the six months ended September 30, 2020 was $13.3 million and $13.4 million respectively. Weighted average common shares outstanding used~~ in the calculation of ~~basic and~~ diluted earnings per common share for both the ~~three~~three- and ~~six months ended~~six-months ending September 30, ~~2019,~~2021. Weighted average common shares outstanding was ~~13.3~~13.4 million and 13.3 in the calculation of basic earnings per common share for the three- and six-months ending September 30, 2020, respectively, and 13.4 ~~million.~~million in the calculation of diluted earnings per common share for both the three- and six-months ending September 30, 2020.

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LIQUIDITY AND CAPITAL RESOURCES

~~Liquidity Overview~~LIQUIDITY OVERVIEW

Our primary source of funding is cash from operations and borrowings which are accounted for as non-recourse and recourse notes payable. We 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.

Throughout the current fiscal year and until October 12, 2021, ePlus Technology, inc. and certain of its subsidiaries (the “Borrowers”), which are part of our technology segment, ~~finance~~financed their operations, ~~with~~in addition to funds generated from operations, ~~and~~ with a credit facility with ~~Wells Fargo Commercial Distribution Finance, LLC (“WFCDF”).~~WFCDF. This facility ~~provides~~provided short-term capital for our technology segment. There ~~are~~were two components of the WFCDF credit facility: (1) a floor plan component, and (2) an accounts receivable component.

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

Our ability to continue to expand, both organically and through acquisitions, is dependent upon our ability to generate enough cash flow from operations or from borrowing or 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.

The extent of the impact of COVID-19 is uncertain and may impact our liquidity position over the longer term. ~~As credit~~Credit markets ~~have tightened~~may tighten as a result of COVID-19 and we may have difficulty funding our financing transactions with lenders, which may result in the use of our cash or a decrease in financing originations.

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~~Cash Flows~~CASH FLOWS

The following table summarizes our sources and uses of cash over the periods indicated (in thousands):

Six Months Ended September 30,
2020 2019
Net cash provided by (used in) operating activities $ 8,408 $ (54,404 )
Net cash used in investing activities (2,811 ) (18,050 )
Net cash provided by financing activities 69,730 48,356
Effect of exchange rate changes on cash (477 ) 114
Net increase (decrease) in cash and cash equivalents $ 74,850 $ (23,984 )

	Six Months Ended September 30,
	2021			2020
Net cash provided by (used in) operating activities	$	(135,004	)	$	8,408
Net cash used in investing activities		(13,690	)		(2,811	)
Net cash provided by financing activities		75,782			69,730
Effect of exchange rate changes on cash		300			(477	)
Net increase (decrease) in cash and cash equivalents	$	(72,612	)	$	74,850

Cash flows from operating activities.: We ~~had $8.4~~used $135.0 million ~~provided by~~in operating activities during the six months ended September 30, ~~2020,~~2021, compared to ~~$54.4~~$8.4 million ~~used in~~provided by operating activities for the six months ended September 30, ~~2019.~~2020. See below for a breakdown of operating cash flows by segment (in thousands):

Six Months Ended September 30,
2020 2019
Technology segment $ 44,367 $ 3,833
Financing segment (35,959 ) (58,237 )
Net cash provided by (used in) operating activities $ 8,408 $ (54,404 )

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	Six Months Ended September 30,
	2021			2020
Technology segment	$	(127,361	)	$	44,367
Financing segment		(7,643	)		(35,959	)
Net cash provided by (used in) operating activities	$	(135,004	)	$	8,408

Technology ~~Segment~~segment: In the six months ended September 30, 2021, our technology segment used $127.4 million from operating activities primarily due to increases in our accounts receivable and inventories and a decrease in accounts payable-trade. Offsetting this, we had net borrowing on the floor plan component of our credit facility of $47.2 million. We use this facility to manage working capital needs. We present changes in this balance as financing activity in our consolidated statement of cash flows.

In the six months ended September 30, 2020, our technology segment provided $44.4 million from operating activities primarily due to cash generated from earnings. Additionally, we had net borrowing on the floor plan component of our credit facility of $91.6 million which was partially offset by repayment of ~~$35.0~~$35.0 million in borrowings under the accounts receivable component of our ~~Technology~~technology segment credit facility. The net borrowing is primarily the result of extended payment terms from certain vendor partners that deferred $76.3 million in payments for an additional 30 days. The majority of these programs relate to COVID-19 and ended in October 2020. We use this facility to manage working capital needs. We present changes in this balance as financing activity in our consolidated statement of cash flows.

In the six months ended September 30, 2019, operating cash flows provided by our technology segment was $3.8 million as cash generated from earnings exceeding changes in working capital. In addition, cash provided by the accounts payable – floor plan facility was $13.6 million. Accounts payable – floor plan is a facility used to manage working capital needs and we are required to present changes in this balance as financing activity in our consolidated statement of cash flows.

To manage our working capital, we monitor our cash conversion cycle for our technology segment, 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~~technology segment:

	As of September 30,						As of September 30,
	2020			2019			2021			2020
(DSO) Days sales outstanding (1)		61			59			64			61
(DIO) Days inventory outstanding (2)		14			10			18			14
(DPO) Days payable outstanding (3)		(54	)		(46	)		(47	)		(54	)
Cash conversion cycle		21			23			35			21

(1)	Represents the rolling ~~three-month~~three month average of the balance of trade accounts receivable-trade, net for our technology segment at the end of the period divided by adjusted gross billings for the same ~~three-month~~three month period.

(2)	Represents the rolling ~~three-month~~three month average of the balance of inventory, net for our technology segment at the end of the period divided by cost of adjusted gross billings for the same ~~three-month~~three month period.

(3)	Represents the rolling ~~three-month~~three month average of the combined balance of accounts payable-trade and accounts payable-floor plan for our technology segment at the end of the period divided by cost of adjusted gross billings for the same ~~three-month~~three month period.

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Our cash conversion cycle ~~decreased~~increased to 35 days at September 30, 2021, compared to 21 days at September 30, ~~2020, compared to 23 days at September 30, 2019.~~2020. Our standard payment term for customers is between 30-60 days; however, certain customer orders may be approved for extended payment terms. Our DPO ~~increased 8~~decreased 7 days. Invoices processed through our 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 days from the invoice ~~date; however, certain of our suppliers temporarily increased our terms to 90 days.~~date. Our DSO increased 2to 64 days, ~~due to an increase in~~which reflects higher sales ~~during the quarter ended September 30, 2020,~~ to customers with terms greater than or equal to net 60 ~~days. The 4 day increase~~days for the period ended September 30, 2021, including sales to one of our larger customers related to ongoing projects, as compared to the same period in the prior year. Our DIO ~~was~~increased to 18 days due to ~~an increase in average~~higher inventory ~~balances~~balance. Inventory, which represents equipment ordered by customers but not yet delivered, increased 92.3% to $134.5 million as of ~~45.1%, or $24.0~~September 30, 2021, from $70.0 million as of March 31, 2021, partially due to ~~pending~~ongoing projects ~~for our customers and some delays in receiving by our customers whose offices were temporarily closed due to COVID-19.~~with the same large customer.

Financing ~~Segment~~segment: In the six months ended September 30, 2021, our financing segment used $7.6 million from operating activities, primarily due to increases in accounts receivable of $9.8 million and financing receivables-net of $19.3 million, offset by net earnings. In the six months ended September 30, 2020, our financing segment used $36.0 million from operating activities, primarily due to changes in financing receivables- net of $54.4 million, partially offset by earnings ~~of $10.4 million~~ and an increase in accounts payable trade of $13.0 million.

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Cash flows related to investing activities: In the six months ended September 30, ~~2019, our financing segment~~2021, we used ~~$58.2~~$13.7 million from investing activities, consisting of $16.2 million for purchases of property, equipment and operating ~~activities, primarily due to changes in financing receivables- net of $76.4 million.~~ ~~We recognize the change in financing receivables, including the issuance of financing receivables~~lease equipment offset by ~~repayments~~$2.6 million of ~~financing receivables and the~~ proceeds from the ~~transfer~~sale of ~~financing receivables, when we account for the transfer as a sale, as part of~~property, equipment, and operating ~~activities.~~

lease equipment. ~~Cash flows related to investing activities~~. In the six months ended September 30, 2020, we used $2.8 million from investing activities, consisting of $3.3 million for purchases of property, equipment and operating lease equipment offset by $0.5 million of proceeds from the sale of property, equipment, and operating lease equipment.

Cash flows from financing activities: In the six months ended September 30, ~~2019, we used $18.1~~2021, cash provided by financing activities was $75.8 million, ~~from investing activities,~~ consisting of ~~$13.8~~net borrowings on the floor plan component of our credit facility of $47.2 million ~~for acquisitions, $4.9~~and net repayments of non-recourse and recourse notes payable of $35.4 million, ~~for purchases of property, equipment and operating lease equipment~~partially offset by ~~$0.7~~$6.9 million in cash used to repurchase outstanding shares of ~~proceeds from the sale of property, equipment, and operating lease equipment.~~

~~Cash flows from financing activities~~our common stock. In the six months ended September 30, 2020, cash provided by financing activities was $69.7 million consisting of net borrowings on floor plan facility of $91.6 million, net borrowings of non-recourse and recourse notes payable of $18.1 million, which was partially offset by repayment of ~~$35.0~~$35.0 million in borrowings under the accounts receivable component of our Technology segment credit facility and $4.5 million in repurchase of common stock.

In the six months ended September 30, 2019, cash provided by financing activities was $48.4 million, consisting of net borrowings of non-recourse and recourse notes payable of $49.2 million, net borrowings on floor plan facility of $13.6 million, and offset by $13.7 million in repurchase of common stock and $0.8 million paid to sellers of SLAIT as part of a working capital adjustment.

Our borrowing of non-recourse and recourse notes payable primarily arises from our financing segment when we transfer contractual payments due to us under lease and financing agreements to third-party financial institutions. When the transfers do not meet the requirements for a sale, the proceeds paid to us represent borrowings of non-recourse or recourse notes payable.

~~Non-Cash Activities~~Non-cash activities.: We transfer contractual payments due to us under lease and financing agreements to third-party financial institutions. As a condition of these agreements, certain financial institutions may request that the customer remit their contractual payments to a trust, rather than to us, and the trust pays the financial institution. Alternatively, the customer will make payments to us, and we will remit the payment to the financial institution. The economic impact to us under either structure is similar, in that the assigned contractual payments are paid by the customer and remitted to the lender. However, when our customer makes payments through a trust, such payments represent non-cash transactions. Also, in certain assignment agreements, we may direct the third-party financial institution to pay some of the proceeds from the assignment directly to the vendor or vendors that have supplied the assets being leased and or financed. In these situations, the portion of the proceeds paid directly to our vendors are non-cash transactions.

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~~Secured borrowings~~SECURED BORROWINGS – ~~Financing segment~~FINANCING SEGMENT

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 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 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, is against the customer and the specific equipment 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.As a result of COVID-19, credit markets have tightened. Our lenders are more discerning and are taking longer to approve transactions. In addition, certain lenders have narrowed their demand to certain types of transactions and/or credit quality and excluding others. For example, some lenders have declined transactions that have longer terms or transactions with certain market segments. Therefore, we may no longer be able to transfer certain receivables to financial institutions which may result in investing our capital or declining the transaction.

~~Credit facility — Technology segment~~CREDIT FACILITY – TECHNOLOGY SEGMENT

~~Our subsidiary,~~ e~~Plus Technology, inc.,~~Throughout the current fiscal year and ~~certain of~~until October 12, 2021, our technology segment financed its ~~subsidiaries have~~operations, in addition to funds generated from operations, with a ~~financing~~credit facility ~~from WFCDF to finance their working~~with WFCDF. This facility provided short-term capital ~~requirements~~ for ~~inventories and accounts receivable.~~our technology segment. There ~~are~~were two components of ~~this~~the WFCDF credit facility: (1) a floor plan ~~component;~~component and (2) an accounts receivable component.

~~On May 15, 2020, we executed an amendment to~~Under the WFCDF credit facility, ~~that increased the~~there was an aggregate limit offor the two components, except during a temporary uplift, ~~to $275.0~~of $275 million. ~~Additionally, we have an election~~We could elect to temporarily increase the aggregate limit to ~~$350.0~~$350 million for a period of not less than 30 days, provided that all such periods ~~shall~~ not exceed 150 days in the aggregate in any calendar year. ~~Further,~~Additionally, the ~~amendment increased the~~WFCDF credit facility had a limit on the accounts receivable component of ~~the~~$100 million. WFCDF ~~credit facility to $100.0 million, changed the~~charged us an interest rate equal to two percent (2.00%) plus the greater of one month LIBOR or seventy-five hundredths of one percent (0.75%)~~, and modified certain restrictions on~~ e~~Plus Technology, inc.’s ability to pay dividends to~~ e~~Plus inc.~~.

As of September 30, ~~2020,~~2021, the limit of the two components of the credit facility was ~~$275~~$350 million ~~and~~as result of our election to temporarily uplift the ~~accounts receivable component had a sub-limit of $100 million~~.aggregate limit.

The WFCDF credit facility iswas secured by the assets of e~~Plus Technology, inc. and certain of its subsidiaries, and varies available borrowing based upon~~ the ~~value of their receivables and inventory.~~Borrowers. Additionally, the credit facility ~~requires~~required a guaranty of $10.5 million by ePlus inc.

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The WFCDF credit facility ~~restricts~~restricted the ability of e~~Plus Technology, inc. and certain of its subsidiaries~~the Borrowers to pay dividends to ePlus inc. unless their available borrowing ~~meets~~met certain thresholds. As of September 30, ~~2020,~~2021, and March 31, 2021, their available borrowing met the threshold such that there were no restricted net assets of ePlus Technology, inc.

The credit facility ~~requires~~required that financial statements of e~~Plus Technology, inc. and certain of its subsidiaries~~the Borrowers be provided within 45 days of each quarter and 90 days of each fiscal year end and ~~requires~~required that other operational reports be provided on a regular basis. Either party ~~may~~could terminate with 90 days’ advance written notice.

On October 13, 2021, we entered the 2021 Credit Facility by and among the Borrowers, WFCDF, as administrative agent thereunder, and the Lenders. The Lenders under this facility established for the benefit of the Borrowers a discretionary senior secured floorplan facility in the aggregate principal amount of up to $375 million, together with a sublimit for a revolving credit facility for up to $100 million. Loans under this credit agreement will accrue interest at a rate per annum equal to LIBOR plus 1.75%. This new credit agreement replaced the existing credit facility effective October 13, 2021.

Floor ~~Plan Component~~plan component.: After a customer places a purchase order with us and after we have completed our credit review of the customer, 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.~~ date~~In addition, certain suppliers have temporarily extended their repayment terms to us due to COVID-19.~~. Most customer payments in our technology segment are remitted to our lockboxes. Once payments are cleared, the monies in the lockbox accounts are automatically and daily transferred to our operating account. On the due dates of the floor plan component, we make cash payments to WFCDF. 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 in our consolidated statements of cash flows.

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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 September 30, 2020

Balance as of
September 30, 2020

Maximum Credit Limit
at March 31, 2020

Balance as of
March 31, 2020

$275,000 $218,970 $300,000 $127,416

~~On October 1, 2020, we elected to exercise the temporary increase in the aggregate limit of the WFCDF credit facility to $350.0 million for a period of not less than 30 days.~~

Maximum Credit Limit at September 30, 2021				Balance as of September 30, 2021				Maximum Credit Limit at March 31, 2021				Balance as of March 31, 2021
$	350,000			$	145,880			$	275,000			$	98,653

Accounts ~~Receivable Component~~receivable component.: e~~Plus Technology, inc. and certain of its subsidiaries~~We have an accounts receivable component included within the WFCDF credit facility, which has a revolving line of credit. The outstanding balance under the accounts receivable component is ~~recorded~~presented as part of as recourse notes ~~payable~~payable- current on our consolidated balance sheets. Our borrowings and repayments under the accounts receivable component are included in “borrowings of non-recourse and recourse notes payable” and “repayments of non-recourse and recourse notes ~~payable”,~~payable,” respectively, within cash flows from the financing activities in our consolidated statements of cash flows.

As of ~~March 31, 2020,~~September 30, 2021, there was an outstanding balance for the accounts receivable component of ~~$35.0~~$29.0 million. ~~As of September 30, 2020, there was no~~We did not have any outstanding balance ~~for the accounts receivable component. As of September 30, 2020, and March 31, 2020, the maximum credit limit was $100.0 million and $50.0 million, respectively.~~ ~~We may maintain a balance on~~under the accounts receivable component ~~to assist in mitigating risk arising from COVID-19.~~of the WFCDF credit facility as of either the period ended March 31, 2021, or September 30, 2020. The maximum credit limit under this facility was $100.0 million.

~~Performance Guarantees~~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 material 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 September 30, ~~2020,~~2021, we were not involved in any unconsolidated special purpose entity transactions.

~~Adequacy~~

Table of ~~Capital Resources~~Contents

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 open offices in new geographic areas, which may require a significant investment of cash. We may also acquire technology companies to expand and enhance the platform of bundled solutions to provide additional functionality and value-added services. We may continue to use our internally generated funds to finance investments in leased assets or investments in notes receivables 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. The impacts of COVID-19 may limit or eliminate our access to capital. While the future is uncertain, we do not believe our credit facility will be terminated by ~~the lender~~WFCDF or us. ~~Our~~Additionally, while our lending partners in our financing segment have ~~tightened credit availability and are~~become more discerning in their approval ~~process. However,~~processes, we currently we have funding resources available for our transactions.

~~Inflation~~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. In the most recent quarter, we have experienced some increases in prices from our suppliers as well as rising wages. We generally have been able to pass along these price increases to our customers. There can be no assurances, however, that inflation would not have a material impact on our sales or operating costs in the future.

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~~Potential Fluctuations in Quarterly Operating Results~~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.

Our quarterly results of operations are susceptible to fluctuations for a number of reasons, including, but not limited to the worldwide impacts from COVID-19, 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, 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 Factors,” in our ~~2020~~2021 Annual Report, as supplemented in subsequently filed reports, 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.

Item 3.

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

Our cash flow may be adversely affected by the risks related to the COVID-19 pandemic, which may result in delays in the collections of our accounts receivables or non-payment.

Although a substantial portion of our liabilities are non-recourse, fixed-interest-rate instruments, we utilize lines of credit and other financing facilities that are subject to fluctuations in short-term interest rates. Our non-recourse instruments, which are denominated in US dollars, were entered for other than trading purposes and 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, and may be 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 credit facility bear interest at a market-based variable rate. As of September 30, ~~2020,~~2021, 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, Euros, and Indian Rupees. 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 subsidiary’s functional currency. To date, our foreign operations are insignificant in relation to total consolidated operations, and we believe that potential fluctuations in currency exchange rates will not have a material effect on our financial position.

~~The~~We evaluate developments related to the UK ~~referendum (“Brexit”) to leave~~leaving the European Union ~~could~~on a regular basis to determine if such developments will have a material impact ~~revenue items, cost items, tax, goodwill impairments~~on our results on operations and ~~liquidity, among others. The most obvious immediate impact~~financial position. Our assessment is ~~the effect of foreign exchange fluctuations on revenue and cost items. We have determined~~ that ~~our~~ foreign currency exposure for our UK 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 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. As our foreign operations have been smaller compared to our domestic operations, we believe that potential fluctuations in currency exchange rates will not have a material effect on our financial position.

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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, is recorded, processed, summarized and reported within the 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 September 30, ~~2020.~~2021.

~~Changes in Internal Control Over Financial Reporting.~~CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have not been any changes in our internal control over financial reporting during the quarter ended September 30, ~~2020,~~2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Limitations on the Effectiveness of Controls~~LIMITATIONS AND EFFECTIVENESS OF CONTROLS

Our management, including our CEO and CFO, 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.

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PART II. OTHER INFORMATION

Item 1.

~~Legal Proceedings~~LEGAL PROCEEDINGS

~~We are not currently involved~~Please refer to Note 9, “Commitment and Contingencies” to the accompanying Consolidated Financial Statements included in any litigation that we believe could have a materially adverse effect on our financial condition or results of operation. However, 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, but are not limited to, 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; claims relating to alleged security or privacy breaches, and claims stemming from actions or events relating to COVID-19. We attempt to ameliorate the effect of potential litigation through insurance coverage and contractual protections such as rights to indemnifications and limitations of liability. Additionally, we proactively seek to recover funds to which we may be entitled. From time to time, we are successful in obtaining recoveries by filing a claim in class action suits, however, we have limited insight into the timing or amount of those recoveries.

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.“Part I, Item 1. Financial Statements”.

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Item 1A.

~~Risk Factors~~ RISK FACTORS

There has not been any material change in the risk factors ~~previously~~ disclosed in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2021, as supplemented in Part I,II, Item 1A of our ~~2020 Annual Report.~~Quarterly Report for the period ended June 30, 2021.

Item 2.

~~Unregistered Sales of Equity Securities and Use of Proceeds~~ UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information regarding our total purchases of 76,743 shares of ePlus inc. common stock during the six months ended September 30, ~~2020.~~2021, including a total of 49,028 shares purchased as part of the publicly announced share repurchase plans or programs.

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, 2020 through April 30, 2020 - $ - - 339,324 (2)
May 1, 2020 through May 27, 2020 996 $ 66.75 - 339,324 (3)
May 28, 2020 through May 31, 2020 - - 500,000 (4)
June 1, 2020 through June 30, 2020 36,644 $ 71.94 - 500,000 (5)
July 1, 2020 through July 31, 2020 - - 500,000 (6)
August 1, 2020 through August 31, 2020 - $ - - 500,000 (7)
September 1, 2020 through September 30, 2020 24,318 $ 73.37 24,318 475,682 (8)

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, 2021 through April 30, 2021		-	$	-		-		440,899	(2	)
May 1, 2021 through May 27, 2021		999	$	100.80		-		440,899	(3	)
May 28, 2021 through May 31, 2021		-	$	-		-		500,000	(4	)
June 1, 2021 through June 30, 2021		44,345	$	90.42		17,629		482,371	(5	)
July 1, 2021 through July 31, 2021		31,399	$	87.99		31,399		450,972	(6	)
August 1, 2021 through August 31, 2021		-	$	-		-		450,972	(7	)
September 1, 2021 through September 30, 2021		-	$	-		-		450,972	(8	)

(1)

~~Any~~All shares acquired were in open-market purchases, except for ~~37,640~~27,715 shares, out of which ~~996~~999 were repurchased in May ~~2020~~2021 and ~~36,644~~26,716 in June ~~2020~~2021 to satisfy tax withholding obligations that arose due to the vesting of shares of restricted stock.

(2)

The share purchase authorization in place for the month ended April 30, ~~2020,~~2021, had purchase limitations on the number of shares of up to 500,000 shares. As of April 30, ~~2020,~~2021, the remaining authorized shares to be purchased were ~~339,324.~~440,899.

(3)

As of May 27, ~~2019,~~2021, the authorization under the ~~then existing~~then-existing share repurchase plan expired.

(4)

On ~~May 20, 2020,~~March 18, 2021, the board of directors authorized the company to repurchase up to 500,000 shares of our outstanding common stock commencing on May 28, ~~2020,~~2021, and continuing to May 27, ~~2021.~~2022. As of May 31, ~~2020,~~2021, the remaining authorized shares to be purchased were 500,000.

(5)

The share purchase authorization in place for the month ended June 30, ~~2020,~~2021, had purchase limitations on the number of shares of up to 500,000 shares. As of June 30, ~~2020,~~2021, the remaining authorized shares to be purchased were ~~500,000.~~482,371.

(6)

The share purchase authorization in place for the month ended July 31, ~~2020,~~2021, had purchase limitations on the number of shares of up to 500,000 shares. As of July 31, ~~2020,~~2021, the remaining authorized shares to be purchased were ~~500,000.~~450,972.

(7)

The share purchase authorization in place for the month ended August 31, ~~2020,~~2021, had purchase limitations on the number of shares of up to 500,000 shares. As of August 31, ~~2020,~~2021, the remaining authorized shares to be purchased were ~~500,000.~~450,972.

(8)

The share purchase authorization in place for the month ended September 30, ~~2020,~~2021, had purchase limitations on the number of shares of up to 500,000 shares. As of September 30, ~~2020,~~2021, the remaining authorized shares to be purchased were ~~475,682.~~450,972.

The timing and expiration date of the current stock repurchase authorizations are included in Note 12,11, “Stockholders’ Equity” to our unaudited ~~condensed~~ consolidated financial statements included elsewhere in this report.

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.

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Item 6.

~~Exhibits~~EXHIBITS

Exhibit Number		Exhibit Description

3.1		e~~Plus~~ePlus inc. Amended and Restated Certificate of Incorporation as amended September 15, 2008 (Incorporated herein by reference as Exhibit 3.1 to our Current Report on Form 8-K filed on September 19, 2008).

3.2		Amended and Restated Bylaws of e~~Plus~~ePlus inc., as ~~amended February 15, 2018~~of September 1, 2021.

10.1		ePlus 2021 Employee Long-Term Incentive Plan (Incorporated herein by reference to Exhibit ~~3.1~~10.1 to our Current Report on Form 8-K filed on ~~February 20, 2018)~~September 23, 2021).

10.2		First Amended and Restated Credit Agreement, dated as of October 13, 2021, by and among ePlus Technology, inc., ePlus Technology Services, inc., SLAIT Consulting, LLC, certain of ePlus inc. subsidiaries as guarantors, Wells Fargo Commercial Distribution Finance, LLC as administrative agent and the Lenders party thereto (Incorporated herein by reference to Exhibit 10.1 to our Current Report in Form 8-K filed on October 19, 2021).

10.3		Guaranty and Security Agreement, dated as of October 13, 2021, by and among ePlus Technology, inc., ePlus Technology Services, inc., SLAIT Consulting, LLC, certain future subsidiaries of ePlus inc., as guarantors, Wells Fargo Commercial Distribution Finance, LLC as administrative agent for the benefit of Secured Parties (Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on October 19, 2021).

10.4		First Amended and Restated Collateralized Guaranty, dated as of October 13, 2021, by and among ePlus Group, inc. and Wells Fargo Commercial Distribution Finance, LLC as agent for the benefit of Secured Parties (Incorporated herein by reference to Exhibit 10.3 to our Current Report on Form 8-K filed on October 19, 2021).

10.5		First Amended and Restated Limited Guaranty, dated as of October 13, 2021, by and between ePlus inc. and Wells Fargo Commercial Distribution Finance, LLC as agent for the benefit of Secured Parties (Incorporated herein by reference to Exhibit 10.4 to our Current Report on Form 8-K filed on October 19, 2021).

31.1		Certification of the Chief Executive Officer of e~~Plus~~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 e~~Plus~~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 e~~Plus~~ePlus inc. pursuant to 18 U.S.C. § 1350.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

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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~~ ePlus inc.

Date: November ~~4, 2020~~9, 2021	/s/ MARK P. MARRON
	By: Mark P. Marron
	Chief Executive Officer and President
	(Principal Executive Officer)

Date: November ~~4, 2020~~9, 2021	/s/ ELAINE D. MARION
	By: Elaine D. Marion
	Chief Financial Officer
	(Principal Financial Officer)

Remainder of Year ending March 31, 2021	$	20,527
Year Ending March 31, 2022		18,889
Year Ending March 31, 2023		8,385
Year Ending March 31, 2024		2,026
Year Ending March 31, 2025		516
Year Ending March 31, 2026 and thereafter		111
Total remaining performance obligations	$	50,454

Remainder of the Year ending March 31, 2021	$	46,006
Year Ending March 31, 2022		19,376
Year Ending March 31, 2023		8,196
Year Ending March 31, 2024		2,205
Year Ending March 31, 2025 and thereafter		917
Total	$	76,700

Remainder of the Year ending March 31, 2021	$	1,534
Year Ending March 31, 2022		1,927
Year Ending March 31, 2023		1,436
Year Ending March 31, 2024		477
Year Ending March 31, 2025 and thereafter		35
Total	$	5,409

Lease term and Discount Rate	September 30, 2020			March 31, 2020
Weighted average remaining lease term (months)		34			38
Weighted average discount rate		3.8	%		3.9	%

	September 30, 2020
Remainder of the year ending March 31, 2021	$	2,432
Year ending March 31, 2022		4,319
Year ending March 31, 2023		3,093
Year ending March 31, 2024		1,249
Year ending March 31, 2025 and thereafter		813
Total lease payments	$	11,906
Less: interest		(617	)
Present value of lease liabilities	$	11,289

	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

High CQR	$	951	$	105	$	922	$	1,978	$	1,181	$	33,581	$	36,740	$	(4,766	)	$	(19,823	)	$	12,151
Average CQR		46		107		112		265		1,106		31,381		32,752		(3,646	)		(18,693	)		10,413
Low CQR		0		0		0		0		0		0		0		0			0			0
Total	$	997	$	212	$	1,034	$	2,243	$	2,287	$	64,962	$	69,492	$	(8,412	)	$	(38,516	)	$	22,564

	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

High CQR	$	1,332	$	2	$	280	$	1,614	$	2,878	$	29,057	$	33,549	$	(18,341	)	$	15,208
Average CQR		140		44		142		326		1,135		19,995		21,456		(16,636	)		4,820
Low CQR		63		0		152		215		0		197		412		0			412
Total	$	1,535	$	46	$	574	$	2,155	$	4,013	$	49,249	$	55,417	$	(34,977	)	$	20,440

	Number of Shares			Weighted Average Grant- date Fair Value

Nonvested April 1, 2020		193,580		$	73.74
Granted		99,182		$	71.81
Vested		(110,155	)	$	70.00
Forfeited		0		$	0
Nonvested September 30, 2020		182,607		$	74.95

Maximum Credit Limit at September 30, 2020		Balance as of September 30, 2020		Maximum Credit Limit at March 31, 2020		Balance as of March 31, 2020
$275,000		$218,970		$300,000		$127,416