EPLUS INC 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures The Company's management, with the participation of the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), has evaluated the effectiveness of the Company's disclosure controls and procedures, or “disclosure controls”, as of the end of the period covered by this report. as defined in 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 Form 10-K annual report, is recorded, processed, summarized and reported within the time periods specified in the US Securities and Exchange Commission’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. 45 Table of Contents Based on the evaluation described above, the CEO and CFO concluded that disclosure controls and procedures as of March 31, 2021, were effective in ensuring information required to be disclosed in our SEC reports was recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information was accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f). This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements. Our management performed an assessment of the effectiveness of our internal control over financial reporting as of March 31, 2021, utilizing the criteria described in the “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The objective of this assessment was to determine whether our internal control over financial reporting was effective as of March 31, 2021. Management’s assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment. Based on this assessment, management determined that, as of March 31, 2021, the Company maintained effective internal control over financial reporting. Deloitte & Touche LLP, an independent registered public accounting firm, who audited the consolidated financial statements of the Company included in this Annual Report on Form 10-K, has also audited the effectiveness of the Company’s internal control over financial reporting as stated in its report appearing on page F-3. Changes in Internal Control Over Financial Reporting There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred during the quarter ended March 31, 2021, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Limitations on the Effectiveness of Controls Our management, including our CEO and CFO, does 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. ITEM 9B. OTHER INFORMATION None. 46 Table of Contents PART III Except as set forth below, the information required by Items 10, 11, 12, 13 and 14 is incorporated by reference from our definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the close of our fiscal year. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information about our directors may be found under the caption “Proposal 1 – Election of Directors” in our Proxy Statement for the 2021 Annual Meeting of Stockholders (the “Proxy Statement”). The information in the Proxy Statement set forth under the captions of “Corporate Governance – Code of Conduct” and “- Board Committees” is incorporated herein by reference. The information under the heading “Executive Officers” in Item 1 of this report is incorporated in this section by reference. Code of Ethics We have a code of ethics that applies to all of our employees, including our principal executive officer, principal financial officer, principal accounting officer and our Board. The Code of Conduct is available on our website at www.eplus.com/investors/corporate-governance-legal/code-of-conduct . We will disclose on our website any amendments to or waivers from any provision of the Code of Conduct that applies to any of the directors or executive officers. ITEM 11. EXECUTIVE COMPENSATION The information in the Proxy Statement set forth under the captions “Director Compensation,” “Compensation Discussion and Analysis,” “2021 Executive Compensation,” and “Corporate Governance – Compensation Committee Interlocks and Insider Participation” is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information in the Proxy Statement set forth under the captions “Equity Compensation Plan Information” and “Stock Ownership” is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information in the Proxy Statement set forth under the caption “Corporate Governance - Related Person Transactions” and “Independence of Our Board of Directors” is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information in the Proxy Statement set forth under the caption “Proposal 3 – Ratification of the Selection of Deloitte & Touche LLP as our Independent Registered Public Accounting Firm for our Fiscal Year Ending March 31, 2022” is incorporated herein by reference. 47 Table of Contents PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a)(1) Financial Statements The consolidated financial statements listed in the accompanying Index to Financial Statements and Schedules are filed as a part of this report and incorporated herein by reference. (a)(2) Financial Statement Schedule See "Financial Statement Schedule II - Valuation and Qualifying Accounts" on page S-1. (a)(3) Exhibit List Exhibits 10.2 through 10.10 and 10.36 through 10.38 are management contracts or compensatory plans or arrangements. Exhibit No. Exhibit Description 3.1 ePlus inc. Amended and Restated Certificate of Incorporation, filed on September 19, 2008 (Incorporated herein by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q for the period ended September 30, 2008). 3.2 Amended and Restated Bylaws of ePlus inc. as amended February 15, 2018 (Incorporated herein by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on February 20, 2018). 4.1 Specimen Certificate of Common Stock (Incorporated herein by reference to Exhibit 4.1 to our Registration Statement on Form S-1 (File No. 333-11737) originally filed on September 11, 1996). 4.2 Description of ePlus inc.'s securities (Incorporated herein by reference to Exhibit 4.2 to our Annual Report on Form 10-K for the year ended March 31, 2019). 10.1 Form of Indemnification Agreement entered into by and between ePlus and its directors and officers (Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on August 23, 2016). 10.2 Amended and Restated Employment Agreement effective September 6, 2017, by and between ePlus inc. and Mark P. Marron (Incorporated herein by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended December 31, 2017). 10.3 Amendment #1, effective July 16, 2018, to Amended and Restated Employment Agreement effective September 6, 2017, by and between ePlus inc. and Mark P. Marron (Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on July 18, 2018). 10.4 Amendment #2, effective November 14, 2019, to Amended and Restated Employment Agreement effective September 6, 2017, by and between ePlus inc. and Mark P. Marron (Incorporated herein by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the period ended December 31, 2019). 10.5 Amended and Restated Employment Agreement effective September 6, 2017, by and between ePlus inc. and Elaine D. Marion (Incorporated herein by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the period ended December 31, 2017). 10.6 Amendment #1, effective November 14, 2019, to Amended and Restated Employment Agreement, effective September 6, 2017, by and between ePlus inc. and Elaine D. Marion (Incorporated herein by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended December 31, 2019). 10.7 2017 Non-Employee Director Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on September 14, 2017). 10.8 ePlus inc. 2012 Employee Long-term Incentive Plan (updated to reflect stock split effected March 31, 2017) (Incorporated herein by reference to Exhibit 10.8 to our Annual Report on Form 10-K for the fiscal year ended March 31, 2017). 10.9 Form of Award Agreement – Restricted Stock Agreement (for awards granted under and subject to the provisions of the ePlus inc. 2012 Employee Long-Term Incentive Plan) (Incorporated herein by reference to Exhibit 10.24 to our Annual Report on Form 10-K for the fiscal year ended March 31, 2013). 48 Table of Contents 10.10 Form of Award Agreement – Restricted Stock Unit Award Agreement (for awards granted under and subject to the provisions of the e Plus inc. 2012 Employee Long-Term Incentive Plan) (Incorporated herein by reference to Exhibit 10.25 to our Annual Report on Form 10-K for the fiscal year ended March 31, 2013). 10.11 Limited Guaranty dated June 24, 2004 by and between GE Commercial Distribution Finance Corporation and e Plus inc. (Incorporated herein by reference to Exhibit 10.10 to our Current Report on Form 8-K filed on November 17, 2005). 10.12 Collateralized Guaranty, dated March 30, 2004, by and between GE Commercial Distribution Finance Corporation and e Plus Group, inc. (Incorporated herein by reference to Exhibit 10.11 to our Current Report on Form 8-K filed on November 17, 2005). 10.13 Amendment to Collateralized Guaranty, dated November 14, 2005, by and between GE Commercial Distribution Finance Corporation and e Plus Group, inc. (Incorporated herein by reference to Exhibit 10.12 to our Current Report on Form 8-K filed on November 17, 2005). 10.14 Amended and Restated Business Financing Agreement, dated July 23, 2012, by and between General Electric Commercial Distribution Finance and e Plus Technology, inc. (Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on July 26, 2012). 10.15 Amendment No. 1, dated July 31, 2014, to Amended and Restated Business Financing Agreement by and between General Electric Commercial Distribution Finance and e Plus Technology, inc. (Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the period ended September 30, 2014). 10.16 Amendment No. 2, dated July 24, 2015, to Amended and Restated Business Financing Agreement by and between General Electric Commercial Distribution Finance and e Plus Technology, inc. (Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on July 30, 2015). 10.17 Amendment No. 3, dated October 20, 2015, to Amended and Restated Business Financing Agreement by and among e Plus Technology, inc. and its subsidiary e Plus Technology Services, inc. and GE Commercial Distribution Finance Corporation (Incorporated herein by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the period ended September 30, 2015). 10.18 Amendment No. 4, dated July 28, 2016, to Amended and Restated Business Financing Agreement by and among e Plus Technology, inc. and its subsidiary e Plus Technology Services, inc. and Wells Fargo Commercial Distribution Finance, LLC (f/k/a GE Commercial Distribution Finance Corporation) (Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on August 1, 2016). 10.19 Amendment No. 5, dated July 27, 2017, to Amended and Restated Business Financing Agreement by and between e Plus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC (f/k/a GE Commercial Distribution Finance Corporation) (Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on August 3, 2017). 10.20 Amendment No. 6, dated February 15, 2018, to Amended and Restated Business Financing Agreement by and between e Plus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC (f/k/a GE Commercial Distribution Finance Corporation) (Incorporated herein by reference to Exhibit 10.27 to our Annual Report on Form 10-K for the fiscal year ended March 31, 2018). 10.21 Amendment No. 7, dated January 15, 2019, to Amended and Restated Business Financing Agreement between ePlus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC (Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on January 18, 2019). 10.22 Amendment No. 8, dated November 12, 2019, to Amended and Restated Business Financing Agreement between ePlus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC. (Incorporated herein by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the period ended December 31, 2019). 10.23 Amendment No. 9, dated March 31, 2020, to Amended and Restated Business Financing Agreement between ePlus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC. (Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on April 3, 2020). 49 Table of Contents 10.24 Amendment No. 10, dated May 18, 2020, to Amended and Restated Business Financing Agreement between ePlus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC. (Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on May 21, 2020). 10.25 Amended and Restated Agreement for Wholesale Financing, dated July 23, 2012, by and between General Electric Commercial Distribution Finance and e Plus Technology, inc. (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July 26, 2012). 10.26 Amendment No. 1, dated July 31, 2014, to Amended and Restated Agreement for Wholesale Financing by and between General Electric Commercial Distribution Finance and e Plus Technology, inc. (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended September 30, 2014). 10.27 Amendment No. 2, dated July 24, 2015, to Amended and Restated Agreement for Wholesale Financing by and between General Electric Commercial Distribution Finance and e Plus Technology, inc. (Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July 30, 2015). 10.28 Amendment No. 3, dated October 20, 2015, to Amended and Restated Agreement for Wholesale Financing by and among e Plus Technology, inc. and its subsidiary e Plus Technology Services, inc. and GE Commercial Distribution Finance Corporation (Incorporated herein by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended September 30, 2015). 10.29 Amendment No. 4, dated July 28, 2016, to Amended and Restated Agreement for Wholesale Financing by and among e Plus Technology, inc. and its subsidiary e Plus Technology Services, inc. and Wells Fargo Commercial Distribution Finance, LLC (f/k/a GE Commercial Distribution Finance Corporation) (Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on August 1, 2016). 10.30 Amendment No. 5, dated July 27, 2017, to Amended and Restated Agreement for Wholesale Financing by and between e Plus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC (f/k/a GE Commercial Distribution Finance Corporation) (Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on August 3, 2017). 10.31 Amendment No. 6, dated February 15, 2018, to Amended and Restated Agreement for Wholesale Financing by and between e Plus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC (f/k/a GE Commercial Distribution Finance Corporation) (Incorporated herein by reference to Exhibit 10.20 to our Annual Report of Form 10-K for the fiscal year ended March 31, 2018). 10.32 Amendment No. 7, dated January 15, 2019, to Amended and Restated Agreement for Wholesale Financing between ePlus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC (Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on January 18, 2019). 10.33 Amendment No. 8, dated November 12, 2019, to Amended and Restated Agreement for Wholesale Financing between ePlus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC. (Incorporated herein by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the period ended December 31, 2019). 10.34 Amendment No. 9, dated March 31, 2020, to Amended and Restated Agreement for Wholesale Financing between ePlus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC. (Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on April 3, 2020). 10.35 Amendment No. 10, dated May 18, 2020, to Amended and Restated Agreement for Wholesale Financing between ePlus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC. (Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 21, 2020). 10.36 Employment Agreement, effective May 7, 2018, by and between ePlus inc. and Darren S. Raiguel. (Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 9, 2018). 50 Table of Contents 10.37 Amendment No. 1, effective November 14, 2019, to Amended and Restated Employment Agreement, effective May 7, 2018, by and between ePlus inc. and Darren S Raiguel. (Incorporated herein by reference to Exhibit 10.3 to our Current Report on Form 10-Q filed on February 6, 2020). 10.38 ePlus inc. Cash Incentive Plan, effective April 1, 2018, (Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July 18, 2018). 21 Subsidiaries of e Plus inc. 23 Consent of Independent Registered Public Accounting Firm. 31.1 Certification of the Chief Executive Officer of e Plus 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 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 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). (b) See item 15(a)(3) above. (c) See Item 15(a)(1) and 15(a)(2) above. ITEM 16. FORM 10-K SUMMARY None. 51 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or Section 15(d) 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. e Plus inc. /s/ MARK P. MARRON By: Mark P. Marron Chief Executive Officer and President Date: May 20, 2021 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ MARK P. MARRON By: Mark P. Marron Chief Executive Officer, President, and Director (Principal Executive Officer) Date: May 20, 2021 /s/ ELAINE D. MARION By: Elaine D. Marion, Chief Financial Officer (Principal Financial and Accounting Officer) Date: May 20, 2021 /s/ BRUCE M. BOWEN By: Bruce M. Bowen, Director Date: May 20, 2021 /s/ JOHN E. CALLIES By: John E. Callies, Director Date: May 20, 2021 /s/ C. THOMAS FAULDERS, III By: C. Thomas Faulders, III, Chairman Date: May 20, 2021 /s/ ERIC D. HOVDE By: Eric D. Hovde, Director Date: May 20, 2021 /s/ IRA A. HUNT By: Ira A. Hunt, Director Date: May 20, 2021 /s/ MAUREEN F. MORRISON By: Maureen F. Morrison Date: May 20, 2021 /s/ BEN XIANG By: Ben Xiang, Director Date: May 20, 2021 52 Table of Contents e Plus inc. AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND SCHEDULES PAGE Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of March 31, 2021, and 2020 F-6 Consolidated Statements of Operations for the Years ended March 31, 2021, 2020 and 2019 F-7 Consolidated Statements of Comprehensive Income for the Years ended March 31, 2021, 2020 and 2019 F-8 Consolidated Statements of Cash Flows for the Years ended March 31, 2021, 2020 and 2019 F-9 Consolidated Statements of Stockholders’ Equity for the Years ended March 31, 2021, 2020 and 2019 F-11 Notes to Consolidated Financial Statements F-12 F- 1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of e Plus inc. Herndon, Virginia Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of ePlus inc. and subsidiaries (the "Company") as of March 31, 2021 and 2020, and the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended March 31, 2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated May 20, 2021, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Revenue Recognition – Gross Versus Net Recognition of Sales of Third-Party Software – Refer to Note 1 to the financial statements Critical Audit Matter Description The Company is typically the principal in sales of third-party software. Sales are recognized on a gross basis with the selling price to the customer recorded as sales and the acquisition cost of the product recognized as cost of sales. The Company recognizes revenue from these sales at the point in time that control passes to the customer, which is typically upon delivery of the software to the customer. The Company is also the agent in sales of third-party maintenance, software support, and services as the third-party controls the service until it is transferred to the customer. Similarly, the Company is the agent in sales of third-party software and accompanying third-party support when the third-party software benefits the customer only in conjunction with the accompanying support. In these sales, the Company considers the third-party software and support as inputs to a single performance obligation. In all these sales where the Company is the agent, the Company recognizes sales on a net basis at the point that their customer and vendor accept the terms and conditions of the arrangement. F- 2 Table of Contents Auditing the Company’s determination of gross or net recognition of third-party software and support sales involved a high degree of subjectivity as it required the evaluation of whether the third-party software benefits the customer only in conjunction with the accompanying support. When the support is determined to be critical or essential to the software, the transaction is viewed as one combined performance obligation, and revenue is recognized net of related costs. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to management’s conclusion related to the recognition of sales of third-party software included the following, among others: • We tested the design and operating effectiveness of management’s controls over the determination of gross or net recognition of third-party software and support sales. • For a selection of contracts, we performed the following procedures: – Inspected the customer invoice and purchase order to determine whether the sale represented a valid transaction with a customer. – Compared the cost per the Company’s records to the cost per the vendor invoice. – Evaluated the sale to determine whether it constituted a single or multiple performance obligation(s) through inspection of the customer invoice, purchase order, and information on vendor websites accessed through third-party search engines. – Evaluated the sale to determine whether there was accompanying third-party support related to the software, and whether the support was separately identifiable or essential to the functionality of the software through inspection of customer invoices, purchase orders, information on vendor websites accessed through third-party search engines and inquiries with management, as necessary. Transfers of Financial Assets – Refer to Note 4 to the financial statements Critical Audit Matter Description The Company enters into arrangements to transfer the contractual payments due under financing receivables and operating lease agreements, which are accounted for in accordance with Codification Topic 860. These transfers are accounted for as either a sale or as a pledge of collateral in a secured borrowing. For transfers accounted for as a secured borrowing, the corresponding investments serve as collateral for non-recourse notes payable. For transfers accounted for as sales, the Company derecognizes the carrying value of the asset transferred plus any liability and recognizes a net gain or loss on the sale, which are presented within net sales in the consolidated statement of operations. Auditing the Company’s determination of whether the transfer should be accounted for as a secured borrowing or a sale involved a high degree of subjectivity. This subjectivity stems from management’s assessment of whether the transferred assets have been isolated from the transferor. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to management’s conclusion related to the transfer of financial assets included the following, among others: • We tested the design and operating effectiveness of management’s controls over the transfer of financial assets, including management’s controls over the evaluation of the terms of loan documents and accompanying investor data, assignment agreements, and the calculation of the gain or loss. • For a selection of transactions, we evaluated the Company’s determination of sale or secured borrowing, by evaluating, among other factors, if the transferred assets have been isolated from the Company. Specifically, we performed the following procedures: – Obtained the executed transfer agreement and evaluated whether the Company: ◾ Assigned its rights, titles, interests, estates, claims, and demands to the third-party assignee ◾ Retained any rights with respect to the payments assigned to the third-party assignee or had been appropriately isolated from the assets. We evaluated opinions from outside legal counsel, when applicable. F- 3 Table of Contents – Obtained and inspected the cash proceeds support from the transfer and compared the cash received to the selling price. – Tested the mathematical accuracy of management’s calculation of the gain or loss based on the cash proceeds and the receivable balance as of date of sale. /s/ DELOITTE & TOUCHE LLP McLean, Virginia May 20, 2021 We have served as the Company’s auditor since 1990. F- 4 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of e Plus inc. Herndon, Virginia Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of ePlus inc. and subsidiaries (the "Company") as of March 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended March 31, 2021, of the Company and our report dated May 20, 2021 expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ DELOITTE & TOUCHE LLP McLean, Virginia May 20, 2021 F- 5 Table of Contents e Plus inc. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) March 31, 2021 March 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 129,562 $ 86,231 Accounts receivable—trade, net 391,567 374,998 Accounts receivable—other, net 41,053 36,570 Inventories 69,963 50,268 Financing receivables—net, current 106,272 70,169 Deferred costs 28,201 22,306 Other current assets 10,976 9,256 Total current assets 777,594 649,798 Financing receivables and operating leases—net 90,165 74,158 Deferred tax asset—net 1,468 - Property, equipment and other assets 42,289 32,596 Goodwill 126,645 118,097 Other intangible assets—net 38,614 34,464 TOTAL ASSETS $ 1,076,775 $ 909,113 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Current liabilities: Accounts payable $ 165,162 $ 82,919 Accounts payable—floor plan 98,653 127,416 Salaries and commissions payable 36,839 30,952 Deferred revenue 72,802 55,480 Recourse notes payable—current 5,450 37,256 Non-recourse notes payable—current 50,397 29,630 Other current liabilities 30,061 22,986 Total current liabilities 459,364 386,639 Recourse notes payable - long-term 12,658 - Non-recourse notes payable - long-term 5,664 5,872 Deferred tax liability—net - 2,730 Other liabilities 36,679 27,727 TOTAL LIABILITIES 514,365 422,968 COMMITMENTS AND CONTINGENCIES ( Note 10 ) STOCKHOLDERS' EQUITY Preferred stock, $ 0.01 per share par value; 2,000 shares authorized; none outstanding - - Common stock, $ 0.01 per share par value; 25,000 shares authorized; 13,503 outstanding at March 31, 2021 and 13,500 outstanding at March 31, 2020 145 144 Additional paid-in capital 152,366 145,197 Treasury stock, at cost, 993 shares at March 31, 2021 and 896 shares at March 31, 2020 ( 75,372 ) ( 68,424 ) Retained earnings 484,616 410,219 Accumulated other comprehensive income—foreign currency translation adjustment 655 ( 991 ) Total Stockholders' Equity 562,410 486,145 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,076,775 $ 909,113 See Notes to Consolidated Financial Statements. F- 6 Table of Contents e Plus inc. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Year Ended March 31, 2021 2020 2019 Net sales Product $ 1,366,158 $ 1,395,288 $ 1,223,195 Services 202,165 193,116 149,478 Total 1,568,323 1,588,404 1,372,673 Cost of sales Product 1,049,677 1,076,773 952,464 Services 125,092 120,440 89,821 Total 1,174,769 1,197,213 1,042,285 Gross profit 393,554 391,191 330,388 Selling, general, and administrative 271,263 279,182 237,082 Depreciation and amortization 13,951 14,156 11,824 Interest and financing costs 2,005 2,574 1,948 Operating expenses 287,219 295,912 250,854 Operating income 106,335 95,279 79,534 Other income (expense) 571 680 6,696 Earnings before tax 106,906 95,959 86,230 Provision for income taxes 32,509 26,877 23,038 Net earnings $ 74,397 $ 69,082 $ 63,192 Net earnings per common share—basic $ 5.58 $ 5.18 $ 4.70 Net earnings per common share—diluted $ 5.54 $ 5.15 $ 4.65 Weighted average common shares outstanding—basic 13,337 13,327 13,448 Weighted average common shares outstanding—diluted 13,417 13,415 13,578 See Notes to Consolidated Financial Statements. F- 7 Table of Contents e Plus inc. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Year Ended March 31, 2021 2020 2019 NET EARNINGS $ 74,397 $ 69,082 $ 63,192 OTHER COMPREHENSIVE INCOME, NET OF TAX: Foreign currency translation adjustments 1,646 ( 720 ) ( 803 ) Other comprehensive income (loss) 1,646 ( 720 ) ( 803 ) TOTAL COMPREHENSIVE INCOME $ 76,043 $ 68,362 $ 62,389 See Notes to Consolidated Financial Statements. F- 8 Table of Contents e Plus inc. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended March 31, 2021 2020 2019 Cash flows from operating activities: Net earnings $ 74,397 $ 69,082 $ 63,192 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 19,991 19,156 18,639 Reserve for credit losses 1,436 1,004 170 Share-based compensation expense 7,169 7,954 7,243 Deferred taxes ( 4,198 ) ( 2,185 ) 3,280 Payments from lessees directly to lenders—operating leases ( 34 ) ( 70 ) ( 156 ) Gain on disposal of property, equipment, and operating lease equipment ( 2,742 ) ( 814 ) ( 2,027 ) Gain on sale of financial receivables - - ( 9,077 ) Changes in: Accounts receivable ( 5,056 ) ( 64,388 ) ( 34,306 ) Inventories-net ( 16,798 ) 115 ( 10,929 ) Financing receivables—net ( 42,104 ) ( 109,355 ) ( 7,883 ) Deferred costs and other assets ( 16,503 ) ( 20,982 ) 5,412 Accounts payable-trade 76,772 ( 8,884 ) 12,456 Salaries and commissions payable, deferred revenue, and other liabilities 37,177 35,193 ( 6,603 ) Net cash provided by (used in) operating activities 129,507 ( 74,174 ) 39,411 Cash flows from investing activities: Proceeds from sale of property, equipment, and operating lease equipment 2,791 1,705 3,619 Purchases of property, equipment, and operating lease equipment ( 11,513 ) ( 7,009 ) ( 11,629 ) Cash used in acquisitions, net of cash acquired ( 27,034 ) ( 15,035 ) ( 49,764 ) Purchases of assets to be leased or financed - - ( 10,368 ) Issuance of financing receivables - - ( 175,410 ) Repayments of financing receivables - - 73,942 Proceeds from sale of financing receivables - - 73,405 Net cash used in investing activities ( 35,756 ) ( 20,339 ) ( 96,205 ) Cash flows from financing activities: Borrowings of non-recourse and recourse notes payable 66,403 141,369 83,924 Repayments of non-recourse and recourse notes payable ( 74,328 ) ( 31,880 ) ( 43,054 ) Repurchase of common stock ( 6,948 ) ( 14,425 ) ( 18,754 ) Repayments of financing of acquisitions ( 556 ) ( 5,763 ) ( 7,634 ) Net borrowings (repayments) on floor plan facility ( 34,373 ) 11,333 3,974 Net cash provided by (used in) financing activities ( 49,802 ) 100,634 18,456 Effect of exchange rate changes on cash ( 617 ) 294 ( 44 ) Net increase (decrease) in cash and cash equivalents 43,332 6,415 ( 38,382 ) Cash and cash equivalents, beginning of period 86,231 79,816 118,198 Cash and cash equivalents, end of period $ 129,563 $ 86,231 $ 79,816 F- 9 Table of Contents CONSOLIDATED STATEMENTS OF CASH FLOWS - continued (in thousands) Year Ended March 31, 2021 2020 2019 Supplemental disclosures of cash flow information: Cash paid for interest $ 1,436 $ 2,260 $ 1,862 Cash paid for income taxes $ 31,690 $ 28,356 $ 19,938 Cash paid for amounts included in the measurement of lease liabilities $ 5,780 $ 5,613 $ - Schedule of non-cash investing and financing activities: Proceeds from sale of property, equipment, and leased equipment $ 2,045 $ - $ 520 Purchases of property, equipment, and operating lease equipment $ ( 372 ) $ ( 329 ) $ ( 1,874 ) Purchases of assets to be leased or financed $ - $ - $ ( 13,663 ) Issuance of financing receivables $ - $ - $ ( 119,024 ) Proceeds from sale of financing receivables $ - $ - $ 142,418 Consideration for acquisitions $ - $ ( 241 ) $ ( 257 ) Borrowing of non-recourse and recourse notes payable $ 121,826 $ 114,439 $ 75,164 Repayments of non-recourse and recourse notes payable $ ( 34 ) $ ( 70 ) $ ( 156 ) Vesting of share-based compensation $ 7,937 $ 8,990 $ 12,816 New operating lease assets obtained in exchange for lease obligations $ 1,146 $ 6,035 $ - See Notes to Consolidated Financial Statements. F- 10 Table of Contents e Plus inc. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) Common Stock Additional Paid-In Treasury Retained Accumulated Other Comprehensive Shares Par Value Capital Stock Earnings Income Total Balance, April 1, 2018 13,761 $ 142 $ 130,000 $ ( 36,016 ) $ 277,945 $ 532 $ 372,603 Issuance of restricted stock awards 75 1 - - - - 1 Share-based compensation - - 7,243 - - - 7,243 Repurchase of common stock ( 225 ) - - ( 17,983 ) - - ( 17,983 ) Net earnings - - - - 63,192 - 63,192 Foreign currency translation adjustment - - - - - ( 803 ) ( 803 ) Balance, March 31, 2019 13,611 $ 143 $ 137,243 $ ( 53,999 ) $ 341,137 $ ( 271 ) $ 424,253 Issuance of restricted stock awards 93 1 - - - - 1 Share-based compensation - - 7,954 - - - 7,954 Repurchase of common stock ( 204 ) - - ( 14,425 ) - - ( 14,425 ) Net earnings - - - - 69,082 - 69,082 Foreign currency translation adjustment - - - - - ( 720 ) ( 720 ) Balance, March 31, 2020 13,500 $ 144 $ 145,197 $ ( 68,424 ) $ 410,219 $ ( 991 ) $ 486,145 Issuance of restricted stock awards 100 1 - - - - 1 Share-based compensation - - 7,169 - - - 7,169 Repurchase of common stock ( 97 ) - - ( 6,948 ) - - ( 6,948 ) Net earnings - - - - 74,397 - 74,397 Foreign currency translation adjustment - - - - - 1,646 1,646 Balance, March 31, 2021 13,503 $ 145 $ 152,366 $ ( 75,372 ) $ 484,616 $ 655 $ 562,410 See Notes to Consolidated Financial Statements F- 11 Table of Contents e Plus inc. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of and for the Years ended March 31, 2021, 2020, and 2019 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF BUSINESS — Our company was founded in 1990 and is a Delaware corporation. e Plus inc. is sometimes referred to in this Annual Report on Form 10-K as “we,” “our,” “us,” “ourselves,” or “ e Plus.” e Plus inc. is a holding company that through its subsidiaries provides information technology solutions which 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 and the United Kingdom (“UK”). BASIS OF PRESENTATION — The consolidated financial statements include the accounts of e Plus inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accounts of businesses acquired during fiscal years 2021, 2020 and 2019 are included in the consolidated financial statements from the dates of acquisition. USE OF ESTIMATES — The preparation of financial statements in conformity with accounting principles generally accepted in the US requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at 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 asset values, vendor consideration, lease classification, goodwill and intangibles, 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. 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 write off financing receivables when we deem them to be uncollectable. Through the year ended March 31, 2021, we recognized an increase in the allowance to reflect the forecasted credit deterioration due to the COVID-19 pandemic. BUSINESS COMBINATIONS — We account for business combinations using the acquisition method, which requires that the total purchase price for each of the acquired entity be allocated to the assets acquired and liabilities assumed based on their fair values at the acquisition date. The allocation process requires an analysis of intangible assets, such as customer relationships, trade names, acquired contractual rights and assumed contractual commitments and legal contingencies to identify and record all assets acquired and liabilities assumed at their fair value. We record any premium paid over the fair value of the acquired net assets as goodwill. Our initial purchase price allocations are subject to revision within the measurement period, not to exceed one year from the date of acquisition. We include the results of operations for the acquired company in our financial statements from the acquisition date. CASH AND CASH EQUIVALENTS — Cash and cash equivalents consist primarily of interest-bearing accounts and money market funds that consist of short-term US treasury securities. We consider all highly liquid investments, including those with an original maturity of three months or less at the date of acquisition, to be cash equivalents. We have a lockbox account whose purpose is to collect and distribute customer payments under financing arrangements. As of March 31, 2021, we had $ 0.7 million being held in trust for third-party recipients within our lockbox account. There were no amounts being held in trust for third-party recipients as of March 31, 2020. As of March 31, 2021, and March 31, 2020, there were no restrictions on the withdrawal of funds from our money market funds. CONCENTRATIONS OF RISK — Financial instruments that potentially subject us to concentrations of credit risk include cash and cash equivalents, short-term investments, accounts receivable, and financing receivables. Cash and cash equivalents may include short-term investments that are maintained principally with financial institutions in the US. Our accounts receivable-trade balance as of March 31, 2021, and 2020 included approximately 20 % concentration of invoices due from Verizon Communications Inc. The risk on our accounts receivable and financing receivables is reduced by having a broad customer base in a diverse range of industries and through the ongoing evaluation of collectability of our portfolio. The credit risk is further mitigated by transferring certain of our financing receivables to financial institutions on a non-recourse basis and, for our lease receivables, by owning the underlying asset. A substantial portion of our sales are products from Cisco Systems, which represented approximately 36 %, 40 %, and 42 %, of our technology segment net sales for the years ended March 31, 2021, 2020, and 2019, respectively. F- 12 Table of Contents DEFERRED COSTS — When a contract is within the scope of Accounting Standards Codification (“Codification”) Topic 606, Revenue from Contracts with Customers (“Codification Topic 606”), we defer costs of fulfilling the contract when they generate or enhance resources that will be used by us in satisfying performance obligations in the future. Additionally, we capitalize costs that are incremental to obtaining the contracts, predominately sales commissions, and expense them in proportion to each completed contract performance obligation. DEFERRED REVENUE — We recognize deferred revenue when cash payments are received or due in advance of our performance. EARNINGS PER SHARE — Basic earnings per share is calculated by dividing net earnings attributable to common stockholders by the basic weighted average number of shares of common stock outstanding during each period. Diluted earnings per share reflects the potential dilution of securities that could participate in our earnings, including restricted stock awards during each period. FAIR VALUE MEASUREMENT — We follow the guidance in Codification Topic 820 Fair Value Measurements (“Codification Topic 820”) which governs how to measure fair value for financial reporting. This topic defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. This topic also establishes a fair value hierarchy that categorizes into three levels the inputs to valuation techniques used to measure fair value: ● Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. ● Level 2 – Inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities in active markets, that are observable for the asset or liability, either directly or indirectly. ● Level 3 – Unobservable inputs for the asset or liability. The fair values are determined based on model-based techniques such as discounted cash flow models using inputs that we could not corroborate with market data. FINANCIAL INSTRUMENTS — For financial instruments such as cash, short-term investments, accounts receivables, accounts payable and other current liabilities, we consider the recorded value of the financial instruments to approximate the fair value due to their short maturities. On March 31, 2021, the carrying amounts of our notes receivables, recourse and non-recourse payables were $ 112.6 million, $ 18.1 million and $ 56.1 million, respectively, and their fair values were $ 113.2 million, $ 18.1 million and $ 56.3 million, respectively. On March 31, 2020, the carrying amounts of our notes receivables, recourse and non-recourse payables were $ 54.8 million, $ 37.3 million and $ 35.5 million, respectively, and their fair values were $ 55.4 million, $ 37.3 million and $ 35.5 million, respectively. FINANCING RECEIVABLES AND OPERATING LEASES — Financing receivables and operating leases consists of notes receivable, sales-type leases and operating leases. We issue financing receivables for periods generally between 2 to 6 years, with most terms ranging between 3 to 4 years. When we lease equipment under an operating lease, we recognize the underlying asset at cost and depreciate it on a straight-line bases over its estimated useful life. We estimate that the useful life for most information technology (“IT”) equipment under lease is 4 years . FOREIGN CURRENCY TRANSLATION — Our functional currency is the US dollar. Our international subsidiaries typically use their local currency as their functional currency. We translate the assets and liabilities of our international subsidiaries into US dollars at the spot rate in effect at the applicable reporting date. We translate the revenues and expenses of our international subsidiaries into US dollars at the average exchange rates in effect during the applicable period. We report the resulting foreign currency translation adjustment as accumulated other comprehensive loss, which is reflected as a separate component of stockholders’ equity. We report all foreign currency transaction gains or losses in other income (expense) on our consolidated statement of operations. We recognized a gain of $ 0.5 million, a loss of $ 0.4 million, and a gain of $ 0.4 million due to foreign currency translations for the years ended March 31, 2021, 2020, and 2019, respectively. F- 13 Table of Contents GOODWILL — We test goodwill for impairment on an annual basis, as of October 1, 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 amount. In a qualitative assessment, we assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill. If, after assessing the totality of events or circumstances, we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary. If, after assessing the totality of events or circumstances, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we perform the quantitative goodwill impairment test. We may also elect the unconditional option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. In the quantitative impairment test, we compare the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. Conversely, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. IMPLEMENTATION COSTS OF A HOSTING ARRANGEMENT- We capitalize implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We classify these capitalized costs in the same balance sheet line item as the amounts prepaid for the related hosting arrangement and we present the amortization of these capitalized costs in the same income statement line item as the service fees for the related hosting arrangement. We amortize the capitalized implementation costs over the term of the hosting arrangement. INCOME TAXES — Deferred income taxes are accounted for in accordance with Codification Topic 740 Income Taxes (“Codification Topic 740”). Under this method, deferred income tax assets and liabilities are determined based on the temporary differences between the financial statement reporting and tax bases of assets and liabilities, using tax rates currently in effect. Future tax benefits, such as net operating loss carry-forwards, are recognized to the extent that realization of these benefits is considered to be more likely than not. We review our deferred tax assets at least annually and make necessary valuation adjustments. In addition, we account for uncertain tax positions in accordance with Codification Topic 740. Specifically, the Topic prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation also provides guidance on the related de-recognition, classification, interest and penalties, accounting for interim periods, disclosure and transition of uncertain tax positions. In accordance with our accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. INVENTORIES — Inventories are stated at the lower of cost and net realizable value. Cost is determined using a weighted average cost method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Our determination of the net realizable value for inventories is based on the terms of underlying purchase commitments from our customers, current economic conditions including the impact of COVID-19, and other relevant factors. LESSEE ACCOUNTING — We lease office space for periods up to 6 years. At the lease commencement date, we recognize operating lease liabilities based on the present value of the future minimum lease payments. In determining the present value of future minimum lease payments, we use our incremental borrowing rate based on the information available at the commencement date. When the future minimum payments encompass non-lease components, we account for the lease and non-lease components as a single lease component. We elected not to recognize right-of-use assets and lease liabilities for leases with an initial term of 12 months or less. We recognize lease expense on a straight-line basis over the lease term beginning on the commencement date. PROPERTY AND EQUIPMENT — Property and equipment are stated at cost, net of accumulated depreciation and amortization. We recognize property and equipment obtained through a business combination at its fair market value as of the acquisition date. We compute depreciation and amortization using the straight-line method over the estimated useful lives of the related assets, which range from three to seven years . We typically depreciate internal use IT equipment over three years , perpetual software licenses over five years , furniture and fixtures over five years , and telecommunications equipment over seven years . F- 14 Table of Contents RESIDUAL ASSETS — Our estimate for the residual asset in a lease is the amount we expect to derive from the underlying asset following the end of the lease term. In a sales-type lease, we recognize the unguaranteed residual asset, measured on a discounted basis, upon lease commencement. In our subsequent accounting for the lease, we increase the unguaranteed residual asset using the effective interest method. We evaluate residual values for impairment on a quarterly basis. We recognize impairments as incurred. We do not recognize upward adjustments due to changes in estimates of residual values. REVENUE RECOGNITION — We recognize most of our revenues from the sales of third-party products, third-party software, third-party maintenance, software support, and services, e Plus professional and managed services, and hosting e Plus proprietary software. We recognize revenue from these sales under the guidance in Codification Topic 606. The core principle of Codification Topic 606 is that an entity should recognize revenue for the transfer of goods and services equal to an amount it expects to be entitled to receive for those goods and services. We account for a contract under Codification Topic 606 when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance, and collectability of consideration is probable. Revenues are reported net of sales refunds, including an estimate of future returns based on an evaluation of historical sales returns, current economic conditions, volume, and other relevant factors. Our contracts with customers may include multiple promises that are distinct performance obligations. For such arrangements, we allocate the transaction price to each performance obligation based on its relative standalone selling price. We determine standalone selling prices using expected cost-plus margin. We recognize revenue when (or as) we satisfy a performance obligation by transferring a promised good or service to a customer. A good or service is transferred when (or as) the customer obtains control of that good or service. Depending on the nature of each performance obligation, this may be at a point in time or over time, as further described below. We typically invoice our customers for third-party products upon shipment, unless our customers lease the equipment through our financing segment, in which case the arrangement is accounted for as a lease in accordance with Codification Topic 842, Leases ("Codification Topic 842"). We typically invoice our customers for third-party software upon delivery and third-party services at the point of sale, unless our customers finance these products through our financing segment, in which case we record a financing receivable based on the terms of the arrangement. Product Revenue Sales of third-party products We are the principal in sales of third-party products. As such, we recognize sales on a gross basis with the selling price to the customer recorded as sales and the acquisition cost of the product recognized as cost of sales. We recognize revenue from these sales at the point in time that control passes to the customer, which is typically upon delivery of the product to the customer. In some instances, our customers may request that we bill them for a product but retain physical possession of the product until later delivery, commonly known as “bill-and-hold” arrangements. In these transactions, we recognize revenue when the customer has signed a bill-and-hold agreement with us, the product is identified separately as belonging to the customer and, when orders include configuration, such configuration is complete, and the product is ready for delivery to the customer. We recognize sales of off-lease equipment within our financing segment when control passes to the customer, which is typically the date that title to the equipment is transferred per the sales agreement. Sales of third-party software We are typically the principal in sales of third-party software. Sales are recognized on a gross basis with the selling price to the customer recorded as sales and the acquisition cost of the product recognized as cost of sales. We recognize revenue from these sales at the point in time that control passes to the customer, which is typically upon delivery of the software to the customer. F- 15 Table of Contents Sales of third-party maintenance, software support, and services We are the agent in sales of third-party maintenance, software support, and services as the third-party controls the service until it is transferred to the customer. Similarly, we are the agent in sales of third-party software and accompanying third-party support when the third-party software benefits the customer only in conjunction with the accompanying support. In these sales, we consider the third-party software and support as inputs to a single performance obligation. In all these sales where we are the agent, we recognize sales on a net basis at the point that our customer and vendor accept the terms and conditions of the arrangement. Freight and sales tax We present freight billed to our customers within sales and the related freight charged to us within cost of sales. We present sales tax collected from customers and remittances to governmental authorities on a net basis. Financing revenue and other We account for leases to customers in accordance with Codification Topic 842. We utilize a portfolio approach by grouping together many similar assets being leased to a single customer. We classify our leases as either sales-type leases or operating leases. We classify leases as sales-type leases if any one of five criteria are met, each of which indicate that the lease transfers control of the underlying asset to the lessee. We classify our other leases as operating leases. For sales-type leases, upon lease commencement, we recognize the present value of the lease payments and the residual asset discounted using the rate implicit in the lease. When we are financing equipment provided by another dealer, we typically do not have any selling profit or loss arising from the lease. When we are the dealer of the equipment being leased, we typically recognize revenue in the amount of the lease receivable and cost of sales in the amount of the carrying value of the underlying asset minus the unguaranteed residual asset. After the commencement date, we recognize interest income as part of net sales using the effective interest method. For operating leases, we recognize the underlying asset as an operating lease asset. We depreciate the asset on a straight-line basis to its estimated residual value over its estimated useful life. We recognize the lease payments over the lease term on a straight-line basis as part of net sales. In all our leases, we recognize variable lease payments, primarily reimbursement for property taxes associated with the leased asset, as part of net sales in the period in which the changes in facts and circumstances on which the variable lease payments are based occur. We exclude from revenues and expenses any sales taxes reimbursed by the lessee. We also finance third-party software and third-party services for our customers, which we classify as notes-receivable. We recognize interest income on our notes-receivable using the effective interest method. We account for transfers of our financial assets, under Codification Topic 860 Transfers and Servicing (“Codification Topic 860”). When a transfer meets all the requirements for sale accounting, we derecognize the financial asset and record a net gain or loss that is included in net sales. Service Revenue Sales of e Plus professional, managed services, and staffing e Plus professional services offerings include assessments, project management, and staging, configuration, and integration. e Plus managed service offerings range from monitoring and notification to a fully outsourced network management solution. e Plus staffing delivers a full range of staffing solutions, including short-term, long-term, temporary-to-hire, and direct-hire IT professionals. In all these arrangements, we satisfy our performance obligation and recognize revenue over time. In arrangements for e Plus professional services and staffing, we provide services under both time and materials and fixed price contracts. When services are provided on a time and materials basis, we recognize sales at agreed-upon billing rates as services are performed. When services are provided on a fixed fee basis, we recognize sales over time in proportion to our progress toward complete satisfaction of the performance obligation. We typically measure progress based on costs incurred in proportion to total estimated costs, commonly referred to as the “cost-to-cost” method. F- 16 Table of Contents In arrangements for e Plus managed services, our arrangement is typically a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). We typically recognize sales from these services on a straight-line basis over the period services are provided. SHARE-BASED COMPENSATION — We account for share-based compensation in accordance with Codification Topic 718 Compensation—Stock Compensation . We recognize compensation cost for awards of restricted stock with graded vesting on a straight-line basis over the requisite service period. We account for forfeitures when they occur. There are no additional conditions for vesting other than service conditions. SOFTWARE DEVELOPMENT COSTS — We capitalize costs for the development of internal use software under the Codification Topic 350-40 Intangibles—Goodwill and Other Intangibles, Subtopic Internal-Use Software . We capitalized development costs for internal use software of $ 0.2 million, $ 0.2 million and $ 2.5 million during the years ended March 31, 2021, 2020 and 2019, respectively. We had capitalized costs, net of amortization, of approximately $ 3.4 million and $ 4.5 million at March 31, 2021, and March 31, 2020, respectively, that is included in the accompanying consolidated balance sheets as a component of other intangible assets-net. TREASURY STOCK — We account for treasury stock under the cost method and include treasury stock as a component of stockholders’ equity on the accompanying consolidated balance sheets. VENDOR CONSIDERATION — We receive payments and credits from vendors pursuant to volume incentive programs and shared marketing expense programs. Many of these programs extend over one or more quarters’ sales activities. Different programs have different vendor/program specific milestones to achieve. Amounts due from vendors as of March 31, 2021, and 2020 were $ 18.2 million and $ 20.8 million, respectively, which were included within accounts receivable-other, net in the accompanying balance sheets. We recognize rebates pursuant to volume incentive programs, when the rebate is probable and reasonably estimable, based on a systematic and rational allocation of the cash consideration offered to the underlying transactions that result in our progress toward earning the rebate. When a rebate is not probable or not reasonably estimable, we recognized the rebate as the milestones are achieved or as cash is received. We recognize rebates pursuant to shared marketing expense programs as a reduction of the related selling and administrative expenses in the period the program occurs when the consideration represents a reimbursement of specific, incremental, identifiable costs. We recognize consideration that exceeds the specific, incremental, identifiable costs as a reduction of cost of sales. 2. RECENT ACCOUNTING PRONOUNCEMENTS CREDIT LOSSES — We adopted ASU 2016-13 on April 1, 2020. The amendments in this update replaced the incurred loss impairment methodology in current US GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable 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. REVENUES Contract balances Accounts receivable – trade consists entirely of amounts due from contracts with customers. In addition, we had $ 54.6 million, $ 33.1 million and $ 16.2 million of receivables from contracts with customers included within financing receivables as of March 31, 2021, 2020 and 2019, respectively. The following table provides the balance of contract liabilities from contracts with customers (in thousands): March 31, 2021 2020 2019 Current (included in deferred revenue) $ 72,299 $ 54,486 $ 46,356 Non-current (included in other liabilities) $ 26,042 $ 16,395 $ 13,593 Revenue recognized from the beginning contract liability balance was $ 42.2 million and $ 53.5 million for the fiscal year ended March 31, 2021, and 2020, respectively. F- 17 Table of Contents Performance obligations The following table includes revenue expected to be recognized in the future related to performance obligations, primarily non-cancelable contracts for e Plus managed services, that are unsatisfied or partially unsatisfied at the end of the reporting period (in thousands): Year ending March 31, 2022 $ 38,097 2023 16,560 2024 7,784 2025 794 2026 and thereafter 246 Total remaining performance obligations $ 63,481 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. 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, 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 years ended March 31, 2021, and 2020 (in thousands): Year Ended March 31 , 2021 2020 Net sales $ 27,196 $ 15,631 Cost of sales 17,855 13,039 Gross profit $ 9,341 $ 2,592 The following table provides interest income in aggregate on our sales-type leases and lease income on our operating leases for the years ended March 31, 2021 , and 2020 (in thousands) : Year Ended March 31 , 2021 2020 Interest income on sales-type leases $ 7,602 $ 6,623 Lease income on operating leases $ 15,864 $ 18,534 FINANCING RECEIVABLES—NET The following tables provide a disaggregation of our financing receivables - net (in thousands): March 31, 2021 Notes Receivable Lease Receivables Financing Receivables Gross receivables $ 112,641 $ 68,393 $ 181,034 Unguaranteed residual value (1) - 14,876 14,876 Initial direct costs, net of amortization 425 - 425 Unearned income - ( 8,393 ) ( 8,393 ) Allowance for credit losses (2) ( 1,212 ) ( 1,171 ) ( 2,383 ) Total, net $ 111,854 $ 73,705 $ 185,559 Reported as: Current $ 73,175 $ 33,097 $ 106,272 Long-term 38,679 40,608 79,287 Total, net $ 111,854 $ 73,705 $ 185,559 (1) Includes unguaranteed residual values of $ 9,453 thousand that we retained after selling the related lease receivable. (2) Refer to Note 7, “Allowance for Credit Losses” for details. F- 18 Table of Contents March 31, 2020 Notes Receivable Lease Receivables Financing Receivables Minimum payments $ 55,417 $ 69,492 $ 124,909 Estimated unguaranteed residual value (1) - 21,862 21,862 Initial direct costs, net of amortization 212 247 459 Unearned income - ( 11,612 ) ( 11,612 ) Allowance for credit losses (2) ( 798 ) ( 610 ) ( 1,408 ) Total, net $ 54,831 $ 79,379 $ 134,210 Reported as: Current $ 31,181 $ 38,988 $ 70,169 Long-term 23,650 40,391 64,041 Total, net $ 54,831 $ 79,379 $ 134,210 (1) Includes unguaranteed residual values of $ 14,972 thousand for sales type leases, which have been sold and accounted for as sale s . (2) Refer to Note 7, “Allowance for Credit Losses” for details. The following table provides the future scheduled minimum lease payments for investments in sales-type leases as of March 31, 2021 (in thousands): Year ending March 31, 2022 $ 36,900 2023 16,358 2024 9,628 2025 3,356 2026 and thereafter 2,151 Total $ 68,393 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): March 31, 2021 March 31, 2020 Cost of equipment under operating leases $ 18,748 $ 21,276 Accumulated depreciation ( 7,870 ) ( 11,159 ) Investment in operating lease equipment—net (1) $ 10,878 $ 10,117 (1) Amounts include estimated unguaranteed residual values of $ 2.5 million and $ 3.1 million as of March 31, 2021 , and 2020 , respectively. The following table provides the future scheduled minimum lease rental payments for operating leases as of March 31, 2021 (in thousands): Year ending March 31, 2022 $ 4,744 2023 3,756 2024 1,034 2025 37 Total $ 9,571 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 secured borrowings . For transfers accounted for as a secured borrowing, the corresponding investments serve as collateral for non-recourse notes payable. As of March 31, 2021, and March 31, 2020, we had financing receivables of $ 60.5 million and $ 34.6 million, respectively, and operating leases of $ 3.3 million and $ 6.7 million, respectively which were collateral for non-recourse notes payable. See Note 9, “Notes Payable and Credit Facility.” F- 19 Table of Contents 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. For the years ended March 31, 2021, 2020, and 2019, we recognized net gains of $ 14.5 million, $ 21.8 million, and $ 9.1 million, respectively, and total proceeds from these sales were $ 364.0 million, $ 593.7 million, and $ 276.1 million, respectively. When we retain servicing obligations in transfers accounted for as sales, we allocate a portion of the proceeds to deferred revenues, which is recognized as we perform the services. As of both March 31, 2021, and March 31, 2020, we had deferred revenue of $ 0.4 million for servicing obligations. In a limited number of transfers accounted for as sales, we indemnified the assignee in the event that the lessee elects to early terminate the lease. As of March 31, 2021 , our total potential liability that could result from these indemnities is immaterial. 5. LESSEE ACCOUNTING We lease office space for periods up to six 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 $ 6.1 million and $ 5.6 million as part of selling, general, and administrative expenses during the years ended March 31, 2021 , and March 31, 2020 , respectively. Supplemental information about the remaining lease terms and discount rates applied as of March 31, 2021 , and March 30, 2020 , are as follows: Year Ended March 31 , Lease term and Discount Rate 2021 2020 Weighted average remaining lease term (months) 32 38 Weighted average discount rate 3.7 % 3.9 % The following table provides our future lease payments under our operating leases as of March 31, 2021 (in thousand s) : Year ending March 31, 2022 $ 4,006 2023 3,166 2024 1,323 2025 884 2026 34 Total lease payments 9,413 Less: interest ( 439 ) Present value of lease liabilities $ 8,974 6. GOODWILL AND OTHER INTANGIBLE ASSETS GOODWILL The following table summarizes the changes in the carrying amount of goodwill for the years ended March 31, 2021, and March 31, 2020, respectively (in thousands): March 31, 2021 March 31, 2020 Goodwill Accumulated Impairment Loss Net Carrying Amount Goodwill Accumulated Impairment Loss Net Carrying Amount Beginning balance $ 126,770 $ ( 8,673 ) $ 118,097 $ 119,480 $ ( 8,673 ) $ 110,807 Acquisitions 8,328 - 8,328 7,410 - 7,410 Foreign currency translations 220 - 220 ( 120 ) - ( 120 ) Ending balance $ 135,318 $ ( 8,673 ) $ 126,645 $ 126,770 $ ( 8,673 ) $ 118,097 F- 20 Table of Contents 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 March 31, 2021 , and March 31, 2020 , relates to our technology reportable segment, which we also determined to be one reporting unit. The carrying value of goodwill was $ 126.6 and $ 118.1 million as of March 31, 2021 , and March 31, 2020 , respectively. The increase in the balance during the year ended March 31, 2021 , is due to our acquisition of certain assets and liabilities of Systems Management and Planning, Inc. (“SMP”) of $ 8.3 million and favorable changes in foreign currency translation of $ 0.2 million . Refer to Note 16 , “Business Combinations” for details. 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 tests as of October 1, 2020 , and 2019 , 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 ten percent change in our estimate of the fair value of the reporting unit. OTHER INTANGIBLE ASSETS Our other intangible assets consist of the following at March 31, 2021, and March 31, 2020 (in thousands): March 31, 2021 March 31, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships & other intangibles $ 77,335 $ ( 42,115 ) $ 35,220 $ 63,006 $ ( 33,000 ) $ 30,006 Capitalized software development 10,553 ( 7,159 ) 3,394 10,385 ( 5,927 ) 4,458 Total $ 87,888 $ ( 49,274 ) $ 38,614 $ 73,391 $ ( 38,927 ) $ 34,464 Customer relationships and other intangibles are generally amortized between 5 to 10 years. Capitalized software development is generally amortized over 5 years. The change in the gross carrying amount of other intangible asset is due to the addition of a customer relationship intangible asset of $ 14.3 million from our acquisition of SMP. Refer to Note 16 , “Business Combinations” for details. Total amortization expense for customer relationships & other intangible assets was $ 10.3 million, $ 9.4 million, and $ 7.9 million for the years ended March 31, 2021, 2020 and 2019, respectively. The following table provides the future amortization expense for customer relationships & other intangible assets as of March 31, 2021 (in thousands): Year ending March 31, 2022 $ 10,073 2023 8,028 2024 6,218 2025 4,647 2026 and thereafter 6,254 Total $ 35,220 F- 21 Table of Contents 7. ALLOWANCE FOR CREDIT LOSSES The following table provides the activity in our allowance for credit losses for the years ended March 31, 2021, 2020 and 2019 (in thousands): Accounts Receivable Notes Receivable Lease Receivables Total Balance as of March 31, 2018 $ 1,538 $ 486 $ 640 $ 2,664 Provision for credit losses 195 250 ( 110 ) 335 Write-offs and other ( 154 ) ( 231 ) - ( 385 ) Balance as of March 31, 2019 1,579 505 530 2,614 Provision for credit losses 627 293 84 1,004 Write-offs and other ( 425 ) - ( 4 ) ( 429 ) Balance as of March 31, 2020 1,781 798 610 3,189 Provision for credit losses 367 503 566 1,436 Write-offs and other ( 84 ) ( 89 ) ( 5 ) ( 178 ) Balance as of March 31, 2021 $ 2,064 $ 1,212 $ 1,171 $ 4,447 The following table provides our allowance for credit losses and minimum payments associated with our notes receivables and lease-related receivables disaggregated based on our impairment method as of March 31, 2020 (in thousand s): 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 - Ending balance $ 798 $ 610 Minimum payments: Ending balance: collectively evaluated for impairment $ 55,005 $ 69,492 Ending balance: individually evaluated for impairment 412 - Ending balance $ 55,417 $ 69,492 We evaluate our customers using an internally assigned credit quality rating (“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 %. F- 22 Table of Contents The following table provides the amortized cost basis of our financing receivables by CQR and by credit origination year as of March 31, 2021 (in thousand s): Amortized cost basis by origination year ending March 31 , 2021 2020 2019 2018 2017 Total Transfers (2) Net credit exposure Notes receivable: High CQR $ 93,793 $ 6,250 $ 769 $ 771 $ 19 $ 101,602 $ ( 63,471 ) $ 38,131 Average CQR 7,689 2,468 550 8 - 10,715 ( 2,896 ) 7,819 Low CQR - - 324 - - 324 - 324 Total $ 101,482 $ 8,718 $ 1,643 $ 779 $ 19 $ 112,641 $ ( 66,367 ) $ 46,274 Lease receivables: High CQR $ 28,898 $ 5,885 $ 1,798 $ 463 $ 125 $ 37,169 $ ( 7,468 ) $ 29,701 Average CQR 23,445 3,482 1,017 270 40 28,254 ( 4,592 ) 23,662 Low CQR - - - - - - - - Total $ 52,343 $ 9,367 $ 2,815 $ 733 $ 165 $ 65,423 $ ( 12,060 ) $ 53,363 Total amortized cost (1) $ 153,825 $ 18,085 $ 4,458 $ 1,512 $ 184 $ 178,064 $ ( 78,427 ) $ 99,637 (1) Unguaranteed residual values of $ 9,453 thousand that we retained after selling the related lease receivable and initial direct costs of notes receivable of $ 425 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. The following table provides an aging analysis of our financing receivables as of March 31, 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 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 The following table provides an aging analysis of our lease receivables by CQR as of March 31, 2020 (in thousand s): 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 - - - - - - - - - - Total $ 997 $ 212 $ 1,034 $ 2,243 $ 2,287 $ 64,962 $ 69,492 $ ( 8,412 ) $ ( 38,516 ) $ 22,564 The following table provides an aging analysis of our notes receivable by CQR as of March 31, 2020 (in thousand s): 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 - 152 215 - 197 412 - 412 Total $ 1,535 $ 46 $ 574 $ 2,155 $ 4,013 $ 49,249 $ 55,417 $ ( 34,977 ) $ 20,440 Our financial assets on nonaccrual status were not significant as of March 31, 2021 , and March 31, 2020. F- 23 Table of Contents 8. PROPERTY, EQUIPMENT, AND OTHER ASSETS AND LIABILITIES PROPERTY AND EQUIPMENT — NET Property and equipment—net consists of the following (in thousands): March 31, 2021 March 31, 2020 Furniture, fixtures and equipment $ 26,612 $ 24,657 Leasehold improvements 6,918 6,964 Capitalized software 4,153 3,513 Vehicles 546 315 Total assets 38,229 35,449 Accumulated depreciation and amortization ( 30,841 ) ( 28,296 ) Property and equipment - net $ 7,388 $ 7,153 For the years ended March 31, 2021, 2020 and 2019, depreciation and amortization expense on property and equipment, including amounts recognized in cost of sales, was $ 5.4 million, $ 4.8 million, and $ 4.7 million, respectively. OTHER ASSETS AND LIABILITIES Our property, equipment, other assets and liabilities consist of the following (in thousand s): March 31, 2021 March 31, 2020 Other current assets: Deposits & funds held in escrow $ 759 $ 926 Prepaid assets 9,939 7,946 Other 278 384 Total $ 10,976 $ 9,256 Property, equipment and other assets : Property and equipment, net $ 7,388 $ 7,153 Deferred costs - non-current 19,063 10,957 Right-of-use assets 8,763 13,066 Other 7,075 1,420 Total $ 42,289 $ 32,596 Other current liabilities : Accrued expenses $ 13,598 $ 10,024 Accrued income taxes payable 4,439 406 Contingent consideration - current - 220 Short-term lease liability 3,934 4,815 Other 8,090 7,521 Total $ 30,061 $ 22,986 Other liabilities : Deferred revenue - non-current $ 26,309 $ 16,693 Long-term lease liability 5,040 8,326 Other 5,330 2,708 Total $ 36,679 $ 27,727 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 were placed in escrow and were released during the current fiscal year upon payment of outstanding invoices related to the underlying financing arrangements that were sold. F- 24 Table of Contents 9. NOTES PAYABLE AND CREDIT FACILITY Credit Facility Within our technology segment, e Plus Technology, inc. and certain of its subsidiaries finance their operations with funds generated from operations, and with a credit facility with Wells Fargo Commercial Distribution Finance, LLC (“WFCDF”) . This facility provides short-term capital for our technology segment. There are two components of the WFCDF credit facility: (1) a floor plan component and (2) an accounts receivable component. Under the floor plan component, we had outstanding balances of $ 98.7 million and $ 127.4 million as of March 31, 2021, 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 March 31, 2021, and March 31, 2020. On May 18, 2020, we executed an amendment to the WFCDF credit facility that increased the aggregate limit of the two components, except during a temporary uplift, to $ 275 million. Additionally, we have an election to temporarily increase the aggregate limit to $ 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, the amendment increased the limit on the accounts receivable component of the WFCDF credit facility to $ 100 million, changed the interest rate 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 March 31, 2021, the limit of the two components of the credit facility was $ 275 million, and the accounts receivable component had a sub-limit of $ 100 million. Our borrowing availability under the credit facility varies based upon the value of the receivables and inventory of e Plus Technology, inc., and certain of its subsidiaries. Under the accounts receivable component, we had no outstanding balance as of March 31, 2021 and $ 35 million outstanding as of March 31, 2020. The accounts receivable component is presented as recourse notes payable – current . The WFCDF credit facility is secured by the assets of e Plus Technology, inc. and certain of its subsidiaries. Additionally, the credit facility requires a guaranty of $ 10.5 million by e Plus inc. The credit facility restricts the ability of e Plus Technology, inc. and certain of its subsidiaries to pay dividends to e Plus inc. unless their available borrowing meets certain thresholds. As of 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 that financial statements of e Plus Technology, inc. and certain of its subsidiaries be provided within 45 days of each quarter and 90 days of each fiscal year end and requires that other operational reports be provided on a regular basis. Either party may terminate with 90 days’ advance notice. The loss of the WFCDF credit facility could have a material adverse effect on our future results as we currently rely on this facility and its components for daily working capital and liquidity for our technology segment and as an operational function of our accounts payable process. 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. We had $ 18.1 million and $ 2.3 million as of March 31, 2021 and March 31, 2020, respectively in recourse borrowings that were collateralized by investments in notes receivable and leases. Our principal and interest payments are generally due periodically at the same time payments are due from the customer under the leases or notes receivable that collateralize the notes payable. The weighted average interest rate for these borrowings was 3.50 % as of March 31, 2021 and 2.55 % as of March 31, 2020. 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 March 31, 2021, and March 31, 2020, we had $ 56.1 million and $ 35.5 million, respectively, of non-recourse borrowings that were collateralized by investments in notes and leases. Principal and interest payments are generally due periodically in amounts that are approximately equal to the total payments due from the customer under the leases or notes receivable that collateralize the notes payable. The weighted average interest rate for our non-recourse notes payable was 3.35 % and 3.84 % , as of March 31, 2021, and March 31, 2020, respectively. F- 25 Table of Contents 10. COMMITMENTS AND CONTINGENCIES Legal Proceedings From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate amount of liability and expenses, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect our financial condition, results of operations and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome, whether favorable or unfavorable, may materially and adversely affect us due to legal costs and expenses, diversion of management attention and other factors. We expense legal costs in the period incurred. We cannot assure that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against us in the future, and these matters could relate to prior, current or future transactions or events. 11. EARNINGS PER SHARE Basic earnings per share is computed by dividing net earnings attributable to common shares by the weighted average number of common shares outstanding for the period. Diluted net earnings per share include the potential dilution of securities that could participate in our earnings, but not securities that are anti-dilutive. The following table provides a reconciliation of the numerators and denominators used to calculate basic and diluted net earnings per common share as disclosed in our consolidated statements of operations for the fiscal years ended March 31, 2021, 2020 and 2019 (in thousands, except per share data). 2021 2020 2019 Net earnings attributable to common shareholders - basic and diluted $ 74,397 $ 69,082 $ 63,192 Basic and diluted common shares outstanding: Weighted average common shares outstanding — basic 13,337 13,327 13,448 Effect of dilutive shares 80 88 130 Weighted average shares common outstanding — diluted 13,417 13,415 13,578 Earnings per common share - basic $ 5.58 $ 5.18 $ 4.70 Earnings per common share - diluted $ 5.54 $ 5.15 $ 4.65 12. STOCKHOLDERS’ EQUITY Share Repurchase Plan On May 24, 2019, our board of directors authorized the repurchase up to 500,000 shares of our outstanding common stock over a 12-month period beginning on May 28, 2019 through May 27, 2020. 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 May 28, 2020 and ending on May 27, 2021. On 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 May 28, 2021 and ending on May 27, 2022. These plans 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. During the year ended March 31, 2021, we purchased 59,101 shares of our outstanding common stock at an average cost of $ 71.83 per share for a total purchase price of $ 4.2 million under the share repurchase plan; we also acquired 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 year ended March 31, 2020, we purchased 161,976 shares of our outstanding common stock at an average cost of $ 70.39 per share for a total purchase price of $ 11.4 million under the share repurchase plan. We also acquired 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. F- 26 Table of Contents 13. SHARE-BASED COMPENSATION Share-Based Plans In each of the years ended March 31, 2021, 2020 and 2019, we issued share-based payment awards and had outstanding share-based payment awards under the following plans: (1) the 2012 Employee Long-Term Incentive Plan (“2012 Employee LTIP”), and (2) the 2017 Non-Employee Director Long-Term Incentive Plan (“2017 Director LTIP”). 2012 Employee LTIP On September 13, 2012, our stockholders approved the 2012 Employee LTIP that was adopted by the Board on July 10, 2012. Under the 2012 Employee LTIP, 1,500,000 shares were authorized for grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, or other share-based awards to e Plus employees. The purpose of the 2012 Employee LTIP is to encourage our employees to acquire a proprietary interest in the growth and performance of e Plus, thus enhancing the value of e Plus for the benefit of its stockholders, and to enhance our ability to attract and retain exceptionally qualified individuals. The 2012 Employee LTIP is administered by the Compensation Committee. Shares issuable under the 2012 Employee LTIP may consist of authorized but unissued shares or shares held in our treasury. Shares under the 2012 Employee LTIP will not be used to compensate our outside directors, who may be compensated under the separate 2017 Director LTIP, as discussed below. Under the 2012 Employee LTIP, the Compensation Committee will determine the time and method of exercise or vesting of the awards. 2017 Director LTIP On September 12, 2017, our stockholders approved the 2017 Director LTIP that was adopted by the Board on July 24, 2017. Under the 2017 Director LTIP, 150,000 shares were authorized for grant to non-employee directors. The purpose of the 2017 Director LTIP is to align the economic interests of the directors with the interests of stockholders by including equity as a component of pay and to attract, motivate and retain experienced and knowledgeable directors. Each director receives an annual grant of restricted stock having a grant-date fair value equal to the cash compensation earned by an outside director during our fiscal year ended immediately before the respective annual grant-date. Directors may elect to receive their cash compensation in restricted stock. These restricted shares are prohibited from being sold, transferred, assigned, pledged or otherwise encumbered or disposed of. The shares vest half on the one-year anniversary and half on the second-year anniversary from the date of the grant. Stock Option Activity During the years ended March 31, 2021, 2020, and 2019, we did no t grant any stock options, nor did we have any outstanding stock options. Restricted Stock Activity During the year ended March 31, 2021, we granted 10,337 restricted shares under the 2017 Director LTIP and 89,873 restricted shares under the 2012 Employee LTIP. Cumulatively, as of March 31, 2021, we granted a total of 33,580 restricted shares under the 2017 Director LTIP and 994,428 restricted shares under the 2012 Employee LTIP A summary of the non-vested restricted shares for year ended March 31, 2021, as follows: Number of Shares Weighted Average Grant-date Fair Value Nonvested April 1, 2020 193,580 $ 73.74 Granted 100,210 $ 71.89 Vested ( 110,412 ) $ 70.03 Forfeited - $ - Nonvested March 31, 2021 183,378 $ 74.97 In each of the years ended March 31, 2021, 2020 and 2019, we used the closing stock price on the grant date or, if the grant date falls on a date the stock was not traded, the previous day’s closing stock price for the fair value of the award. F- 27 Table of Contents The weighted-average grant date fair value of restricted shares granted during the years ended March 31, 2021, 2020, and 2019 was $ 71.89 , $ 72.93 , and $ 94.22 , respectively. The aggregated fair value of restricted shares that vested during the years ended March 31, 2021, 2020, and 2019 was $ 7.7 million, $ 7.6 million, and $ 6.6 million, respectively. Upon each vesting period of the restricted stock awards to employees, participants are subject to minimum tax withholding obligations. The 2012 Employee LTIP and the 2017 Director LTIP allows us to withhold a sufficient number of shares due to the participant to satisfy their minimum tax withholding obligations. For the year ended March 31, 2021, we withheld 37,640 shares of common stock, at a value of $ 2.7 million, which was included in treasury stock. For the year ended March 31, 2020, we withheld 41,817 shares of common stock, at a value of $ 3.0 million, which was included in treasury stock. Compensation Expense We recognize compensation cost for awards of restricted stock with graded vesting on a straight-line basis over the requisite service period. We account for forfeitures when they occur. There are no additional conditions for vesting other than service conditions. During the years ended March 31, 2021, 2020 and 2019, we recognized $ 7.2 million, $ 8.0 million and $ 7.2 million, respectively, of total share-based compensation expense. We recognized tax benefits related to share-based compensation of $ 2.2 million, $ 2.2 million, and $ 2.0 million for the years ended March 31, 2021, 2020, and 2019, respectively, which were included as a reduction to our provision for income taxes. As of March 31, 2021, the total unrecognized compensation expense related to non-vested restricted stock was $ 8.2 million, which is expected to be recognized over a weighted-average period of 27 months. We also provide our employees with a contributory 401(k) profit sharing plan. We may make contributions, which are fully vested when they are made, to the plan. These contributions are not required. The decision whether to make contributions is entirely within our discretion. For the years ended March 31, 2021, 2020 and 2019, our employer contributions for the plan were approximately $ 3.0 million, $ 2.8 million, and $ 2.4 million, respectively. 14. INCOME TAXES We account for our tax positions in accordance with Codification Topic 740. 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 March 31, 2021, and March 31, 2020. We had no additions or reductions to our gross uncertain income tax positions during the year ended March 31, 2021. We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. F- 28 Table of Contents We file income tax returns, including returns for our subsidiaries, with federal, state, local, and foreign jurisdictions. Tax years 2018, 2019 and 2020 are subjected to examination by federal and state taxing authorities. Various state and local income tax returns are also under examination by taxing authorities. We do not believe that the outcome of any examination will have a material impact on our financial statements. A reconciliation of income taxes computed at the statutory federal income tax rate of 21.0% to the provision for income taxes included in the consolidated statements of operations is as follows (in thousands, except percentages): Year Ended March 31, 2021 2020 2019 Statutory federal income tax rate 21.0 % 21.0 % 21.0 % Income tax expense computed at the U.S. statutory federal rate $ 22,450 $ 20,182 $ 18,139 Effect of federal reduction of statutory rate - - - State income tax expense—net of federal benefit 6,941 5,659 4,795 Non-deductible executive compensation 2,052 613 630 Other 1,066 423 ( 526 ) Provision for income taxes $ 32,509 $ 26,877 $ 23,038 Effective income tax rate 30.4 % 28.0 % 26.7 % The components of the provision for income taxes are as follows (in thousands): Year Ended March 31, 2021 2020 2019 Current: Federal $ 26,054 $ 19,367 $ 12,709 State 9,882 9,520 6,591 Foreign 770 200 454 Total current expense 36,706 29,087 19,754 Deferred: Federal ( 3,067 ) ( 492 ) 3,826 State ( 1,096 ) ( 1,799 ) ( 249 ) Foreign ( 34 ) 81 ( 293 ) Total deferred expense (benefit) ( 4,197 ) ( 2,210 ) 3,284 Provision for income taxes $ 32,509 $ 26,877 $ 23,038 F- 29 Table of Contents Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities were as follows (in thousands): March 31, 2021 2020 Deferred tax assets: Accrued vacation $ 2,537 $ 1,966 Deferred revenue 4,227 3,175 Allowance for credit losses 1,048 792 Restricted stock 772 1,575 Other deferred tax assets 1,552 608 Accrued bonus 2,277 2,426 Lease liabilities 2,476 2,550 Other credits and carryforwards - 1,385 Gross deferred tax assets 14,889 14,477 Less: valuation allowance - ( 1,385 ) Net deferred tax assets 14,889 13,092 Deferred tax liabilities: Property and equipment ( 2,391 ) ( 2,102 ) Operating leases ( 6,948 ) ( 10,098 ) Prepaid expenses ( 912 ) ( 817 ) Right-of-use assets ( 2,419 ) ( 2,535 ) Tax deductible goodwill ( 751 ) ( 270 ) Total deferred tax liabilities ( 13,421 ) ( 15,822 ) Net deferred tax asset (liability) $ 1,468 $ ( 2,730 ) On March 31, 2016, we established a deferred tax asset for state capital loss carryforwards which expired on March 31, 2021. We believed that it was more likely than not that the benefit from this deferred tax asset would not be realized and a full valuation allowance was provided. As the carryforward period for these state capital losses expired as of March 31, 2021, we reversed the deferred tax asset and valuation allowance. 15. FAIR VALUE MEASUREMENTS We account for the fair values of our assets and liabilities utilizing a three -tier value hierarchy, which prioritizes the inputs used in measuring fair value. The following table provides the fair value of our assets and liabilities measured at fair value as categorized within the fair value hierarchy as of March 31, 2021, and March 31, 2020 (in thousand s): 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) March 31, 2021 Assets: Money market funds $ 45,134 $ 45,134 $ - $ - March 31, 2020 Assets: Money market funds $ 128 $ 128 $ - $ - Liabilities: Contingent consideration $ 220 $ - $ - $ 220 For the year ended March 31, 2021, we did no t 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 a contingent consideration arrangement. F- 30 Table of Contents During the year ended March 31, 2020 we recorded adjustments of $ 1.4 million to reflect increases in the fair value of our existing contingent consideration liabilities and paid $ 10.1 million to satisfy the obligations of our contingent consideration arrangements. 16. BUSINESS COMBINATIONS Systems Management Planning (SMP) On December 31, 2020, our subsidiary, e Plus Technology, inc., acquired certain assets and liabilities of SMP, an established provider of technology solutions and services in upstate New York and the Northeast. The acquisition enhances e Plus’ footprint across the region, broadens our technology solution offerings especially in the areas of collaboration and supporting virtual employees, and adds to e Plus’ set of commercial, enterprise and state, local, and education customers . Our sum of consideration transferred was $ 27.0 million consisting of $ 29.0 million paid in cash at closing less $ 2.0 million that was paid back to us in our quarter ended March 31, 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 Accounts receivable $ 14,526 Other assets 3,344 Identified intangible assets 14,280 Accounts payable and other current liabilities ( 11,424 ) Performance obligations ( 2,020 ) Total identifiable net assets 18,706 Goodwill 8,328 Total purchase consideration $ 27,034 The identified intangible assets of $ 14.3 million consists of customer relationships with an estimated useful life of seven years . The fair value of acquired receivables equals the gross contractual amounts receivable. We expect to collect all acquired receivables. We recognized goodwill related to this transaction of $ 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, 2020, is not material. ABS Technology On August 23, 2019, our subsidiary, ePlus Technology, inc., acquired certain assets and liabilities of Innovative Systems & Solutions, Inc. (“ABS Technology”), a Virginia Beach, Virginia- headquartered solutions provider with deep expertise in managed services, networking, collaboration, and security solutions. ABS Technology enhances ePlus’ existing solutions portfolio and market position in Richmond and southern Virginia. Our sum of consideration transferred was $ 15.3 million consisting of $ 13.8 million paid in cash at closing plus $ 1.7 million that was paid primarily during the year 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 to a working capital adjustment. F- 31 Table of Contents Our allocation of the purchase consideration to the assets acquired and liabilities assumed is presented below (in thousand s): Acquisition Date Amount Accounts receivable $ 9,208 Other assets 743 Identified intangible assets 5,720 Accounts payable and other current liabilities ( 6,715 ) Performance obligation ( 1,140 ) Total identifiable net assets 7,816 Goodwill 7,461 Total purchase consideration $ 15,277 The identified intangible assets of $ 5.7 million consist of customer relationships with an estimated useful life of seven years . The fair value of acquired receivables equals the gross contractual amounts receivable. We expect to collect all acquired receivables. We recognized goodwill related to this transaction of $ 7.5 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, is not material. SLAIT Consulting, LLC (SLAIT) On January 18, 2019, our subsidiary, e Plus Technology, inc., acquired 100 % of the stock of SLAIT, Consulting, LLC (“SLAIT”), an IT consulting and solutions provider with a focus on security advisory and managed services, managed help desk, specialized IT, staffing, and data center solutions. SLAIT is headquartered in Virginia Beach, Virginia and has locations in Richmond, Virginia, and Charlotte, North Carolina. SLAIT provides consultative services in governance, risk management and compliance; bespoke help desk and managed services solutions, and has relationships with fast-growing emerging vendors and related sales and engineering capabilities. Our sum of consideration transferred is $ 50.0 million consisting of $ 50.7 million paid in cash at closing, less $ 1.0 million cash acquired, and plus a working capital adjustment of $ 0.3 million that we paid in May 2019. Our allocation of the final purchase consideration to the assets acquired and liabilities assumed is presented below (in thousands): Acquisition Date Amount Accounts receivable $ 10,209 Other assets 1,050 Identified intangible assets 18,190 Accounts payable and other current liabilities ( 8,611 ) Performance obligation ( 5,110 ) Total identifiable net assets 15,728 Goodwill 34,301 Total purchase consideration $ 50,029 The identified intangible assets of $ 18.2 million consist of customer relationships with an estimated useful life of 10 years. The fair value of acquired receivables equals the gross contractual amounts receivable. We collected all acquired receivables. We recognized goodwill related to this transaction of $ 34.3 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 reporting period ending March 31, 2019, as though the acquisition date had been April 1, 2018, is not material. F- 32 Table of Contents 17. SEGMENT REPORTING Our segment information is presented in accordance with a “management approach,” which designates the internal reporting used by the chief operating decision-maker (“CODM”) for deciding how to allocate resources and for assessing performance. Our CODM is our Chief Executive Officer and President. Our CODM conducts our operations through two operating segments, our technology segment and our financing segment. Our technology segment includes sales of information technology products, third-party software, third-party maintenance, advanced professional and managed services and our proprietary software to commercial, state and local governments, and government contractors. Our financing segment consists of the financing of IT equipment, software and related services to commercial, state and local governments, and government contractors. Our CODM uses several measures to allocate resources and assess performance. Our reported measure is earnings before taxes. Our reportable segment information was as follows (in thousands): Year Ended March 31, 2021 2020 2019 Technology Financing Total Technology Financing Total Technology Financing Total Sales Product $ 1,305,789 $ 60,369 $ 1,366,158 $ 1,337,022 $ 58,266 $ 1,395,288 $ 1,180,042 $ 43,153 $ 1,223,195 Service 202,165 - 202,165 193,116 - 193,116 149,478 - 149,478 Net sales 1,507,954 60,369 1,568,323 1,530,138 58,266 1,588,404 1,329,520 43,153 1,372,673 Cost of Sales Product 1,036,627 13,050 1,049,677 1,069,110 7,663 1,076,773 945,037 7,427 952,464 Service 125,092 - 125,092 120,440 - 120,440 89,821 - 89,821 Total cost of sales 1,161,719 13,050 1,174,769 1,189,550 7,663 1,197,213 1,034,858 7,427 1,042,285 Gross Profit 346,235 47,319 393,554 340,588 50,603 391,191 294,662 35,726 330,388 Selling, general, and administrative 256,210 15,053 271,263 264,123 15,059 279,182 226,112 10,970 237,082 Depreciation and amortization 13,839 112 13,951 14,016 140 14,156 11,812 12 11,824 Interest and financing costs 521 1,484 2,005 294 2,280 2,574 - 1,948 1,948 Operating expenses 270,570 16,649 287,219 278,433 17,479 295,912 237,924 12,930 250,854 Operating income 75,665 30,670 106,335 62,155 33,124 95,279 56,738 22,796 79,534 Other income 571 680 6,696 Earnings before tax $ 106,906 $ 95,959 $ 86,230 Net Sales Contracts with customers $ 1,484,104 $ 12,369 $ 1,496,473 $ 1,514,507 $ 4,589 $ 1,519,096 $ 1,308,405 $ 3,577 $ 1,311,982 Financing and other 23,850 48,000 71,850 15,631 53,677 69,308 21,115 39,576 60,691 Net Sales $ 1,507,954 $ 60,369 $ 1,568,323 $ 1,530,138 $ 58,266 $ 1,588,404 $ 1,329,520 $ 43,153 $ 1,372,673 Selected Financial Data - Statement of Cash Flow Depreciation and amortization $ 14,568 $ 5,423 $ 19,991 $ 14,516 $ 4,640 $ 19,156 $ 12,661 $ 5,978 $ 18,639 Purchases of property, equipment and operating lease equipment $ 4,752 $ 6,761 $ 11,513 $ 4,842 $ 2,167 $ 7,009 $ 6,042 $ 5,587 $ 11,629 Selected Financial Data - Balance Sheet Total assets $ 828,576 $ 248,199 $ 1,076,775 $ 709,854 $ 199,259 $ 909,113 $ 607,998 $ 178,200 $ 786,198 F- 33 Table of Contents 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 below (in thousands): Year Ended March 31, 2021 2020 2019 Customer end market: Technology $ 251,683 $ 324,239 $ 293,362 Telecom, Media & Entertainment 371,913 289,958 175,260 Financial Services 198,761 191,679 202,074 State and local government and educational institutions 245,919 243,092 223,330 Healthcare 200,067 233,894 193,754 All others 239,611 247,276 241,740 Net sales 1,507,954 1,530,138 1,329,520 Less: Revenue from financing and other ( 23,850 ) ( 15,631 ) ( 21,115 ) Revenue from contracts with customers $ 1,484,104 $ 1,514,507 $ 1,308,405 Year Ended March 31, 2021 2020 2019 Vendor Cisco Systems $ 537,041 $ 607,719 $ 556,182 NetApp 58,020 59,812 48,858 HP Inc. & HPE 59,838 71,802 74,348 Dell / EMC 107,336 84,939 61,284 Arista Networks 51,789 75,281 57,850 Juniper Networks 91,946 68,339 48,943 All others 601,984 562,246 482,055 Net sales 1,507,954 1,530,138 1,329,520 Less: Revenue from financing and other ( 23,850 ) ( 15,631 ) ( 21,115 ) Revenue from contracts with customers $ 1,484,104 $ 1,514,507 $ 1,308,405 Financing Segment Disaggregation of Revenue We analyze our revenues within our financing segment based on the nature of the arrangement, and our revenues from contracts with customers consist of proceeds from the sale of off-lease equipment. Geographic information The geographic information for the years ended March 31, 2021, 2020 and 2019 was as follows (in thousands): Year Ended March 31, 2021 2020 2019 Net sales: US $ 1,476,466 $ 1,508,329 $ 1,284,482 Non US 91,857 80,075 88,191 Total $ 1,568,323 $ 1,588,404 $ 1,372,673 March 31, 2021 2020 Long-lived tangible assets: US $ 33,504 $ 38,297 Non US 931 1,233 Total $ 34,435 $ 39,530 Our long-lived tangible assets include property and equipment-net, operating leases-net, and equipment that has been returned to us at the termination of the lease. Sales to Verizon Communications Inc. represented 19 % and 15 % of net sales for the year ended March 31, 2021 and March 31, 2020, all of which related to our technology segment. Sales to no one customer exceeded 10% of net sales for the year ended March 31, 2019 . F- 34 Table of Contents e Plus inc. AND SUBSIDIARIES Schedule II - Valuation and Qualifying Accounts (Dollars in thousands) Balance at Beginning of Period Charged to Costs and Expenses Deductions/ Write-Offs Balance at End of Period Allowance for sales returns: (1) Year ended March 31, 2019 899 1,305 ( 1,352 ) 852 Year ended March 31, 2020 852 2,678 ( 2,492 ) 1,038 Year ended March 31, 2021 1,038 2,909 ( 2,758 ) 1,189 Allowance for credit losses: Year ended March 31, 2019 2,664 335 ( 385 ) 2,614 Year ended March 31, 2020 2,614 1,004 ( 429 ) 3,189 Year ended March 31, 2021 3,189 1,436 ( 178 ) 4,447 Valuation for deferred taxes: Year ended March 31, 2019 1,335 ( 270 ) - 1,065 Year ended March 31, 2020 1,065 320 - 1,385 Year ended March 31, 2021 1,385 - ( 1,385 ) - (1) These amounts represent the gross profit effect of sales returns during the respective years. Expected merchandise returns after year-end for sales made before year-end were $ 7.4 million, $ 6.5 million, and $ 5.3 million as of March 31, 2021, 2020, and 2019, respectively. F-35