I thought you only had to pay for the setup fee and $4.95 pay per account. They e-mailed me and said I would have to purchase 100 licenses. Is it true or a mistake?

It's true, however HSphere resellers can sell 50-user licenses as their minimum. If 100 is too much for you, try going through a reseller.

Know any good resellers? I remember reading that sometimes resellers actually resell it cheap than the OEM. I am only interested in the licenses. No webhosting required.

Plenty to choose from: http://www.psoft.net/resellers.php

Have you had experience with any of them?

Hehe... we are on that list ;)