SECURITIES AND EXCHANGE COMMISSION
                                              Washington, D.C. 20549
                                                     Form 10-Q


(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2000.

                                                        OR

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

For the transition period from _______________ to ___________

                                          Commission File Number 0-17156

                               MERISEL, INC.
           (Exact name of registrant as specified in its charter)

Delaware                                             95-4172359
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

200 Continental Boulevard
El Segundo, CA                                         90245-0984
(Address of principal executive offices)               (Zip code)


Registrant's telephone number, including area code (310) 615-3080

---------------------------------------------------------------
Former name, former address, and former fiscal year, if changed since last year

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

                                                  Yes X No _____

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date:
                          Number of Shares Outstanding
               Class                                 August 17, 2000
Common Stock, $.01 par value                         80,309,046 Shares


<PAGE>



                                    MERISEL, INC.

                                         INDEX


                                                                Page Reference
PART I   FINANCIAL INFORMATION

         Consolidated Balance Sheets as of                             1-2
         June 30, 2000 and December 31, 1999

         Consolidated Statements of Operations for the
         Three Months and Six Months Ended June 30, 2000 and 1999       3

         Consolidated Statements of Cash Flows for the
         Six Months Ended June 30, 2000 and 1999                        4

         Notes to Consolidated Financial Statements                    5-9

         Management's Discussion and Analysis of                      10-19
         Financial Condition and Results of Operations

         Quantitative and Qualitative Market Risk Disclosure            19

PART II  OTHER INFORMATION                                              20

         SIGNATURES                                                     22



<PAGE>


                SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION


         Certain  statements  contained in this  Quarterly  Report on Form 10-Q,
including  without  limitation   statements  containing  the  words  "believes,"
"anticipates,"    "expects"   and   words   of   similar   import,    constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended.  Such  forward-looking  statements  involve known and unknown risks,
uncertainties and other factors which may cause the actual results,  performance
or achievements of Merisel,  Inc. (the "Company"),  or industry  results,  to be
materially  different  from any  future  results,  performance  or  achievements
expressed or implied by such forward-looking statements.  These factors include,
but are not limited to, the effect of (i) economic  conditions  generally,  (ii)
industry  growth,  (iii)  competition,  (iv) liability and other claims asserted
against the Company,  (v) the loss of  significant  customers  or vendors,  (vi)
operating margins, (vii) business disruptions, (viii) the ability to attract and
retain qualified personnel,  and (ix) other risks detailed in this report. These
factors are discussed elsewhere in this report,  including,  without limitation,
under the captions "Legal Proceedings" and "Management's Discussion and Analysis
of Financial  Condition and Results of Operations."  Given these  uncertainties,
readers  are  cautioned  not to place  undue  reliance  on such  forward-looking
statements.  The Company  disclaims any obligation to update any such factors or
to publicly  announce the result of any revisions to any of the  forward-looking
statements  contained  or  incorporated  by reference  herein to reflect  future
events or developments.


<PAGE>
<TABLE>
<CAPTION>




                                           PART 1. FINANCIAL INFORMATION


Item 1.    Financial Statements

                                          MERISEL, INC. AND SUBSIDIARIES
                                            CONSOLIDATED BALANCE SHEETS
                                                  (In thousands)
                                                    (Unaudited)

                                                      ASSETS

                                                                                June 30,               December 31,
                                                                                  2000                     1999
                                                                           -------------------      -------------------
<S>                                                                        <C>                      <C>
CURRENT ASSETS:
Cash and cash equivalents                                                          $   36,448               $   57,557
Accounts receivable (net of allowances
of $14,971 and $15,186 for 2000 and 1999, respectively)                               214,516                  182,352
Inventories                                                                           193,764                  445,663
Prepaid expenses and other current assets                                               7,740                   10,488
Deferred income taxes                                                                     892                      914
                                                                           -------------------      -------------------
  Total current assets                                                                453,360                  696,974

PROPERTY AND EQUIPMENT, NET                                                            75,501                   84,609

COST IN EXCESS OF NET ASSETS
  ACQUIRED, NET                                                                         3,784                   23,755

OTHER ASSETS                                                                              362                      457
                                                                           -------------------      -------------------

TOTAL ASSETS                                                                       $  533,007               $  805,795
                                                                           ===================      ===================
</TABLE>













         See  accompanying  notes  to  consolidated  financial statements.


<PAGE>
<TABLE>
<CAPTION>


                                          MERISEL, INC. AND SUBSIDIARIES
                                            CONSOLIDATED BALANCE SHEETS
                                         (In thousands, except share data)
                                                    (Unaudited)

                                       LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                  June 30,           December 31,
                                                                                    2000                 1999
                                                                             -------------------    --------------------

<S>                                                                          <C>                    <C>
CURRENT LIABILITIES:
Accounts payable                                                                     $ 305,153              $  540,843
Accrued liabilities                                                                     55,104                  36,609
Long-term debt and capitalized lease obligations - current                               5,904                   2,906
                                                                             -------------------    --------------------
  Total current liabilities                                                            366,161                 580,358

Long-term debt                                                                          87,500                 128,900
Capitalized lease obligations                                                              223                   1,364

STOCKHOLDERS' EQUITY
Convertible preferred stock, $.01 par value, authorized 1,000,000
shares; 150,000 issued and outstanding                                                       2
Common stock, $.01 par value, authorized
  150,000,000 shares; 80,309,046 and 80,278,808
  shares outstanding for 2000 and 1999, respectively                                       803                     803
Additional paid-in capital                                                             297,626                 282,492
Accumulated deficit                                                                   (210,008)               (179,663)
Accumulated other comprehensive loss                                                    (9,300)                 (8,459)
                                                                             -------------------    --------------------
Total stockholders' equity                                                              79,123                  95,173
                                                                             -------------------    --------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $  533,007              $  805,795
                                                                             ===================    ====================
</TABLE>
















      See  accompanying  notes  to  consolidated  financial statements.


<PAGE>
<TABLE>
<CAPTION>


                                          MERISEL, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                       (In thousands, except per share data)
                                                    (Unaudited)

                                                           Three Months Ended                         Six Months Ended
                                                                June 30,                                  June 30,
                                                        2000              1999                    2000               1999
                                                   ---------------     ----------------    ------------------    -----------------

<S>                                                 <C>                <C>                   <C>                  <C>
NET SALES                                           $924,844           $1,266,164            $2,091,608           $2,520,881

COST OF SALES                                        880,771            1,206,202             1,992,972            2,396,271
                                                   ---------------     ----------------    ------------------    -----------------

GROSS PROFIT                                          44,073               59,962                98,636              124,610

SELLING, GENERAL &
  ADMINISTRATIVE EXPENSES                             52,116               60,261               109,361              114,316

IMPAIRMENT LOSSES                                     19,487                                     19,487

LITIGATION-RELATED
  (RECOVERY) CHARGE                                                        (9,000)                                    12,000
                                                   ---------------     ----------------    ------------------    -----------------

OPERATING (LOSS) INCOME                              (27,530)               8,701               (30,212)              (1,706)

INTEREST EXPENSE                                       4,029                4,539                 8,574                7,944

OTHER EXPENSE, NET                                     6,834                6,766                12,902               13,392
                                                   ---------------     ----------------    ------------------    -----------------

LOSS BEFORE INCOME TAXES AND
  EXTRAORDINARY ITEM                                 (38,393)              (2,604)              (51,688)             (23,042)

INCOME TAX PROVISION                                     161                  380                   313                  451
                                                   ---------------     ----------------    ------------------    -----------------

LOSS BEFORE EXTRAORDINARY ITEM                       (38,554)              (2,984)              (52,001)             (23,493)

EXTRAORDINARY GAIN ON DEBT
  EXTINGUISHMENT, NET                                 21,656                                     21,656
                                                   ---------------     ----------------    ------------------    -----------------

NET LOSS                                            $(16,898)             $(2,984)             $(30,345)            $(23,493)
                                                   ===============     ================    ==================    =================

NET LOSS PER SHARE
  (BASIC AND DILUTED):
NET LOSS BEFORE
  EXTRAORDINARY ITEM                                  $(0.48)              $(0.04)               $(0.65)              $(0.29)
EXTRAORDINARY GAIN                                       .27                                        .27
                                                   ===============     ================    ==================    =================
NET LOSS                                              $(0.21)              $(0.04)               $(0.38)              $(0.29)
                                                   ===============     ================    ==================    =================

WEIGHTED AVERAGE NUMBER OF SHARES:
  BASIC AND DILUTED                                   80,309               80,279                80,299               80,278
                                                   ===============     ================    ==================    =================

</TABLE>







        See  accompanying  notes  to  consolidated  financial statements.


<PAGE>
<TABLE>
<CAPTION>


                                          MERISEL, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (In thousands)
                                                    (Unaudited)

                                                                                    Six Months Ended June 30,
                                                                                  2000                     1999
                                                                            ------------------      -------------------
<S>                                                                        <C>                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                          $  (30,345)             $   (23,493)
Adjustments to reconcile net loss to net
  cash used by operating activities:
  Depreciation and amortization                                                       11,009                    8,800
  Provision for doubtful accounts                                                      7,666                    7,547
  Impairment losses                                                                   19,487
  Gain on sale of property and equipment                                              (1,538)
  Extraordinary gain on extinguishment of debt                                       (21,656)
Changes in operating assets and liabilities:
  Accounts receivable                                                                (40,923)                 (31,087)
  Inventories                                                                        249,851                   94,150
  Prepaid expenses and other current assets                                            2,031                     (845)
  Accounts payable                                                                  (232,293)                 (53,248)
  Accrued liabilities                                                                 18,571                    1,415
                                                                            ------------------      -------------------
Net cash used for operating activities                                               (18,140)                   3,239
                                                                            ------------------      -------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                                                    (1,826)                 (18,708)
Proceeds from sale of property and equipment, net disposal cost                        1,765
                                                                            ------------------      -------------------
Net cash used for investing activities                                                   (61)                 (18,708)
                                                                            ------------------      -------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving line of credit                                             40,000                  172,150
Repayments under revolving line of credit                                            (40,000)                (172,150)
Proceeds from issuance of convertible preferred stock                                 15,000
Purchase of bonds                                                                    (15,047)
Repayments under other financing arrangements                                         (2,043)                  (1,159)
Proceeds from issuance of Common Stock                                                                             12
                                                                            ------------------      -------------------
Net cash used for financing activities                                                (2,090)                  (1,147)

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                 (818)                   1,354
                                                                            ------------------      -------------------

NET DECREASE IN CASH AND
  CASH EQUIVALENTS                                                                   (21,109)                 (15,262)

CASH AND CASH EQUIVALENTS, BEGINNING OF
  PERIOD                                                                              57,557                   36,341
                                                                            ------------------      -------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                    $         36,448               $   21,079
                                                                            ==================      ===================

Supplemental disclosure of cash flow information:
                                                                                          (in thousands)
Cash paid (received) during the period for:                                       2000                    1999
                                                                            ------------------     --------------------
  Interest                                                                  $         10,185               $    9,796
  Income taxes                                                                          (532)                     189

Non cash activities:
   Capital lease obligations entered into                                                120                      --

     See  accompanying  notes  to  consolidated  financial statements.

</TABLE>

<PAGE>


MERISEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


1. General

Merisel,  Inc., a Delaware  corporation and a holding company (together with its
subsidiaries,  "Merisel" or the "Company"), is a leading distributor of computer
hardware and software  products.  From March 1997 through 1999, through its main
operating  subsidiary  Merisel  Americas,  Inc.  ("Merisel  Americas")  and  its
subsidiaries,  the Company operated three distinct business units: United States
distribution,  Canadian  distribution  and the Merisel Open  Computing  Alliance
(MOCA(TM)). In December 1999, Merisel announced plans to restructure and combine
its U.S. and Canadian  distribution  businesses and operate them as one business
unit,  North  American  distribution.  At the end of the quarter  ended June 30,
2000, the Company decided to return to the use of separate product and inventory
management  and sales  management  teams for its U.S. and Canadian  distribution
businesses. Merisel's North American distribution business offers a full line of
products  and  services  to a  broad  range  of  reseller  customers,  including
value-added  resellers ("VARs"),  commercial  resellers,  internet resellers and
retailers. MOCA provides enterprise-class solutions for Sun Microsystems servers
and the Solaris  operating system to Sun  Microsystems-authorized  resellers and
consultants.  Effective  April 3, 2000,  the operations of MOCA are conducted by
Merisel Open Computing Alliance, Inc. as a separate subsidiary.

The  information  for the three and six months  ended June 30, 2000 and 1999 has
not been  audited by  independent  accountants,  but  includes  all  adjustments
(consisting  of  normal  recurring  accruals)  which  are,  in  the  opinion  of
management, necessary for a fair presentation of the results for such periods.

Certain information and footnote  disclosures  normally included in consolidated
financial  statements  prepared in accordance with generally accepted accounting
principles  in the United  States of America have been  omitted  pursuant to the
requirements  of the Securities and Exchange  Commission  ("SEC"),  although the
Company believes that the disclosures included in these financial statements are
adequate to make the information  not misleading.  Certain amounts for 1999 have
been  reclassified  to  conform  with the 2000  presentation.  The  consolidated
financial  statements as presented herein should be read in conjunction with the
consolidated financial statements and notes thereto included in Merisel's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999.

2. Liquidity

At June 30, 2000, the Company had cash and cash  equivalents of $36,448,000.  In
the opinion of management,  the Company will not have  sufficient  liquidity for
its U.S. distribution business unless it receives improved vendor credit support
for its U.S.  distribution  business  and is able to maintain in place its asset
securitization  facility for such  business.  If the Company is unable to either
substantially restructure or sell its U.S. distribution business,
<PAGE>


MERISEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(UNAUDITED)


and  obtain  the  required  financing  for  such  business,  in the  opinion  of
management,   the  Company  will  have   insufficient   liquidity  to  meet  its
requirements for the next 12 months.

3. New Accounting Pronouncements

In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards ("SFAS") No. 133,  "Accounting for
Derivative Instruments and Hedging Activities". As amended by SFAS No. 137, SFAS
No. 133 is effective for financial  statements issued for all fiscal quarters of
all fiscal years  beginning after June 15, 2000. The Company will adopt SFAS No.
133 as required in January  2001.  SFAS No. 133 requires all  derivatives  to be
recorded  on the balance  sheet at fair value.  The Company is in the process of
evaluating  the effect that this new standard,  as amended by SFAS No. 138, will
have on its financial statements.

In December 1999, the SEC released Staff  Accounting  Bulletin  ("SAB") No. 101,
which  provides  the staff's  views in applying  generally  accepted  accounting
principles  to selected  revenue  recognition  issues.  In March  2000,  the SEC
released SAB No. 101A, which delayed for one quarter the implementation  date of
SAB No. 101 for  registrants  with fiscal years beginning  between  December 16,
1999 and March 15, 2000.  In June 2000,  the SEC  released  SAB No. 101B,  which
delayed  the  implementation  date of SAB No. 101 until no later than the fourth
fiscal quarter of fiscal years beginning after December 15, 1999. The Company is
evaluating  what  impact,  if any,  SAB No.  101  may  have on its  consolidated
financial statements.

4. Fiscal Year

The  Company's  fiscal year is the 52- or 53-week  period ending on the Saturday
nearest to December  31. The  Company's  second  quarter is the  13-week  period
ending on the Saturday nearest to June 30. For simplicity of  presentation,  the
Company has described the interim  periods and year-end period as of June 30 and
December 31, respectively.


<PAGE>


MERISEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(UNAUDITED)


5. Extraordinary Gain on Debt Extinguishment

In June 2000, the Company purchased  $37,500,000  aggregate  principal amount of
its outstanding 12-1/2% Senior Notes due 2004 (the "12.5% Notes"). The aggregate
cost to  purchase  the notes was  $15,000,000  and,  as a  result,  the  Company
recognized an  extraordinary  gain, net of unamortized  debt issuance  costs, of
approximately $21,656,000, for the six months ended June 30, 2000.

6. Impairment Losses

As the result of its  continuing  losses and  conditions in its business and the
industry  in which it  operates  at June 30,  2000,  the  Company  reviewed  the
recoverability  of its  long-lived  assets,  including  identifiable  intangible
assets, to determine if there has been any permanent  impairment.  The review of
the  Company's  intangible  assets  indicated  that the  excess of cost over net
assets  acquired  related  to  the  U.S.  distribution  business  was  impaired.
Accordingly,  the Company has recorded an impairment loss totaling  $19,487,000,
representing  the unamortized  goodwill  attributable  to the U.S.  distribution
business.

7. Comprehensive Income

The Company  calculates  comprehensive  income in accordance  with SFAS No. 130,
"Reporting  Comprehensive  Income".  SFAS  No.  130  establishes  standards  for
reporting and displaying  comprehensive  income and its components in a full set
of general purpose  financial  statements.  Comprehensive  income is computed as
follows:

<TABLE>
<CAPTION>
                                                              (In thousands)                         (In thousands)
                                                            Three Months Ended                      Six Months Ended
                                                                 June 30,                               June 30,
                                                         2000                1999                2000              1999
                                                         ----                ----                ----              ----
<S>                                                     <C>                <C>                  <C>              <C>

Net loss                                               $(16,898)            $(2,984)            $(30,345)        $(23,493)
Other comprehensive income -
   Foreign currency translation adjustments                (726)                783                 (841)           1,531
                                                    ----------------    ----------------     -------------    ---------------
Comprehensive loss                                     $(17,624)            $(2,201)            $(31,186)        $(21,962)
                                                    ================    ================     =============    ===============
</TABLE>

8. Earnings Per Share

The  Company  calculates  earnings  per share in  accordance  with SFAS No. 128,
"Earnings Per Share."  Basic  earnings per share is computed on the basis of the
weighted average number of common shares outstanding. Diluted earnings per share
is  computed  on the basis of the  weighted  average  number  of  common  shares
outstanding  plus the effect of outstanding  potential  common shares  including
stock options, convertible preferred stock and restricted stock units using the

<PAGE>


MERISEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(UNAUDITED)


 "treasury  stock"  method.  There was no  difference  between basic and diluted
weighted  average  shares  outstanding  for each of the  June 30,  2000 and 1999
periods as the impact of stock options would be anti-dilutive in both periods.

9.       Segment Information

The  Company  reports  segment  information  in  accordance  with SFAS No.  131,
"Disclosure about Segments of an Enterprise and Related  Information".  SFAS No.
131  requires  disclosure  of  certain  information  about  operating  segments,
geographic areas in which the Company  operates,  major customers,  and products
and  services.  From March 1997 through late 1999,  the Company  operated  three
distinct business units: United States distribution,  Canadian  distribution and
MOCA. Prior to December 1999, each of these segments had a dedicated  management
team and was managed  separately  primarily  because of geography (United States
and Canada) and  differences  in product  categories,  marketing  strategies and
customer base (MOCA).  In December 1999, the Company  announced a  restructuring
plan that would  combine the U.S. and Canadian  distribution  segments  into one
operating segment,  the North American  distribution segment ("NAM"). At the end
of the quarter ended June 30, 2000, the Company  decided to return to the use of
separate  product and inventory  management and sales  management  teams for its
U.S.  and  Canadian  distribution  businesses.  Effective  April  3,  2000,  the
operations of MOCA are conducted by Merisel Open Computing  Alliance,  Inc. as a
separate subsidiary.

In accordance  with SFAS No. 131, the Company has prepared the following  tables
which present information related to each operating segment included in internal
management reports.
<TABLE>
<CAPTION>

                                                              Three Months Ended
                                                                June 30, 2000
                                                                (in thousands)
                         ---------------------------------------------------------------------------------------------

                             United
                             States         Canada           NAM             MOCA           Other          Total
                           ----------     ----------       --------       ----------      ----------     ---------
<S>                       <C>            <C>                <C>            <C>             <C>           <C>
Net sales to external
customers                    $469,808       $158,476       $628,284         $296,560                       $924,844
Segment operating
(loss) profit                $(32,238)       $(1,037)      $(33,275)          $8,588       $(2,843)        $(27,530)
Total segment assets         $283,319        $99,071       $401,877         $137,567       $13,050         $533,007
</TABLE>
<TABLE>
<CAPTION>

                                                              Three Months Ended
                                                                June 30, 1999
                                                                (in thousands)
                         ---------------------------------------------------------------------------------------------

                             United
                             States         Canada           NAM             MOCA           Other          Total
                           ----------     ----------       --------       ----------      ----------     ---------
<S>                       <C>            <C>                <C>            <C>             <C>           <C>

Net sales to external
customers                    $794,596       $204,595       $999,191         $266,973                     $1,266,164
Segment operating
(loss) profit                 $(7,802)        $1,695        $(6,107)          $5,808        $9,000           $8,701
</TABLE>



<PAGE>


MERISEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(UNAUDITED)

<TABLE>
<CAPTION>

                                                               Six Months Ended
                                                                June 30, 2000
                                                                (in thousands)
                         ---------------------------------------------------------------------------------------------

                             United
                             States         Canada           NAM             MOCA           Other          Total
                           ----------     ----------       --------       ----------      ----------     ---------
<S>                       <C>            <C>                <C>            <C>             <C>           <C>

Net sales to external
customers                  $1,140,700       $392,148     $1,532,848         $558,760                     $2,091,608
Segment operating
(loss) profit                $(43,818)       $(1,763)      $(45,581)         $15,369                       $(30,212)
</TABLE>
<TABLE>
<CAPTION>


                                                               Six Months Ended
                                                                June 30, 1999
                                                                (in thousands)
                         ---------------------------------------------------------------------------------------------

                             United
                             States         Canada           NAM             MOCA           Other          Total
                           ----------     ----------       --------       ----------      ----------     ---------
<S>                       <C>            <C>                <C>            <C>             <C>           <C>

Net sales to external
customers                  $1,583,941       $464,535     $2,048,476         $472,405                     $2,520,881
Segment operating
(loss) profit                 $(3,879)        $5,156         $1,277           $9,017      $(12,000)         $(1,706)
</TABLE>




<PAGE>


Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

 Merisel,  Inc., a Delaware corporation and a holding company (together with its
subsidiaries,  "Merisel" or the "Company"), is a leading distributor of computer
hardware and software  products.  From March 1997 through 1999, through its main
operating  subsidiary  Merisel  Americas,  Inc.  ("Merisel  Americas")  and  its
subsidiaries,  the Company operated three distinct business units: United States
distribution,  Canadian  distribution  and the Merisel Open  Computing  Alliance
(MOCA(TM)). In December 1999, Merisel announced plans to restructure and combine
its U.S. and Canadian  distribution  businesses and operate them as one business
unit, the North American distribution  business. At the end of the quarter ended
June 30, 2000, the Company decided to return to the use of separate  product and
inventory  management  and  sales  management  teams for its U.S.  and  Canadian
distribution businesses. Merisel's North American distribution business offers a
full line of products  and  services  to a broad  range of  reseller  customers,
including  value-added  resellers  ("VARs"),   commercial  resellers,   internet
resellers  and  retailers.  MOCA  provides  enterprise-class  solutions  for Sun
Microsystems    servers    and   the   Solaris    operating    system   to   Sun
Microsystems-authorized resellers and consultants.  Effective April 3, 2000, the
operations of MOCA are conducted by Merisel Open Computing  Alliance,  Inc. as a
separate subsidiary.

With respect to the U.S. distribution business, the Company has determined that,
primarily  as a result of a  significant  contraction  in sales  and  continuing
substantial  operating  losses,  it must operate the business at a significantly
lower cost structure than it has historically.  Accordingly, the Company expects
that it will either restructure and substantially decrease the size and scope of
the U.S.  distribution  business or complete a transaction to sell substantially
all of that business. See "Liquidity and Capital Resources." With respect to its
Canadian distribution business, the Company is undertaking a major restructuring
in order to reduce  operating  costs to bring them into alignment with projected
sales levels and return the business to  profitability  but is also  considering
other strategic options.  With respect to the MOCA business,  which has remained
profitable, the Company is also considering strategic options.

RESULTS OF OPERATIONS

Three  Months Ended June 30, 2000 as Compared to the Three Months Ended June 30,
1999.

The Company's net sales decreased 27.0% from $1,266,164,000 in the quarter ended
June 30, 1999 to  $924,844,000  in the quarter ended June 30, 2000. The decrease
resulted from a 37.1% decline in net sales for the North  American  distribution
business to $628,284,000 from $999,191,000, offset in part by an increase in net
sales for MOCA of 11.1% to $296,560,000 from  $266,973,000.  The decrease in net
sales for North American  distribution,  which the Company also  experienced for
the quarter  ended March 31, 2000,  has resulted  from a number of factors.  The
decrease primarily resulted initially from the focus on restructuring activities
during the first half of the first quarter and from decreased customer orders in
reaction to  Merisel's  price  increases  implemented  in the latter half of the
first quarter. The decline in sales initially

<PAGE>


contributed to excess  inventory  positions  resulting in a delay in some vendor
payments while inventory  levels were reduced to be in line with the lower sales
levels.  These  circumstances,  combined  with  vendor  concern  caused  by  the
bankruptcy  filings of three major  distributors  during the first half of 2000,
contributed  to a significant  loss of vendor credit  support during the quarter
ended June 30, 2000.  This loss of credit  support has  affected  the  Company's
ability to obtain sufficient inventory in the U.S. distribution business,  which
has  significantly  reduced product  availability and caused further declines in
sales for the U.S.  distribution  business.

MOCA sales  growth was  primarily  the result of strong  demand for  Sun-related
computer products and services, but was offset in part by the impact of the loss
of certain customers during the quarter.

Hardware and accessories  accounted for 82% of net sales and software  accounted
for 18% of net sales in the second  quarter of 2000,  as compared to 79% and 21%
for the same categories, respectively, in the second quarter of 1999.

Gross profit  decreased  26.5% or  $15,889,000  from  $59,962,000  in the second
quarter of 1999 to $44,073,000 in the 2000 period,  which primarily reflects the
decline in sales in the 2000 period.  Gross profit as a percentage of sales,  or
gross margin,  increased  modestly  from 4.74% in the second  quarter of 1999 to
4.77% in the  second  quarter  of 2000.  Gross  margins  in the  North  American
distribution  business  and MOCA were  4.03% and  6.32%,  respectively,  for the
second  quarter  of 2000,  compared  to 4.51% and 5.58%,  respectively,  for the
second quarter of 1999. The increase in gross margins for MOCA was primarily due
to one-time  adjustments  related to lower  customer  returns and lower costs of
certain goods sold during the 2000 period.

Over the past year,  the Company has taken various  actions to address the issue
of declining  margins in its North American  distribution  business.  During the
first quarter of 2000, the Company took more direct  measures to improve margins
by implementing sales price increases across a broad range of product offerings.
As a result of these price increases,  front-end  selling margins related to the
U.S. portion of the North American  distribution business for the second quarter
of 2000  increased 52 basis points over the first quarter of 2000, and 119 basis
points over the second quarter of 1999.  Notwithstanding these increases,  gross
margins for the North American  distribution  business for the second quarter of
2000  declined  from the prior year  period  because the  increase in  front-end
selling  margins was not sufficient to offset the continued  reduction in vendor
rebates and price protection losses. The lower sales levels contributed  further
to the decline in vendor rebates.

Selling, general and administrative expenses decreased by 13.5% from $60,261,000
in the second quarter of 1999 to $52,116,000 in the second quarter of 2000. This
decrease is  primarily  related to  reductions  in expenses  resulting  from the
combination of the Company's U.S. and Canadian distribution businesses announced
in December 1999 and a reduction in variable expenses as a result of the decline
in sales. Selling,  general and administrative expenses as a percentage of sales
increased from 4.76% for the second quarter of 1999 to 5.64% for the same period
in 2000.  The  increase in selling,  general  and  administrative  expenses as a
percentage of sales  reflects the 27.0% decline in sales for the second  quarter
of 2000 over the  second  quarter  of 1999,  as a  substantial  portion  of such
expenses are fixed and could not be reduced.



<PAGE>


As the  result of its  continuing  losses and  conditions  in the  business  and
industry in which it operates at June 30, 2000, the Company  determined that its
excess of costs over net assets acquired  related to its U.S.  distribution  was
impaired. In the second quarter of 2000, the Company recorded an impairment loss
totaling $19,487,000,  representing the unamortized goodwill attributable to the
U.S. distribution business.

In the second  quarter of 1999,  the  Company  recorded a  $9,000,000  insurance
recovery  representing  insurance  reimbursement of a portion of the $21,000,000
charge  recorded in the first quarter of 1999 relating to the  settlement of the
litigation  pending in Delaware  Chancery  Court between the Company and certain
holders and former  holders of the Company's  12-1/2% Senior Notes due 2004 (the
"12.5% Notes").

As a result of the above items,  operating  income decreased by $36,231,000 from
income of $8,701,000 for the second quarter of 1999 to a loss of $27,530,000 for
the second quarter of 2000.  Excluding the $9,000,000  insurance  recovery,  the
Company would have had an operating  loss of $299,000 for the second  quarter of
1999.  Excluding the $19,487,000  goodwill  impairment charge, the Company would
have had an operating loss of $8,043,000 for the second quarter of 2000.

In June 2000, the Company purchased  $37,500,000  aggregate  principal amount of
the 12.5%  Notes  for an  aggregate  cost of  $15,000,000,  which was  funded by
proceeds from the issuance of  convertible  preferred  stock.  As a result,  the
Company  recognized an extraordinary gain of approximately  $21,656,000,  net of
unamortized  debt issuance  costs,  in the three months ended June 30, 2000. See
"Debt Obligations, Financing Sources and Capital Expenditures."

Six Months  Ended June 30,  2000 as  Compared  to the Six Months  Ended June 30,
1999.

For the six  months  ended  June 30,  2000,  net sales  decreased  by 17.0% from
$2,520,881,000  for the six months ended June 30, 1999 to $2,091,608,000 for the
six months ended June 30, 2000.  The decrease  resulted from a 25.2% decrease in
net sales for the North American  distribution  business to $1,532,848,000  from
$2,048,476,000,  offset in part by an increase in net sales for MOCA of 18.3% to
$558,760,000 from $472,405,000.

Hardware and accessories  accounted for 82% of net sales and software  accounted
for 18% of net sales in the first six months of 2000, as compared to 79% and 21%
for the same categories, respectively, in the first six months of 1999.

Gross profit decreased 20.8% or $25,974,000 from  $124,610,000 for the first six
months of 1999 to $98,636,000 for the first six months of 2000.  Gross profit as
a percentage of sales, or gross margin, decreased from 4.94% for the 1999 period
to 4.72% for the 2000 period.  Gross margins in the North American  distribution
business and MOCA were 4.31% and 5.84%,  respectively,  for the first six months
of 2000, compared to 4.80% and 5.58%, respectively,  for the first six months of
1999. The decrease in margin in the U.S. is  attributable to  substantially  the
same factors  summarized in the  discussion of gross profit for the three months
ended June 30, 2000.



<PAGE>


Selling, general and administrative expenses decreased by 4.3% from $114,316,000
in the six months  ended June 30, 1999 to  $109,361,000  in the six months ended
June 30, 2000.  This  decrease is primarily  related to  reductions  in expenses
resulting from the  combination of the Company's U.S. and Canadian  distribution
businesses  announced in December 1999 and a reduction in variable expenses as a
result of the decline in sales.  The decrease was partially offset by $2,843,000
in litigation-related  reserves recorded in the first quarter of 2000 as well as
an increase in depreciation  and  amortization  expense of $3,463,000.  Selling,
general and  administrative  expenses as a percentage  of sales  increased  from
4.53% of sales in 1999 to 5.23% for the same period in 2000.

As the result of its  continuing  losses and  conditions in its business and the
industry in which it operates at June 30, 2000, the Company  determined that its
excess of costs over net assets acquired  related to its U.S.  distribution  was
impaired. In the second quarter of 2000, the Company recorded an impairment loss
totaling $19,487,000,  representing the unamortized goodwill attributable to the
U.S. distribution business.

Results for the six months ended June 30, 1999 also  reflected  the  $21,000,000
charge  recorded  by the  Company in the first  quarter of 1999  relating to the
settlement  of the  litigation  pending in Delaware  Chancery  Court between the
Company and certain  holders and former  holders of the 12.5%  Notes,  offset in
part by the $9,000,000  insurance recovery recorded by the Company in the second
quarter of 1999.

As a result of the above items,  operating loss  increased by  $28,506,000  from
$1,706,000 for the six-month  period ended June 30, 1999 to $30,212,000  for the
same  period  in 2000.  Excluding  the  litigation-related  charge  and  related
insurance  recovery,  the Company would have had operating income of $10,294,000
for the six-month period ended June 30, 1999. Excluding the $19,487,000 goodwill
impairment  charge,  the Company would have had an operating loss of $10,725,000
for the six-month period ended June 30, 2000.

In June 2000, the Company purchased  $37,500,000  aggregate  principal amount of
the 12.5%  Notes  for an  aggregate  cost of  $15,000,000,  which was  funded by
proceeds from the issuance of  convertible  preferred  stock.  As a result,  the
Company  recognized an  extraordinary  gain,  net of  unamortized  debt issuance
costs, of approximately $21,656,000,  in the six months ended June 30, 2000. See
"Debt Obligations, Financing Sources and Capital Expenditures."

Interest Expense; Other Expense; and Income Tax Provision

Interest  expense for the Company  decreased 11.2% from $4,539,000 in the second
quarter of 1999 to $4,029,000 in the 2000 period.  For the six months ended June
30, 2000, interest expense for the Company increased 7.9% from $7,944,000 in the
1999 period to $8,574,000 in the 2000 period. This increase is primarily related
to  the   capitalization   of  $1,227,000   of  interest   related  to  the  SAP
implementation  in the first quarter of 1999. As SAP was implemented in the U.S.
in April 1999, there was no capitalization  of interest  required  subsequent to
the second quarter of 1999.



<PAGE>


Other  expenses for the Company  increased  from  $6,766,000 in the three months
ended June 30, 1999 to $6,834,000  for the three months ended June 30, 2000, and
decreased from  $13,392,000 in the six months ended June 30, 1999 to $12,902,000
for the six months ended June 30, 2000. The decrease in the six-month  period is
primarily  related to a $1,538,000  gain  recorded on the sale of the  Company's
Marlborough,  Massachusetts  call  center in  January  2000.  The  decrease  was
partially offset by a $274,000 increase in foreign exchange losses.  The average
proceeds  drawn  from  the  sale of  accounts  receivable  under  the  Company's
securitization   facilities  as  of  the  end  of  each  month   decreased  from
$411,788,000 for the six months ended June 30, 1999 to $299,983,000 for the same
period in 2000,  however,  securitization fees remained flat due to higher rates
experienced in the first six months of 2000.

The income tax provision  decreased from $380,000 and $451,000 for the three and
six months ended June 30, 1999,  respectively,  to $161,000 and $313,000 for the
same periods in 2000.  In both periods,  the income tax rate reflects  primarily
the minimal  statutory tax  requirements  in the various states and provinces in
which the Company conducts business, as the Company has sufficient net operating
loss provisions to offset federal income taxes in the current period.

Consolidated Net Loss

On a  consolidated  basis,  net loss before  extraordinary  item for the Company
increased  from  $2,984,000 and  $23,493,000  for the three and six months ended
June 30, 1999,  respectively,  to a net loss of $38,554,000 for the three months
ended June 30, 2000 and  $52,001,000  for the six months ended June 30, 2000 due
to the factors  described  above. Net loss per share before  extraordinary  item
increased from $0.04 per share for the three months ended June 30, 1999 to a net
loss of $0.48 per share for the three months  ended June 30, 2000.  Net loss per
share  before  extraordinary  item  increased  from  $0.29 per share for the six
months  ended June 30,  1999 to a net loss of $0.65 per share for the six months
ended June 30, 2000.

Results  for the six months  ended June 30, 2000 also  reflect an  extraordinary
gain of $21,656,000  related to the purchase of $37,500,000  aggregate principal
amount of the 12.5% Notes.

SYSTEMS AND PROCESSES

Merisel has made  significant  investments  in advanced  computer and  warehouse
management systems for its North American operations to support sales growth and
improve  service  levels.  All of  Merisel's  nine North  American  distribution
centers and its Raleigh, North Carolina,  co-location facility utilize the MILES
computerized  warehouse  management  system,  which uses infrared bar coding and
advanced  computer  hardware and  software to improve  shipping,  receiving  and
picking accuracy rates.

In 1993,  the Company  began  designing an SAP R/3  enterprise-wide  information
system that would  integrate all  functional  areas of the  business,  including
sales and distribution, inventory management, financial services, and marketing,
in a real-time  environment.  Merisel  converted its Canadian  operations from a
mainframe  system  to the  new SAP  system  in  August  1995,  and  successfully
completed the conversion of its North American operations in April 1999.



<PAGE>


VARIABILITY OF QUARTERLY RESULTS AND SEASONALITY

Historically,  the  Company  has  experienced  variability  in its net sales and
operating  margins on a quarterly  basis.  Management  believes that the factors
influencing  quarterly  variability  include:  (i)  the  overall  growth  in the
computer  industry;  (ii) shifts in short-term demand for the Company's products
resulting, in part, from the introduction of new products or updates to existing
products;  (iii)  intensity  of price  competition  among  the  Company  and its
competitors as influenced by various  factors;  and (iv) the fact that virtually
all sales in a given quarter  result from orders booked in that quarter.  Due to
the factors  noted  above,  as well as the  dynamic  qualities  of the  computer
products  distribution  industry,  the  Company's  revenues  and earnings may be
subject to  material  volatility,  particularly  on a quarterly  basis,  and the
results for any  quarterly  period may not be  indicative  of results for a full
fiscal year.

Additionally,  in the U.S.  and Canada,  the  Company's  net sales in the fourth
quarter  have  been  historically  higher  than  in its  other  three  quarters.
Management believes that the pattern of higher fourth-quarter sales is partially
explained by customer buying patterns relating to calendar year-end business and
holiday  purchases.  As a result of this pattern,  the Company's working capital
requirements  in the fourth  quarter  have  typically  been  greater  than other
quarters.  Net sales in the Canadian  operations are also historically strong in
the first quarter of the fiscal year,  which is primarily due to buying patterns
of Canadian government agencies. See "Liquidity and Capital Resources."

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow Activity

Net cash used by operating  activities during the six months ended June 30, 2000
was $18,140,000.  The primary uses of cash from operating  activities include an
increase  in  accounts  receivable  of  $40,923,000  and a decrease  in accounts
payable  of  $232,293,000  which  was  offset  by a  decrease  in  inventory  of
$249,851,000.  The  decrease in accounts  payable and  inventory  are  primarily
related to the loss of vendor credit support and significant decline in sales.

The increase in accounts  receivable is primarily due to a larger  percentage of
the Company's  receivables  being ineligible under the Company's  securitization
facilities as a result of concentration limitations as well as a decrease in the
amount of proceeds  drawn from the sale of accounts  receivable  relative to the
total amount of receivables sold.

Net cash  used in  investing  activities  related  to  capital  expenditures  of
$1,826,000,   which  were  primarily  related  to  various  information  systems
projects.  This was largely  offset by $1,765,000 in cash proceeds from the sale
of the Marlborough, Massachusetts call center in January 2000.

Net  cash  used  for  financing  activities  was  $2,090,000  and was  comprised
primarily of repayments  under  capitalized  lease  obligations  and  promissory
notes.  In  addition,  $15,047,000  of cash  was  used to  purchase  $37,500,000
aggregate  principal  of the 12.5%  Notes,  which was offset by  $15,000,000  of
proceeds from the issuance of convertible preferred stock.



<PAGE>


Securitization Facilities

The  Company's  wholly  owned  subsidiary,  Merisel  Americas,  sells trade
receivables on an ongoing basis to its wholly owned  subsidiary  Merisel Capital
Funding,  Inc.  ("Merisel  Capital  Funding").  Pursuant to an agreement  with a
securitization  company (the  "Receivables  Purchase and Servicing  Agreement"),
Merisel Capital Funding,  in turn, sells such receivables to the  securitization
company on an ongoing basis,  which yields proceeds of up to $250,000,000 at any
point in time.  Merisel Capital Funding's sole business is the purchase of trade
receivables   from  Merisel  Americas  and,  upon  the  commencement  of  MOCA's
operations  as a separate  subsidiary on April 3, 2000,  Merisel Open  Computing
Alliance,  Inc. Merisel Capital Funding is a separate  corporate entity with its
own separate  creditors,  which in the event of its liquidation will be entitled
to be satisfied out of Merisel  Capital  Funding's  assets prior to any value in
Merisel Capital Funding becoming  available to Merisel Capital  Funding's equity
holders.  This facility  expires in October 2003. The  Receivables  Purchase and
Servicing  Agreement  contains certain financial  covenants that require,  among
other  things,  minimum  levels  of net  worth  and cash  flow.  Because  of the
impairment  charge  recorded by the Company for the three  months ended June 30,
2000, the Company was required to obtain, and did obtain, amendments and waivers
with respect to certain  covenants under the Receivables  Purchase and Servicing
Agreement.  Such  amendment  requires that, by no later than September 30, 2000,
the  Company  shall have  either (i)  approved  a plan to  restructure  its U.S.
distribution  business,  or (ii) entered into an agreement to sell substantially
all of its U.S.distribution  business, or (iii) approved a plan to wind down the
operations  of its  U.S.  distribution  business,  which  in each  case  must be
satisfactory to the securitization  company. In addition, the amendment provides
that, by no later than October 30, 2000, the Company shall have either completed
the  sale  of,  or  commenced  the  restructuring  or wind  down  of,  its  U.S.
distribution business. The failure of the Company to meet such obligations would
result in a default under the Receivables Purchase and Servicing Agreement,  and
there is no  assurance  that the  Company  would be able to obtain  any  further
waivers.

Effective December 15, 1995, Merisel Canada Inc. ("Merisel Canada") entered into
a  receivables  purchase  agreement  with a  securitization  company  to provide
funding for Merisel Canada.  In accordance  with this agreement,  Merisel Canada
sells receivables to the securitization  company, which yields proceeds of up to
$150,000,000  Canadian  dollars  at any  point in  time.  The  facility  expires
December 12, 2000, but is extendible by notice from the securitization  company,
subject to the Company's approval. Due to the Company's recent performance,  the
securitization company has indicated that it will not likely extend the facility
unless  the  Company  can  demonstrate  a plan that  will  return  its  Canadian
distribution  business to  profitability.  If the facility is not extended,  the
Company  believes that it will be able to secure  alternative  financing for its
Canadian  operations,   subject  to  its  ability  to  demonstrate  a  plan  for
profitability.  There are no  assurances  it will be  successful in securing the
necessary financing.

Under these  securitization  agreements,  the receivables are sold at face value
with payment of a portion of the purchase price being  deferred.  As of June 30,
2000, the total amount outstanding under these agreements was $214,221,000. Fees
incurred in connection  with the sale of accounts  receivable  for the three and
six months  ended June 30,  2000 were  $5,752,000  and  $12,266,000  compared to
$5,916,000 and $12,292,000  incurred for the three and six months ended June 30,
1999 and are recorded as other expense.


<PAGE>


Debt Obligations, Financing Sources and Capital Expenditures

In June 2000, the Company purchased  $37,500,000  aggregate  principal amount of
the 12.5%  Notes  for an  aggregate  cost of  $15,000,000,  which was  funded by
proceeds from the issuance of  convertible  preferred  stock.  As a result,  the
Company  recognized an  extraordinary  gain,  net of  unamortized  debt issuance
costs, of approximately $21,656,000 in the quarter ended June 30, 2000.

At June 30, 2000, Merisel, Inc. had outstanding  $87,500,000 principal amount of
the 12.5% Notes. In July 2000, the Company  purchased an additional  $20,105,000
of the 12.5% Notes,  reducing the outstanding balance to $67,395,000.  The 12.5%
Notes  provide for an interest rate of 12.5%  payable  semi-annually.  The 12.5%
Notes are  redeemable,  in whole or in part, at the option of the Company at any
time on or after December 31, 1999, initially at 106.25% of principal amount and
at redemption prices declining to 100% of principal amount for redemptions on or
after December 31, 2002. By virtue of being an obligation of Merisel,  Inc., the
12.5% Notes are  effectively  subordinated  to all  liabilities of the Company's
subsidiaries,  including  trade  payables,  and are not guaranteed by any of the
Company's  subsidiaries.  The  indenture  relating to the 12.5%  Notes  contains
certain  covenants  that,  among  other  things,  limit  the type and  amount of
additional  indebtedness  that  may be  incurred  by the  Company  or any of its
subsidiaries and impose limitations on investments,  loans,  advances,  sales or
transfers of assets, the making of dividends and other payments, the creation of
liens, sale-leaseback transactions with affiliates and certain mergers.

At June  30,  2000,  the  Company  had a  promissory  note  outstanding  with an
aggregate  balance of  $4,211,000.  This note provides for interest at a rate of
7.7% per annum.  Remaining payments due under this note are $311,000 in 2000 and
$3,900,000 in 2001. The note is  collateralized by certain of the Company's real
property and equipment.

In  June  2000,  an  affiliate  of  Stonington   Partners,   Inc.,   which  owns
approximately  62 percent of the Company's common stock,  purchased  convertible
preferred  stock of the Company for an aggregate  purchase  price of $15 million
(the  "Convertible  Preferred").  The Convertible  Preferred  provides for an 8%
dividend payable in additional shares of Convertible Preferred.  The Convertible
Preferred  is  convertible  into  the  Company's  common  stock  at a per  share
conversion  price of  $1.75.  At the  option  of the  Company,  the  Convertible
Preferred will be converted into common stock when the average  closing price of
the common stock for any 20  consecutive  trading  days is at least  $3.75.  The
Convertible  Preferred  is not  convertible  during the first six  months  after
issuance  and is not  redeemable  during the first three  years after  issuance,
except in the event of  certain  extraordinary  corporate  events,  including  a
change of control.

Merisel Americas is party to a Loan and Security  Agreement dated as of June 30,
1998 (the "Loan and  Security  Agreement")  with Bank of America  NT&SA  ("BA"),
acting as agent,  that provides for borrowings on a revolving basis.  Borrowings
under the Loan and Security  Agreement  are secured by a pledge of a majority of
the  inventories  held by Merisel  Americas,  and are subject to meeting certain
availability  requirements under a borrowing-base formula and other limitations.
The amount available for borrowing under the Loan and Security  Agreement at any
time may be further limited by restrictions  under the indenture relating to the
12.5%  Notes.  Because  the  decline  in  inventory  pledged  under the Loan and
Security Agreement had

<PAGE>


essentially eliminated borrowing availability, in May 2000 the Loan and Security
Agreement was amended to reduce the commitment  from $100 million to $35 million
and to change the borrowing-base formula to increase availability.  The Loan and
Security  Agreement also contains covenants that require minimum levels of gross
profit and limit capital expenditures.  Borrowings bear interest at LIBOR plus a
specified margin or, at the Company's option,  the agent's prime rate. An annual
fee of 0.375% is payable with respect to the unused  portion of the  commitment.
The Loan and Security  Agreement  has a  termination  date of June 30, 2003.  No
amounts were  outstanding  under the Loan and Security  Agreement as of June 30,
2000.  There is  currently  minimal  borrowing  availability  under the Loan and
Security  Agreement  and the Company  expects to cancel the facility in the near
future.

In addition to its requirements for working capital for operations,  the Company
presently   anticipates  that  its  capital   expenditures  will  be  less  than
$5,000,000 for 2000. Capital  expenditures are expected to consist primarily of
costs  associated  with  maintaining  the  Company's  infrastructure  (including
information  systems,  warehouse  systems and other  Company  facilities)  as is
required to support the Company's continuing operations.

At June 30, 2000, the Company had cash and cash  equivalents of $36,448,000.  In
the opinion of management,  the Company will not have  sufficient  liquidity for
its U.S. distribution business unless it receives improved vendor credit support
for its U.S.  distribution  business  and is able to maintain in place its asset
securitization  facility  for  such  business.  With  respect  to  its  Canadian
distribution  and MOCA  businesses,  if the Company is unable to complete one of
the options  outlined above with respect to its U.S.  distribution  business and
obtain the financing for Canadian  distribution and MOCA businesses as discussed
above,  in the  opinion  of  management,  the  Company  will  have  insufficient
liquidity to meet its requirements for the next 12 months.

ASSET MANAGEMENT

Merisel attempts to manage its inventory  position to maintain levels sufficient
to achieve  high product  availability  and  same-day  order fill rates.  Due to
insufficient  vendor credit support,  the Company  recently has not been able to
achieve this for its U.S. distribution business.  Inventory levels may vary from
period to period,  due to factors  including  increases  or  decreases  in sales
levels,   special  term  large-volume   purchases,   and  the  addition  of  new
manufacturers and products. The distribution agreements entered into between the
Company and its vendors  generally  provide  Merisel  with  stock-balancing  and
price-protection  provisions that partially reduce Merisel's risk of loss due to
slow-moving   inventory,   supplier  price   reductions,   product   updates  or
obsolescence.

Stock  balancing  provisions  typically give the distributor the right to return
for credit or  exchange  for other  products a portion  of the  inventory  items
purchased, within a designated period of time, but are not generally provided by
the major PC systems manufacturers. Under price-protection provisions, suppliers
will credit the  distributor  for declines in inventory value resulting from the
supplier's price reductions if the distributor complies with certain conditions.
In the past two years,  however,  certain major PC manufacturers  that are among
the Company's  largest vendors have reduced the availability of price protection
for  distributors by shortening the time periods during which  distributors  may
receive  rebates  or  credit  for  decreases  in  manufacturer  prices on unsold
inventory and changed other terms and  conditions.  These changes have increased
the

<PAGE>


Company's exposure to inventory  valuation risks and have adversely affected the
Company's gross margins for the last several quarters.

The Company purchases exchange contracts to reduce foreign exchange  transaction
gains and losses.  The Company  intends to continue the  practice of  purchasing
foreign exchange contracts,  however,  the risk of foreign exchange  transaction
losses cannot be completely eliminated.

The Company  offers  credit terms to  qualifying  customers  and also sells on a
prepay,  early pay, credit card and  cash-on-delivery  basis.  In addition,  the
Company has  developed a number of customer  financing  alternatives,  including
escrow  programs  and  selected  bid  financing  arrangements.  The Company also
arranges  a wide  variety  of  programs  through  which  third  parties  provide
financing  to  certain  of its  customers.  These  programs  include  floor plan
financing and hardware and software  leasing.  With respect to credit sales, the
Company  attempts to control  its bad debt  exposure  by  monitoring  customers'
creditworthiness  and,  where  practicable,   through  participation  in  credit
associations  that  provide  customer  credit  rating  information  for  certain
accounts.  In  addition,  the Company  purchases  credit  insurance  as it deems
appropriate.  Historically,  the  Company  has  not  experienced  credit  losses
materially  in excess of  established  credit  loss  reserves.  However,  if the
Company's   receivables   experience  a  substantial   deterioration   in  their
collectibility  or if the Company  cannot obtain credit  insurance at reasonable
rates,  the  Company's  financial  condition  and results of  operations  may be
adversely impacted.

COMPETITION

Competition  in  the  computer  products   distribution   industry  is  intense.
Competitive  factors  include price,  breadth and  availability  of products and
services, credit availability and financing options, shipping accuracy, speed of
delivery,  availability of technical support and product information,  marketing
services and programs,  and ability to influence a buyer's decision.  Certain of
Merisel's  competitors  have  substantially  greater  financial  resources  than
Merisel.

Merisel's  principal  competitors for its North American  distribution  business
include  large United  States-based  distributors  such as Ingram Micro and Tech
Data, as well as regional  distributors and franchisers.  MOCA's competitors are
GE Access, which is owned by GE Capital, and Ingram Micro.

Merisel  also  competes  with  manufacturers  that  sell  directly  to  computer
resellers and end users,  sometimes at prices below those charged by Merisel for
similar products, and larger resellers and E-tailers that sell to resellers.


Item 3.  QUANTITATIVE AND QUALITATIVE MARKET RISK DISCLOSURE

No material  changes have occurred in the  quantitative  and qualitative  market
risk  disclosure of the Company as presented in the  Company's  Annual Report on
Form 10-K for the period ended December 31, 1999.


<PAGE>


                                            PART II - OTHER INFORMATION


Item 1. Legal Proceedings

On March 16, 1998, the Company  received a summons and  complaint,  filed in the
Superior  Court of  California,  County of Santa  Clara,  in a matter  captioned
Official  Unsecured  Creditors  Committee  of Media Vision  Technology,  Inc. v.
Merisel,  Inc. In July 2000, the parties entered into a settlement  agreement to
resolve all disputes  arising and related to this action.  Under the settlement,
the Company was not required to make any material payment.

The  Company is  involved  in certain  other  legal  proceedings  arising in the
ordinary course of business, none of which is expected to have a material impact
on the financial condition or business of Merisel.



<PAGE>


Item 6. Exhibits and Reports on Form 8-K

         (a)      Exhibits


10.1     Amendment No. 8 to Purchase  Agreement  dated as of May 19, 2000 among
         Merisel  Americas,  Inc.,  Merisel Capital  Funding,  Inc.,  Redwood
         Receivables  Corporation and General Electric Capital Corporation.

10.2     Amendment No. 4 to Loan and Security  Agreement dated as of May 10,
         2000 among Merisel Americas,  Inc. and Bank of America, National
         Association.


(b)               The following  Report on Form 8-K was filed during the quarter
                  ended June 30, 2000.


                           Current  report on Form 8-K, dated June 9, 2000 which
                           reports the  issuance  and sale of 150,000  shares of
                           convertible  preferred  stock to Phoenix  Acquisition
                           Company II, L.L.C.





<PAGE>


                             SIGNATURES





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

Date: August 18, 2000


                                   Merisel, Inc.



                            By:/s/ Timothy N. Jenson
                                   ----------------------------------
                                   Timothy N. Jenson
                                   Chief Financial Officer and
                                   Executive Vice President
                                  (Principal Financial and Accounting Officer)