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 September 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                        as of November 16, 2000
Common Stock, $.01 par value                80,309,046 Shares


<PAGE>
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                                  MERISEL, INC.

                                      INDEX


                                                                               Page Reference
PART I   FINANCIAL INFORMATION
<S>              <C>                                                                  <C>

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

                  Consolidated Statements of Operations for the
                  Three Months and Nine Months Ended September 30, 2000 and 1999       3

                  Consolidated Statements of Cash Flows for the
                  Nine Months Ended September 30, 2000 and 1999                        4

                  Notes to Consolidated Financial Statements                         5-11

                  Management's Discussion and Analysis of                           12-22
                  Financial Condition and Results of Operations

                  Quantitative and Qualitative Market Risk Disclosure                  22

PART II  OTHER INFORMATION                                                             23

                  SIGNATURES                                                           24

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<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.


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                          PART 1. FINANCIAL INFORMATION


Item 1.    Financial Statements

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

                                     ASSETS

                                                                             September 30,            December 31,
                                                                                  2000                    1999
                                                                           -------------------      ------------------
<S>                                                                        <C>                       <C>
CURRENT ASSETS:
Cash and cash equivalents                                                          $   31,958               $  57,557
Accounts receivable (net of allowances
of $16,208 and $12,734 for 2000 and 1999, respectively)                                50,841                 152,631
Inventories                                                                            65,584                 364,438
Prepaid expenses and other current assets                                               3,187                   9,433
Deferred income taxes                                                                     878                     914
Net assets of discontinued operations                                                  95,177                  43,136
                                                                           -------------------      ------------------
  Total current assets                                                                247,625                 628,109

PROPERTY AND EQUIPMENT, NET                                                            50,618                  83,885

COST IN EXCESS OF NET ASSETS
  ACQUIRED, NET                                                                         3,692                  23,755

OTHER ASSETS                                                                              440                     457
                                                                           -------------------      ------------------

TOTAL ASSETS                                                                       $  302,375              $  736,206
                                                                           ===================      ==================






                  See  accompanying   notes  to  consolidated financial statements.
</TABLE>



<PAGE>
<TABLE>
<CAPTION>


                          PART 1. FINANCIAL INFORMATION


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

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                               September 30,         December 31, 1999
                                                                                    2000
                                                                             -------------------    --------------------

<S>                                                                           <C>                    <C>
CURRENT LIABILITIES:
Accounts payable                                                                     $ 157,498              $  474,859
Accrued liabilities                                                                     40,672                  33,004
Long-term debt and capitalized lease obligations - current                               1,718                   2,906
                                                                             -------------------    --------------------
  Total current liabilities                                                            199,888                 510,769

Long-term debt                                                                          67,395                 128,900
Capitalized lease obligations                                                               61                   1,364

STOCKHOLDERS' EQUITY
Convertible preferred stock, $.01 par value, authorized 1,000,000
  shares; 153,500 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                                                             297,985                 282,492
Accumulated deficit                                                                   (254,090)               (179,663)
Accumulated other comprehensive loss                                                    (9,669)                 (8,459)
                                                                             -------------------    --------------------
Total stockholders' equity                                                              35,031                  95,173
                                                                             -------------------    --------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $  302,375              $  736,206
                                                                             ===================    ====================













                     See  accompanying   notes  to  consolidated financial statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


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

                                                        Three Months Ended                         Nine Months Ended
                                                           September 30,                             September 30,
                                                     2000               1999                    2000               1999
                                               -----------------    -----------------    ------------------    -----------------
<S>                                            <C>                   <C>                  <C>                   <C>

NET SALES                                         $399,480           $1,100,712            $1,932,328           $3,149,187

COST OF SALES                                      399,061            1,053,564             1,867,142            3,003,807
                                               -----------------    -----------------    ------------------    -----------------

GROSS PROFIT                                           419               47,148                65,186              145,380

SELLING, GENERAL &
  ADMINISTRATIVE EXPENSES                           40,360               54,349               137,037              156,248

IMPAIRMENT LOSSES                                    9,859                                     29,346

RESTRUCTURING CHARGE                                10,964                                     10,964

LITIGATION-RELATED CHARGE                                                                                           12,000
                                               -----------------    -----------------    ------------------    -----------------

OPERATING LOSS                                     (60,764)              (7,201)             (112,161)             (22,868)

INTEREST EXPENSE                                     1,523                4,798                10,097               12,742

OTHER (INCOME) EXPENSE, NET                         (4,960)               5,491                 3,659               15,660
                                               -----------------    -----------------    ------------------    -----------------

LOSS FROM CONTINUING OPERATIONS
  BEFORE INCOME TAXES AND
  EXTRAORDINARY ITEM                               (57,327)             (17,490)             (125,917)             (51,270)

INCOME TAX PROVISION                                   147                  147                   460                  598
                                               -----------------    -----------------    ------------------    -----------------

LOSS FROM CONTINUING OPERATIONS
  BEFORE EXTRAORDINARY ITEM                        (57,474)             (17,637)             (126,377)             (51,868)

DISCONTINUED OPERATIONS:
INCOME FROM DISCONTINUED OPERATIONS                  3,228                5,921                20,130               16,659
                                               -----------------    -----------------    ------------------    -----------------

LOSS BEFORE EXTRAORDINARY ITEM                     (54,246)             (11,716)             (106,247)             (35,209)

EXTRAORDINARY GAIN ON DEBT
  EXTINGUISHMENT, NET                               10,514                                     32,170
                                               -----------------    -----------------    ------------------    -----------------


NET LOSS                                          $(43,732)            $(11,716)             $(74,077)            $(35,209)
                                               =================    =================    ==================    =================

NET LOSS PER SHARE
  (BASIC AND DILUTED):
LOSS FROM CONTINUING OPERATIONS
  BEFORE EXTRAORDINARY ITEMS                        $(0.72)              $(0.22)               $(1.57)               $(0.65)
INCOME FROM DISCONTINUED OPERATIONS                   0.04                 0.07                  0.25                  0.21
EXTRAORDINARY GAIN                                    0.13                                       0.40
                                               =================    =================    ==================    =================
NET LOSS                                            $(0.54)              $(0.15)               $(0.92)               $(0.44)
                                               =================    =================    ==================    =================

WEIGHTED AVERAGE NUMBER OF SHARES:
  BASIC AND DILUTED                                 80,330               80,279                80,316               80,278
                                               =================    =================    ==================    =================




                     See  accompanying   notes  to  consolidated financial statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


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

                                                                                 Nine Months Ended September 30,
                                                                                  2000                     1999
                                                                            ------------------      -------------------
<S>                                                                         <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                         $   (74,077)             $   (35,209)
Less: income from discontinued operations, net                                        20,130                   16,659
Loss from continuing operations                                                      (94,207)                 (51,868)
Adjustments to reconcile net loss from continuing operations to net cash used by
  operating activities:
  Depreciation and amortization                                                       16,053                   15,243
  Provision for doubtful accounts                                                     13,775                    7,188
  Impairment losses                                                                   29,346
  Gain on sale of property and equipment                                             (10,455)
  Extraordinary gain on extinguishment of debt                                       (32,170)
Changes in operating assets and liabilities:
  Accounts receivable                                                                 87,735                  (27,107)
  Inventories                                                                        296,453                   48,800
  Prepaid expenses and other current assets                                            3,622                   (1,208)
  Accounts payable                                                                  (312,041)                   1,880
  Accrued liabilities                                                                 10,960                    5,908
                                                                            ------------------      -------------------
Net cash provided by (used for) operating activities of continuing operations          9,071                   (1,164)
                                                                            ------------------      -------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                                                    (1,853)                 (24,289)
Proceeds from sale of property and equipment, net disposal cost                       15,888
                                                                            ------------------      -------------------
Net cash provided by (used for) investing activities of continuing operations         14,035                  (24,289)
                                                                            ------------------      -------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving line of credit                                             40,000                  298,700
Repayments under revolving line of credit                                            (40,000)                (296,200)
Proceeds from issuance of convertible preferred stock                                 15,000
Purchase of bonds                                                                    (22,814)
Repayments under other financing arrangements                                         (6,391)                  (1,957)
Proceeds from issuance of Common Stock                                                                             12
                                                                            ------------------      -------------------
Net cash (used for) provided by financing activities of continuing operations        (14,205)                     555

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                               (2,588)                    (655)
                                                                            ------------------      -------------------


NET CASH USED IN DISCONTINUED OPERATIONS                                             (31,912)                  (1,524)

NET DECREASE IN CASH AND
  CASH EQUIVALENTS OF CONTINUING OPERATIONS                                          (25,599)                 (27,077)

CASH AND CASH EQUIVALENTS, BEGINNING OF
  PERIOD                                                                              57,557                   36,341
                                                                            ------------------      -------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                         $    31,958              $     9,264
                                                                            ==================      ===================

Supplemental disclosure of cash flow information:
                                                                                          (in thousands)
Cash paid (received) during the period for:                                       2000                    1999
                                                                            ------------------     --------------------
  Interest                                                                       $    10,870              $    11,447
  Income taxes                                                                        (1,653)                     238

Non cash activities:
   Capital lease obligations entered into                                                120                    --
   Sell of property for note receivable                                                1,000

                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 distributor of computer hardware
and software products and a provider of logistics services. On November 10, 2000
the Company  completed the acquisition of substantially  all the assets of Value
America,   Inc.,  including  its  electronic  fulfillment  business  assets,  to
complement its existing back-end logistics and distribution capability and allow
the  Company to operate an  e-services  and  logistics  business.  See Note 12 -
"Subsequent  Events." Through its main operating  subsidiary  Merisel  Americas,
Inc. ("Merisel Americas") and its subsidiaries,  in recent years the Company has
operated three distinct  business units:  United States  distribution,  Canadian
distribution  and, until October 27, 2000,  the Merisel Open Computing  Alliance
(MOCA(TM)).  Merisel's U.S. and Canadian distribution  businesses offer products
and  services  to a broad  range of reseller  customers,  including  value-added
resellers  ("VARs"),  commercial  resellers,  internet  resellers and retailers.
Merisel  completed  the sale of its MOCA  business  to Arrow  Electronics,  Inc.
effective as of October 27, 2000. MOCA provides  enterprise-class  solutions for
Sun   Microsystems   servers   and  the   Solaris   operating   system   to  Sun
Microsystems-authorized resellers and consultants.

The  information for the three and nine months ended September 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 September 30, 2000, the Company had cash and cash equivalents of $31,958,000,
which  subsequent of September 30, 2000 increased  substantially  as a result of
the sale of the MOCA business to Arrow  effective as of October 27, 2000. In the
opinion of management,  the Company will have sufficient  liquidity for its U.S.
and Canadian distribution  businesses only if it receives adequate vendor credit
support  and is able to obtain  new  financing  for such  businesses  to replace
terminating asset securitization facilities.  The Company believes that if the


<PAGE>



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


U.S.  and  Canadian  distribution  business  plans  for  2001  are  successfully
implemented,  it will have sufficient  liquidity to meet the requirements of its
e-services and logistics business 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." SFAS No. 133 requires all derivatives to be
recorded  on the balance  sheet at fair value.  SFAS No. 133, as amended by SFAS
No. 137 and SFAS No. 138, 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.  The  Company is in the
process  of  evaluating  the  effect  that  this new  standard  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 third quarter is the 13-week period ending
on the Saturday  nearest to September 30. For  simplicity of  presentation,  the
Company has described the interim periods and year-end period as of September 30
and December 31, respectively.

5.   Discontinued Operations

Effective as of October 27,  2000,  the Company  completed  the sale of its MOCA
business to Arrow Electronics, Inc. ("Arrow"). The stock sale agreement pursuant
to which  the  sale was made  provided  for a  purchase  price of $110  million,
subject to  adjustments  based on changes in working  capital  reflected  on the
closing  balance  sheet  of  Merisel  Open  Computing  Alliance,  Inc.,  plus an
additional  amount up to $37.5  million  payable  by the end of March 2001 based
upon  MOCA's  ability  to retain  existing  and gain  additional  business.  The
preliminary  purchase  price was  approximately  $191.2  million of which  $18.5
million will be paid by Arrow on a deferred basis,  subject to the collection of
specified customer accounts receivable and the return of certain

<PAGE>


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


inventory, and approximately $57.5 million was for amounts outstanding under the
Merisel asset securitization  facility. Based on the preliminary purchase price,
the Company  expects to realize a gain of  approximately  $27.4 million from the
sale of the MOCA  business,  without  including the potential  additional  $37.5
million.  The  preliminary  purchase price is subject to adjustments  for actual
working  capital  amounts as of the closing  date  determined  within 60 days of
closing, which are not expected to be material.

The Company has reclassified its  consolidated  financial  statements to reflect
the sale of the MOCA business and to segregate  the  revenues,  direct costs and
expenses (excluding allocated costs), assets and liabilities,  and cash flows of
the MOCA business.  The net operating results,  net assets and net cash flows of
this  business  have  been  reported  as   "Discontinued   Operations"   in  the
accompanying consolidated financial statements.

Summarized financial information for the discontinued operations is as follows:
<TABLE>
<CAPTION>

                                                     (In thousands)                            (In thousands)
                                               For the Three Months Ended                For the Nine Months Ended
                                                     September 30,                             September 30,

                                               2000                 1999                 2000                 1999
                                               ----                 ----                 ----                 ----

<S>                                             <C>                   <C>                 <C>                  <C>
Net Sales                                       $181,539              $257,114            $740,299             $729,520
Income from Discontinued
   Operations                                      3,228                 5,921              20,130               16,659

</TABLE>
<TABLE>
<CAPTION>

                                                         At September 30, 2000        At December 31, 1999

<S>                                                              <C>                         <C>
Current Assets                                                   $123,901                    $112,001
Total Assets                                                      124,453                     112,725
Current Liabilities                                                29,276                      69,589
Total Liabilities                                                  29,276                      69,589
Net assets of discontinued operations                              95,177                      43,136

</TABLE>



<PAGE>



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


6.   Extraordinary Gain on Debt Extinguishment

In July 2000, the Company purchased  $20,105,000  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  $7,742,000  and,  as a  result,  the  Company
recognized an  extraordinary  gain, net of unamortized  debt issuance  costs, of
approximately  $10,514,000  for the three months ended  September 30, 2000. As a
result of this  purchase  and  purchases  of 12.5% Notes made in June 2000,  the
Company has recognized extraordinary gains of approximately  $32,170,000 for the
nine months ended September 30, 2000.

7.   Restructuring Charge

During the third  quarter of 2000,  the  Company  announced  plans that it would
reduce its workforce by approximately  1,000 full-time  positions.  As a result,
the Company has  recorded a  restructuring  charge of  $10,964,000  in the third
quarter of 2000.  Approximately $7,098,000 of the charge consists of termination
benefits  including  severance pay and  outplacement  services to be provided to
those employees that were involuntarily  affected by the reduction in workforce.
The charge also  reflects  approximately  $3,866,000 of lease  termination  fees
related to the planned closure of certain  warehouses and offices. A significant
portion of these  benefits and fees had not been paid as of September  30, 2000,
and the amounts related thereto are included in accrued liabilities.

8.       Impairment Losses

As the result of its  continuing  losses and  conditions in its business and the
industry  in which it  operated  at June 30,  2000,  the  Company  reviewed  the
recoverability  of its  long-lived  assets,  including  identifiable  intangible
assets, to determine if there had 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  recorded an  impairment  loss  totaling  $19,487,000,
representing  the unamortized  goodwill  attributable  to the U.S.  distribution
business,  in the second  quarter  of 2000.  In the third  quarter of 2000,  the
Company  announced  a  restructuring  plan that would  significantly  reduce its
facilities  and  workforce.  In relation to this,  the Company has evaluated the
fixed asset investments that supported these former facilities and personnel. As
a result, in the third quarter of 2000 a $9,859,000 impairment charge related to
redundant  and non-used  assets  determined  to have no value to the Company was
recorded.

9.   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:


<PAGE>
<TABLE>
<CAPTION>



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


                                                              (In thousands)                         (In thousands)
                                                            Three Months Ended                      Nine Months Ended
                                                               September 30,                          September 30,
                                                         2000                1999                2000              1999
                                                         ----                ----                ----              ----

<S>                                                    <C>                 <C>                  <C>              <C>
Net loss                                               $(43,732)           $(11,716)            $(74,077)        $(35,209)
Other comprehensive income -
   Foreign currency translation adjustments                (369)               (311)              (1,210)           1,220
                                                    ----------------    ----------------     -------------    ---------------

Comprehensive loss                                     $(44,101)           $(12,027)            $(75,287)        $(33,989)
                                                    ================    ================     =============    ===============

</TABLE>

10.   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
"treasury  stock"  method.  There was no  difference  between  basic and diluted
weighted average shares  outstanding for each of the September 30, 2000 and 1999
periods  as the  impact  of  stock  options,  convertible  preferred  stock  and
restricted stock units would be anti-dilutive in both periods.

11.      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.  As  described in Note 5,  effective as of October 27, 2000,  the
Company  completed the sale of its MOCA business,  which has  historically  been
treated  as a  separate  segment  under  SFAS 131.  MOCA has been  treated  as a
discontinued  operation in the accompanying  financial  statements.  The segment
data  included  below has been restated to exclude  amounts  related to the MOCA
business unit.

Excluding  the MOCA  business  unit,  during the periods  presented  the Company
operated two distinct  business units:  United States  distribution and Canadian
distribution.


<PAGE>



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


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
                                             September 30, 2000
                                               (in thousands)
                         ------------------------------------------------------------

                             United
                             States         Canada         Other          Total
<S>                         <C>             <C>           <C>            <C>
Net sales to external
Customers                    $269,808       $129,672                      $399,480
Segment operating loss       $(51,540)       $(9,206)                     $(60,764)
Total segment assets         $137,260        $64,993       $4,945         $207,198

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

                             United
                             States         Canada         Other          Total
Net sales to external
Customers                    $894,246       $206,466                    $1,100,712
Segment operating
(loss) profit                 $(9,533)        $2,332                       $(7,201)


                                              Nine Months Ended
                                             September 30, 2000
                                               (in thousands)
                         ------------------------------------------------------------

                             United
                             States         Canada         Other          Total
Net sales to external
customers                  $1,410,508       $521,820                    $1,932,328
Segment operating loss     $  (98,707)      $(10,611)     $(2,843)       $(112,161)



                                              Nine Months Ended
                                             September 30, 1999
                                               (in thousands)
                         ------------------------------------------------------------

                             United
                             States         Canada         Other          Total
Net sales to external
Customers                  $2,478,169       $671,018                    $3,149,187
Segment operating
(loss) profit                $(18,260)        $7,392     $(12,000)        $(22,868)

</TABLE>



<PAGE>



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


12.      Subsequent Events

On November 10, 2000, the Company  completed a transaction in which it purchased
substantially   all  of  the  assets  and   assumed   certain   liabilities   of
Charlottesville,   Virginia-based   Value   America,   Inc.  for   approximately
$2,375,000.  The  Company  expects  to  account  for the  acquisition  under the
purchase method of accounting.


<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 distributor of computer hardware
and software  products and a provider of  logistics  services.  Through its main
operating  subsidiary  Merisel  Americas,  Inc.  ("Merisel  Americas")  and  its
subsidiaries,  the Company operates a United States distribution  business and a
Canadian distribution business. These distribution businesses offer products and
services to a broad range of reseller customers, including value-added resellers
("VARs"),  commercial resellers,  internet resellers and retailers. In addition,
through a newly formed  subsidiary,  the Company  operates a logistics  business
which, through the acquisition of certain electronic fulfillment business assets
from Value  America,  the  Company  intends to expand to include a full range of
electronic services and logistics  capabilities to offer to customers in a broad
range of  industries  ("e-Services  and  Logistics").  See "Business  Strategy"
below.

Discontinued Operations

Effective as of October 27, 2000, the Company  completed the sale of its Merisel
Open Computing Alliance ("MOCA") business unit, which provides  enterprise-class
solutions  for Sun  Microsystems  servers  and the Solaris  operating  system to
authorized  resellers,  to Arrow  Electronics,  Inc.  ("Arrow").  The stock sale
agreement  pursuant to which the sale was made provided for a purchase  price of
$110  million,  subject to  adjustments  based on  changes  in  working  capital
reflected on the closing balance sheet of Merisel Open Computing Alliance, Inc.,
plus an additional  amount up to $37.5 million  payable by the end of March 2001
based upon MOCA's ability to retain existing and gain additional  business.  The
preliminary  purchase  price was  approximately  $191.2  million of which  $18.5
million will be paid by Arrow on a deferred basis,  subject to the collection of
specified customer accounts receivable and the return of certain inventory,  and
approximately  $57.5 million was for amounts outstanding under the Merisel asset
securitization   facility.   The  preliminary   purchase  price  is  subject  to
adjustments for actual working capital amounts as of the closing date determined
within 60 days of closing, which are not expected to be material.

The Company has reclassified its  consolidated  financial  statements to reflect
the sale of the MOCA business and to segregate  the  revenues,  direct costs and
expenses (excluding any allocated costs), assets and liabilities, and cash flows
of the MOCA business.  The net operating results,  net assets and net cash flows
of  this  business  have  been  reported  as  "Discontinued  Operations"  in the
accompanying consolidated financial statements.

Revenues  from MOCA  decreased  $75,575,000,  or  29.4%,  in the  quarter  ended
September  30,  2000  compared  with the  same  quarter  in 1999  and  increased
$10,779,000,  or 1.5%, in the nine months ended September 30, 2000 compared with
the same period in 1999. The loss of major customers in the February  recruiting
cycle and a decrease in vendor support resulting in inconsistent availability of
certain key products are the primary  causes for the third  quarter  decrease in
sales.


<PAGE>



Business Strategy

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.  As a result of this, the Company
announced a plan to restructure and substantially decrease the size and scope of
the U.S.  distribution  business in the third  quarter of 2000. As part of these
efforts,  during the quarter ended  September 30, 2000 the Company  discontinued
its  relationships  with over 100 suppliers in order to streamline its business.
In addition,  some vendors (including the three largest vendors) have terminated
their  relationships  with the U.S.  distribution  business and the scope of the
relationship  with  other  vendors  has  been  significantly  reduced.  The U.S.
distribution business is also eliminating four of its seven warehouse to further
reduce expenses. Management believes that by focusing on fewer vendors, reducing
operating  expenses,  and capitalizing on its 99.9%-plus  shipping  accuracy and
strong  relationships with certain customers,  the business has the potential to
be returned to a successful  business model albeit on a much smaller scale. With
respect to its Canadian distribution business, the Company is also 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.

While management  believes this  restructuring  plan has the potential to return
the U.S. and Canadian distribution businesses to profitability,  there are still
considerable  risks  involved,  including  risks  related to vendor  support and
financing. See "Liquidity and Capital Resources."

With the significant  contraction of the U.S. distribution business, the Company
has been exploring  possibilities  for leveraging its distribution and logistics
capabilities  to  generate   services  revenue   utilizing  the  Company's  core
competencies.  Following the sale of the MOCA business, on November 10, 2000 the
Company acquired substantially all the assets of Charlottesville, Virginia-based
Value America,  Inc. for a purchase price of $2,375,000.  Through a newly formed
subsidiary,  the  Company  intends  to  conduct  its  e-Services  and  Logistics
business,  offering a complete turnkey e-commerce  solution to manufacturers and
retailers who sell their products through  traditional  channels and are looking
to move into the e-commerce  arena.  The e-Services and Logistics  business will
provide a front-end Web-based customer interface and other e-service  offerings,
including  marketing and advertising  services,  web development and design, and
interactive call center  management and customer  service,  that will complement
Merisel's existing back-end logistics and distribution  capability.  The Company
expects to complete the  development  of the  front-end  interface  and required
systems  integration  within a six-month  period.  The Company has already begun
recruitment of customers that it may be able to service solely with the existing
back-end  logistics  and  distribution  capability  prior to  completion  of the
front-end interface.  In connection with the sale of the MOCA business to Arrow,
the Company entered into a transition  services agreement with Arrow pursuant to
which the Company is providing fee-based distribution and logistics services for
the MOCA business, with an initial term of six months.


<PAGE>



RESULTS OF OPERATIONS

Including  discontinued   operations,   the  Company  reported  a  net  loss  of
$43,732,000,  or $0.55 loss per share, for the quarter ended September 30, 2000.
This compares with a net loss of $11,716,000,  or $0.15 loss per share,  for the
comparable prior year period. The net loss of $43,732,000 includes net income of
$3,228,000 from  discontinued  operations.  The discussion and analysis below is
limited to the Company's continuing operations.

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

The Company's net sales decreased 63.7% from $1,100,712,000 in the quarter ended
September 30, 1999 to  $399,480,000 in the quarter ended September 30, 2000. The
decrease  resulted  from a 69.8%  decline in net sales in the U.S.  distribution
business and a 37.2% decline in net sales in the Canadian distribution business.
The  decrease  in net  sales  for  these  businesses,  which  the  Company  also
experienced  for the  quarters  ended  March  31,  2000 and June 30,  2000,  has
resulted  from a  number  of  factors.  The  decrease  primarily  resulted  from
restructuring  activities  during the first half of the first  quarter  and from
decreased customer orders in reaction to Merisel's price changes  implemented in
the latter half of the first quarter. The decline in sales 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.  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.

Hardware and accessories  accounted for 70% of net sales and software  accounted
for 30% of net sales in the third  quarter of 2000,  as  compared to 77% and 23%
for the same categories, respectively, in the third quarter of 1999.

Gross  profit  decreased  99.1% or  $46,729,000  from  $47,148,000  in the third
quarter of 1999 to $419,000 in the 2000  period,  which  primarily  reflects the
decline  in sales in the 2000  period and  adjustments  to  inventory,  accounts
receivable and accounts  payable reserves to reflect current  realizable  value.
These  adjustments are primarily related to the Company's rapid decline in sales
which has  increased  inventory  obsolescence  and to the  wind-down  of certain
vendor  relationships.  Gross profit as a percentage of sales,  or gross margin,
decreased  from 4.28% in the third  quarter of 1999 to .10% in the third quarter
of 2000.  Gross margins in the U.S. and Canadian  distribution  businesses  were
(1.41%)  and 3.27%,  respectively,  for the third  quarter of 2000,  compared to
3.84% and 6.19%,  respectively,  for the third  quarter of 1999.  Excluding  the
adjustments,  U.S.  distribution  would have had gross profit of $6,110,000,  or
gross margin of 2.3%. and Canadian  distribution  would have had gross profit of
$8,122,000,  or gross margin of 6.26%. Such decline in gross margin for the U.S.
distribution  business  resulted  primarily  from a decrease in vendor  rebates,
which are generally based on sales volume.


<PAGE>



Selling, general and administrative expenses decreased by 25.7% from $54,349,000
in the third quarter of 1999 to $40,360,000  in the third quarter of 2000.  This
reduction  resulted  primarily from a decrease in variable expenses due to lower
sales  volumes and also from cost  savings  associated  with the  December  1999
restructuring plan. Selling, general and administrative expenses as a percentage
of sales  increased  from 4.94% for the third  quarter of 1999 to 10.10% for the
same period in 2000, due primarily to reduced sales volumes in relation to fixed
costs.

During the third quarter of 2000, the Company announced that it would reduce its
workforce  by  approximately  700  full-time   positions.   Subsequent  to  that
announcement,  the Company made the decision to close its Cary,  North  Carolina
facility, eliminating an additional 100 positions.  Approximately 200 additional
positions  were  eliminated  by not filling  attrition-related  vacancies.  As a
result,  the Company has recorded a  restructuring  charge of $10,964,000 in the
third  quarter  of 2000.  Approximately  $7,098,000  of the charge  consists  of
termination  benefits  including  severance pay and outplacement  services to be
provided to those employees that were involuntarily affected by the reduction in
workforce.   The  charge  also  reflects   approximately   $3,866,000  of  lease
termination  fees  related to the  planned  closure of  certain  warehouses  and
offices.

In  connection  with the Company's  announced  restructuring  plan,  which would
significantly  reduce its facilities and workforce,  the Company has recorded an
impairment charge of $9,859,000  related to redundant and non-used assets in the
third quarter of 2000.

As a result of the above  items,  the  Company  incurred  an  operating  loss of
$60,764,000 for the  three-month  period ended September 30, 2000 compared to an
operating  loss of $7,201,000  for the  three-month  period ended  September 30,
1999.  Excluding the impairment charges totaling  $9,859,000 and the $10,964,000
restructuring   charge,  the  Company  would  have  had  an  operating  loss  of
$39,941,000 for the three-month period ended September 30, 2000.

In July 2000, the Company purchased  $20,105,000  aggregate  principal amount of
its  outstanding  12-1/2%  Senior  Notes due 2004  (the  "12.5%  Notes")  for an
aggregate  cost  of  $7,742,000.   As  a  result,   the  Company  recognized  an
extraordinary  gain, net of unamortized  debt issuance costs,  of  approximately
$10,514,000  for the three months ended  September 30, 2000.  See "Liquidity and
Capital   Resources   -  Debt   Obligations,   Financing   Sources  and  Capital
Expenditures."

Nine Months  Ended  September  30,  2000 as  Compared  to the Nine Months  Ended
September 30, 1999.

For the nine months ended  September 30, 2000, net sales decreased by 38.6% from
$3,149,187,000  for the nine months ended  September 30, 1999 to  $1,932,328,000
for the nine months ended September 30, 2000. The decrease resulted from a 43.1%
decrease in net sales for the U.S.  distribution business to $1,410,508,000 from
$2,478,169,000  and a 22.2% decrease in net sales for the Canadian  distribution
business to $521,820,000 from $671,018,000.

Gross profit decreased 55.2% or $80,194,000 from $145,380,000 for the first nine
months of 1999 to $65,186,000 for the first nine months of 2000. Gross profit as
a percentage of sales, or gross margin, decreased from 4.62% for the 1999 period
to 3.37% for the 2000 period. Gross
<PAGE>


margins in the U.S. and Canadian  distribution  businesses were 2.90% and 5.34%,
respectively,  for the first nine  months of 2000,  compared to 4.25% and 5.95%,
respectively,  for the first nine months of 1999. The decreases in margin in the
U.S. and Canada are attributable to substantially the same factors summarized in
the discussion of gross margin for the three months ended September 30, 2000.

Selling,   general  and   administrative   expenses   decreased  by  12.3%  from
$156,248,000  in the nine months ended September 30, 1999 to $137,037,000 in the
nine months  ended  September  30,  2000.  Selling,  general and  administrative
expenses as a percentage of sales increased from 4.96% of sales in 1999 to 7.09%
for the same period in 2000, primarily as a result of decreased sales volumes.

During the third quarter of 2000,  the Company  announced a  restructuring  plan
that would significantly  reduce its facilities and workforce.  As a result, the
Company has recorded a restructuring  charge of $10,964,000 in the third quarter
of 2000.

As the result of its  continuing  losses and  conditions in its business and the
industry  in which it  operated  at June 30,  2000,  the  Company  reviewed  the
recoverability  of its  long-lived  assets,  including  identifiable  intangible
assets, to determine if there had 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  recorded an  impairment  loss  totaling  $19,487,000,
representing  the unamortized  goodwill  attributable  to the U.S.  distribution
business,  in the  second  quarter of 2000.  In  connection  with the  Company's
announced  restructuring  plan, the Company has recorded an impairment charge of
$9,859,000  related to  redundant  and non-used  assets in the third  quarter of
2000.

Results  for the nine  months  ended  September  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,  the  Company  incurred  an  operating  loss of
$112,160,000  for the nine-month  period ended September 30, 2000 compared to an
operating loss of  $22,868,000  for the  nine-month  period ended  September 30,
1999.

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.  In July 2000, the Company
purchased  $20,105,000 aggregate principal amount of its outstanding 12.5% Notes
for an aggregate  cost of  $7,742,000.  As a result,  the Company  recognized an
extraordinary  gain, net of unamortized  debt issuance costs,  of  approximately
$32,170,000  for the nine months ended  September 30, 2000.  See  "Liquidity and
Capital   Resources   -  Debt   Obligations,   Financing   Sources  and  Capital
Expenditures."

<PAGE>



Interest Expense; Other Expense; and Income Tax Provision

Interest  expense for the Company  decreased  68.3% from $4,798,000 in the third
quarter of 1999 to  $1,523,000  in the 2000  period.  For the nine months  ended
September  30,  2000,  interest  expense  for the Company  decreased  20.8% from
$12,742,000  in the  1999  period  to  $10,097,000  in the  2000  period.  These
decreases are primarily related to the purchases of the 12.5% Notes made in June
and July of 2000 and a reduction in outstanding  borrowings  under the Company's
revolving credit facility.

Other  expense for the Company  decreased  from  $5,491,000  in the three months
ended  September  30, 1999 to income of  $4,960,000  for the three  months ended
September 30, 2000,  and  decreased  from  $15,660,000  in the nine months ended
September 30, 1999 to $3,659,000  for the nine months ended  September 30, 2000.
The decrease is primarily  related to a $8,917,000  gain recorded on the sale in
September  2000 of the building in El Segundo,  California  owned by the Company
and, for the nine-month  period,  a $1,538,000  gain recorded on the sale of the
Company's  Marlborough,  Massachusetts  call center in January 2000. 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
$337,344,000  for the nine months ended September 30, 1999 to  $178,012,000  for
the same period in 2000. The Company's  securitization fees decreased $3,764,000
from  $14,125,000  for the nine  months  ended 1999 to  $10,361,000  in the same
period for 2000.

The income tax provision was $147,000 and $598,000 for the three and nine months
ended September 30, 1999,  respectively,  and $147,000 and $460,000 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.

Loss from Continuing Operations Before Extraordinary Item

Net loss from continuing  operations before  extraordinary  item for the Company
increased from  $17,637,000  and $51,868,000 for the three and nine months ended
September 30, 1999,  respectively,  to a net loss of  $57,474,000  for the three
months  ended  September  30, 2000 and  $126,377,000  for the nine months  ended
September 30, 2000 due to the factors described above. Net loss per share before
extraordinary  item  increased  from $0.22 per share for the three  months ended
September  30, 1999 to a net loss of $0.72 per share for the three  months ended
September 30, 2000. Net loss per share before  extraordinary item increased from
$0.65 per share for the nine months  ended  September  30, 1999 to a net loss of
$1.57 per share for the nine months ended September 30, 2000.

Results  for  the  nine  months  ended   September  30,  2000  also  reflect  an
extraordinary  gain  of  $32,170,000  related  to the  purchase  of  $57,605,000
aggregate principal amount of the 12.5% Notes.


<PAGE>



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  five North  American  distribution
centers 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.

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 provided by operating activities during the nine months ended September
30, 2000 was $9,071,000.  The primary sources of cash from operating  activities
include decreases in inventory and accounts  receivable balances of $296,453,000
and  $87,735,000,  respectively.  These are  partially  offset by a decrease  in
accounts payable of $312,041,000.


<PAGE>



Net  cash  provided  by  investing   activities  related  to  cash  proceeds  of
$14,123,000 from the sale of the Company's El Segundo building in September 2000
and cash proceeds of $1,765,000 from the sale of the Marlborough,  Massachusetts
call center in January 2000. These were partially offset by capital expenditures
of  $1,853,000  which were  primarily  related to  various  information  systems
projects.

Net  cash  used for  financing  activities  was  $14,205,000  and was  comprised
primarily of repayments  under  capitalized  lease  obligations  and  promissory
notes,  including  $4,057,000 related to the building sold in September 2000. In
addition,  $22,814,000  of cash  was  used  to  purchase  $57,605,000  aggregate
principal of the 12.5% Notes,  which was offset by  $15,000,000 of proceeds from
the issuance of convertible preferred stock.

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 equal to percentage of the receivables that
have been sold and  remain  outstanding  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.  In connection
with the sale of the MOCA  business  to  Arrow,  the  Receivables  Purchase  and
Service  Agreement was amended to permit the  repurchase of accounts  receivable
generated by MOCA and to terminate  MOCA's  participation  in the facility  upon
completion of the sale to Arrow. The amendment also reduced the maximum proceeds
available  under the  facility to $60 million  through  November 15, 2000 and to
declining  amounts  thereafter  until the termination of the facility on January
31, 2001.

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. If the facility is not extended,  the Company believes that it will be
able to secure alternative financing for its Canadian operations,  but there are
no assurances it will be successful. The Company is currently in negotiations to
obtain such 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 September
30, 2000, the total amount  outstanding  under these agreements was $92,723,000.
Fees incurred in connection  with the sale of accounts  receivable for the three
and nine months ended September 30, 2000 were $2,380,000


<PAGE>


and $10,361,000  compared to $5,056,000 and  $14,125,000  incurred for the three
and nine months ended September 30, 1999, and are recorded as other expense.

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.  In July 2000, the
Company purchased an additional  $20,105,000  aggregate  principal amount of the
12.5%  Notes for an  aggregate  cost of  $7,742,000.  As a result,  the  Company
recognized an  extraordinary  gain, net of unamortized  debt issuance  costs, of
approximately $32,170,000 in the nine-month period ended September 30, 2000.

At September  30, 2000,  Merisel,  Inc. had  outstanding  $67,395,000  principal
amount of the 12.5% Notes.  In October and November 2000, the Company  purchased
an additional  $34,437,000 of the 12.5% Notes,  reducing the outstanding balance
to  $32,958,000 as of November 17, 2000. 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.

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 was party to a Loan and Security Agreement dated as of June 30,
1998 with Bank of America NT&SA,  acting as agent,  that provided for borrowings
on a revolving basis. In October 2000, the Company cancelled the facility.

In addition to its requirements for working capital for operations,  the Company
presently anticipates that its capital expenditures, excluding the costs related
to the acquisition of Value America's  assets,  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.


<PAGE>


At September 30, 2000, the Company had cash and cash equivalents of $31,958,000,
which have increased  substantially as a result of the sale of the MOCA business
to Arrow  effective as of October 27, 2000.  In the opinion of  management,  the
Company will have  sufficient  liquidity for its U.S. and Canadian  distribution
businesses  only if it receives  adequate  vendor credit  support and is able to
obtain  new   financing   for  such   businesses   to  replace  its   terminated
securitization  facilities.  However, if the Canadian  distribution  business is
unable to obtain appropriate financing,  the Company would be required to either
significantly  decrease  the  size of or wind  down  the  Canadian  distribution
business.  The  Company  believes  that if the U.S.  and  Canadian  distribution
business plans for 2001 are  successfully  implemented,  it will have sufficient
liquidity  during the next 12 months to meet the  requirements of its e-Services
and  Logistics  business,  which the  Company  does not expect to be  profitable
during that period.

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 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

<PAGE>


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.

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

The Company is involved in certain  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.

Item 6. Exhibits and Reports on Form 8-K

         (a)      Exhibits

10.1     Amendments to  Securitization  Agreements and Waiver,  dated as of
         August 18, 2000,  between Merisel Americas,  Inc.,  Merisel
         Capital Funding, Inc., Redwood Receivables Corporation and General
         Electric Capital Corporation

10.2     Amendments to Securitization  Agreements and Waiver,  dated as of
         October 16, 2000,  between Merisel Americas,  Inc.,  Merisel
         Capital Funding, Inc., Redwood Receivables Corporation and General
         Electric Capital Corporation

10.3     Bonus Agreement, dated as of August 10, 2000, between Merisel Americas,
         Inc. and Timothy N. Jenson

10.4     Retention Agreement, dated as of August 10, 2000, between Merisel
         Americas, Inc. and Karen A. Tallman


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


          Current report on Form 8-K, dated  September 15, 2000,  which reported
     that the  Company  had  entered  into a Stock Sale  Agreement,  dated as of
     September  15,  2000,  between  Merisel,   Inc.,  Merisel  Americas,   Inc.
     ("Americas"),  and Arrow  Electronics,  Inc.  ("Arrow"),  pursuant to which
     Americas had agreed to sell the  outstanding  capital stock of Merisel Open
     Computing Alliance, Inc. to Arrow.






<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: November 17, 2000


                                  Merisel, Inc.



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