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, 1999.

                                       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 12, 1999
Common Stock, $.01 par value                 80,278,809 Shares


<PAGE>
<TABLE>
<CAPTION>




                                  MERISEL, INC.

                                      INDEX


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

                  Consolidated Balance Sheets as of                                                 1-2
                  September 30, 1999 and December 31, 1998

                  Consolidated Statements of Operations for the
                  Three Months and Nine Months Ended September 30, 1999 and 1998                     3

                  Consolidated Statements of Cash Flows for the
                  Nine Months Ended September 30, 1999 and 1998                                      4

                  Notes to Consolidated Financial Statements                                        5-9

                  Management's Discussion and Analysis of                                          10-20
                  Financial Condition and Results of Operations

                  Quantitative and Qualitative Market Risk Disclosure                                21

PART II  OTHER INFORMATION                                                                         22-23

                  SIGNATURES                                                                         24
</TABLE>


<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  may
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)
uncertainties associated with the potential Year 2000 impact on end user demand,
and (ix) other risks  detailed in this report.  These  factors are  discussed in
more detail  elsewhere in this report.  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

                                                                             September 30,             December 31,
                                                                                  1999                     1998
                                                                           -------------------      -------------------
<S>                                                                         <C>                       <C>
CURRENT ASSETS:
Cash and cash equivalents                                                              $9,264                  $36,341
Accounts receivable (net of allowances
of $17,615 and $20,476 for 1999 and 1998, respectively)                               230,002                  202,128
Inventories                                                                           541,548                  587,317
Prepaid expenses and other current assets                                              15,507                   14,193
Deferred income taxes                                                                     897                      865
                                                                           -------------------      -------------------
  Total current assets                                                                797,218                  840,844

PROPERTY AND EQUIPMENT, NET                                                            88,404                   79,719

COST IN EXCESS OF NET ASSETS
  ACQUIRED, NET                                                                        23,866                   24,309

OTHER ASSETS                                                                              519                      448
                                                                           -------------------      -------------------

TOTAL ASSETS                                                                         $910,007                 $945,320
                                                                           ===================      ===================


</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

                                                                               September 30,         December 31, 1998
                                                                                    1999
                                                                             -------------------    --------------------

<S>                                                                            <C>                   <C>
CURRENT LIABILITIES:
Accounts payable                                                                  $615,663               $623,673
Accrued liabilities                                                                 37,868                 31,737
Long-term debt and capitalized lease obligations - current                           2,784                  3,692
                                                                             -------------------    --------------------
  Total current liabilities                                                        656,315                659,102

Long-term debt                                                                     131,505                129,360
Capitalized lease obligations                                                        1,911                  2,605
                                                                             -------------------    --------------------
TOTAL LIABILITIES                                                                  789,731                791,067

STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, authorized 1,000,000
  shares; none issued or outstanding
Common stock, $.01 par value, authorized
  150,000,000 shares; 80,278,812 and 80,272,683 shares
  outstanding for 1999 and 1998, respectively                                          803                    803
Additional paid-in capital                                                         282,392                282,380
Accumulated deficit                                                               (153,704)              (118,495)
Accumulated other comprehensive income                                              (9,215)               (10,435)
                                                                             -------------------    --------------------
Total stockholders' equity                                                         120,276                154,253
                                                                             -------------------    --------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                        $910,007               $945,320
                                                                             ===================    ====================


</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                        Nine Months Ended
                                                             September 30,                             September 30,
                                                        1999              1998                    1999               1998
                                                  ----------------     ----------------    ------------------    -----------------

<S>                                               <C>                      <C>               <C>                      <C>
NET SALES                                         $1,358,495               $1,144,317        $3,880,314               $3,342,426

COST OF SALES                                      1,296,072                1,077,042         3,692,343                3,151,697
                                                  ----------------     ----------------    ------------------    -----------------

GROSS PROFIT                                          62,423                   67,275           187,971                  190,729

SELLING, GENERAL &
  ADMINISTRATIVE EXPENSES                             62,475                   49,792           178,876                  146,844

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

OPERATING (LOSS) INCOME                                  (52)                  17,483            (2,905)                  43,885

INTEREST EXPENSE                                       3,980                    3,649            10,777                   11,323

OTHER EXPENSE                                          7,537                    5,786            20,929                   15,407
                                                  ----------------     ----------------    ------------------    -----------------

(LOSS) INCOME BEFORE INCOME TAXES                    (11,569)                   8,048           (34,611)                  17,155

INCOME TAX PROVISION                                     147                      444               598                      807
                                                  ----------------     ----------------    ------------------    -----------------

NET (LOSS) INCOME                                   $(11,716)                  $7,604          $(35,209)                 $16,348
                                                  ================     ================    ==================    =================

NET (LOSS) INCOME PER SHARE (BASIC AND DILUTED)
                                                      $(0.15)                   $0.09            $(0.44)                   $0.20
                                                  ================     ================    ==================    =================

WEIGHTED AVERAGE NUMBER OF SHARES:
  BASIC                                               80,279                   80,228            80,278                   80,199
  DILUTED                                             80,279                   80,473            80,278                   80,529
                                                  ================     ================    ==================    =================



</TABLE>










              See  accompanying   notes  to  consolidated financial statements.


<PAGE>
<TABLE>
<CAPTION>


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

                                                                                 Nine Months Ended September 30,
                                                                                  1999                     1998
                                                                            ------------------      -------------------
<S>                                                                          <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income                                                                $(35,209)                 $16,348
Adjustments to reconcile net (loss) income to net
  Cash (used in) provided by operating activities:
  Depreciation and amortization                                                    15,418                    7,750
  Provision for doubtful accounts                                                   9,474                    8,728
Changes in operating assets and liabilities:
  Accounts receivable                                                             (35,420)                 (13,852)
  Inventories                                                                      49,291                    7,419
  Prepaid expenses and other current assets                                        (1,354)                   3,864
  Accounts payable                                                                (11,738)                 124,867
  Accrued liabilities                                                               7,029                   (1,549)
                                                                            ------------------      -------------------
Net cash (used in) provided by operating activities                                (2,509)                 153,575
                                                                            ------------------      -------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                                              (24,468)                 (22,684)
                                                                            ------------------      -------------------
Net cash used for investing activities                                            (24,468)                 (22,684)
                                                                            ------------------      -------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under revolving line of credit                                       298,700
  Repayments under revolving line of credit                                      (296,200)
  Repayments under other financing arrangements                                    (1,957)                  (1,278)
  Proceeds from issuance of Common Stock                                               12                      595
                                                                            ------------------      -------------------

Net cash provided by (used for) financing activities                                  555                     (683)
                                                                            ------------------      -------------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                              (655)                  (2,490)
                                                                            ------------------      -------------------

NET (DECREASE) INCREASE IN CASH AND
  CASH EQUIVALENTS                                                                (27,077)                 127,718

CASH AND CASH EQUIVALENTS, BEGINNING OF
  PERIOD                                                                           36,341                   36,447
                                                                            ------------------      -------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                           $9,264                 $164,165
                                                                            ==================      ===================


</TABLE>








            See  accompanying   notes  to  consolidated financial statements.


<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.  The Company  operates three distinct  business
segments: United States distribution, Canadian distribution and the Merisel Open
Computing  Alliance  ("MOCA(TM)").  The Company  markets  products  and services
throughout  the  United  States  and  Canada,   and  has  achieved   operational
efficiencies  that have made it a valued  partner to a broad  range of  computer
resellers,  including value-added resellers ("VARs"),  commercial resellers, and
retailers.   Through   MOCA(TM),   the  Company   supports   Sun   Microsystems'
UNIX(R)-based products and complementary third-party products.

The  information  for the three months and nine months ended  September 30, 1999
and 1998 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 have been omitted  pursuant to the requirements of the Securities and
Exchange Commission, although the Company believes that the disclosures included
in  these  financial  statements  are  adequate  to  make  the  information  not
misleading.  Certain amounts for 1998 have been reclassified to conform with the
1999  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, 1998.

2. New Accounting Pronouncement

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments  and  Hedging  Activities"  ("SFAS  133"),  which is  effective  for
financial  statements  issued for  periods  beginning  after June 15,  2000,  as
amended.  The Company will adopt SFAS 133 as required in January 2001.  SFAS 133
requires all  derivatives to be recorded on the balance sheet at fair value with
changes in fair value reflected in income or equity,  depending on the nature of
the hedge.  The Company is in the process of evaluating the effect that this new
standard will have on the Company's financial statements.



<PAGE>


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


3. 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  period-end  and year-end as September 30 and
December 31, respectively.

4. Comprehensive Income

In June 1997, the FASB issued  Statement of Financial  Accounting  Standards No.
130,  "Reporting for  Comprehensive  Income"  ("SFAS 130").  SFAS 130, which the
Company  adopted  in the  first  quarter  of  1998,  establishes  standards  for
reporting  and  displaying  comprehensive  income and its  components in general
purpose financial statements. Comprehensive income is computed as follows:
<TABLE>
<CAPTION>

                                                              (In thousands)                         (In thousands)
                                                            Three Months Ended                      Nine Months Ended
                                                               September 30,                          September 30,
                                                         1999                1998                1999              1998
                                                         ----                ----                ----              ----

<S>                                                    <C>                   <C>                <C>               <C>
Net (loss) income                                      $(11,716)             $7,604             $(35,209)         $16,348
Other comprehensive income -
   Foreign currency translation adjustments                (311)             (1,642)               1,220           (2,733)
                                                    ----------------    ----------------     -------------    ---------------

Comprehensive income                                   $(12,027)             $5,962             $(33,989)         $13,615
                                                    ================    ================     =============    ===============
</TABLE>


5. Earnings Per Share ("EPS")

The Company  calculates  earnings  per share in  accordance  with  Statement  of
Financial Accounting Standards No. 128, "Earnings Per Share." Basic earnings per
share  is  calculated  using  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 stock
options, excluding those that would be anti-dilutive, using the "treasury stock"
method.



<PAGE>


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


The following table is a  reconciliation  of the weighted average shares used in
the  computation  of basic and  diluted  EPS for the  income  statement  periods
presented herein:
<TABLE>
<CAPTION>

                                                       (In thousands)                       (In thousands)
                                                     Three months Ended                    Nine Months Ended
                                                        September 30,                        September 30,
Weighted average shares outstanding                1999               1998               1999                1998
-----------------------------------                ----               ----               ----                ----
<S>                                             <C>                 <C>                 <C>                 <C>

Basic                                                 80,279             80,228             80,278              80,199
Assumed exercises of stock options                                          245                                    330
                                              ---------------    ---------------    ---------------     ---------------

Diluted                                               80,279             80,473             80,278              80,529
                                              ===============    ===============    ===============     ===============
</TABLE>

6.    Supplemental Disclosure of Cash Flow Information

Cash paid in the three-month and nine-month periods ended September 30 for
interest and income taxes is as follows:
<TABLE>
<CAPTION>

                                            (In thousands)                              (In thousands)
                                          Three Months Ended                           Nine Months Ended
                                             September 30,                               September 30,
                                      1999                  1998                  1999                  1998
                                      ----                  ----                  ----                  ----
   <S>                               <C>                   <C>                    <C>                  <C>

   Interest                            $593                  $  32                $7,441                $7,369
   Income taxes                        $ 49                  $ 463                $  238                $  348

</TABLE>

7.       Segment Information

The Company provides certain  information about operating  segments,  geographic
areas in which the Company operates, major customers, and products and services,
in  accordance  with  Statement  of  Financial  Accounting  Standards  No.  131,
"Disclosure  about  Segments of an Enterprise  and Related  Information"  ("SFAS
131").  The Company has  determined it has three  operating  segments under SFAS
131: the United States distribution  segment, the Canadian distribution segment,
and MOCA. Each of these segments has a dedicated  management team and is managed
separately  primarily  because  of  geography  (United  States and  Canada)  and
differences  in product  categories,  marketing  strategies  and  customer  base
(MOCA). All segment information is provided on the basis of these three segments
as identified. Sales, costs of sales and other direct expenses related to MOCA's
operations in Canada,  which have  historically  been attributed to the Canadian
segment, have been reclassified to the MOCA segment for comparative purposes for
all periods presented.



<PAGE>


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


The Company does not maintain separate stand-alone financial statements prepared
in accordance  with  generally  accepted  accounting  principles for each of its
operating  segments.  In accordance  with SFAS 131, the Company has prepared the
following  tables which present  information  related to each operating  segment
included in internal management reports.
<TABLE>
<CAPTION>

                                                                      (In thousands)
                                                                    Three Months Ended
                                                                    September 30, 1999
                                      -------------------------------------------------------------------------------
                                           United
                                           States              MOCA               Canada                Total
                                           -------            ------              -------              -------
<S>                                        <C>               <C>                 <C>                  <C>
Net sales to external customers              $894,710          $257,315            $206,470           $1,358,495
Segment profit contribution(A)                                   10,453(A)                                10,453(A)
Segment operating (loss) profit(A)            (12,837)                                2,332              (10,505)
</TABLE>
<TABLE>
<CAPTION>

                                                                      (In thousands)
                                                                    Three Months Ended
                                                                    September 30, 1998
                                      -------------------------------------------------------------------------------
                                           United
                                           States              MOCA               Canada                Total
                                          ---------           -------            ---------             --------
<S>                                        <C>               <C>                   <C>                <C>
Net sales to external customers            $803,389          $153,273              $187,655           $1,144,317
Segment profit contribution(A)                                  5,677                                      5,677
Segment operating profit(A)                   9,757                                   2,049               11,806(A)

</TABLE>
<TABLE>
<CAPTION>

                                                                      (In thousands)
                                                                    Nine Months Ended
                                                                    September 30, 1999
                                      -------------------------------------------------------------------------------
                                           United
                                           States              MOCA               Canada                Total
                                          ---------           ------              -------              -------
<S>                                        <C>                 <C>                 <C>                <C>
Net sales to external customers            $2,479,306          $730,003            $671,005           $3,880,314
Segment profit contribution(A)                                   29,084(A)                                29,084(A)
Segment operating (loss) profit(A)            (39,381)                                7,392              (31,989)
</TABLE>
<TABLE>
<CAPTION>

                                                                      (In thousands)
                                                                    Nine Months Ended
                                                                    September 30, 1998
                                      -------------------------------------------------------------------------------
                                           United
                                           States              MOCA               Canada                Total
                                          --------            ------             ---------             -------
<S>                                      <C>                 <C>                   <C>                <C>
Net sales to external customers          $2,310,309          $423,410              $608,706           $3,342,426
Segment profit contribution(A)                                 17,904(A)                                  17,904(A)
Segment operating profit(A)                  22,284                                   3,696               25,980(A)

</TABLE>


<PAGE>


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



<TABLE>
<CAPTION>


Geographical Area Net Sales:
                                     (In thousands)                              (In thousands)
                                   Three months ended                          Nine months ended
                                      September 30,                              September 30,
                                1999                 1998                  1999                  1998
                                ----                 ----                  ----                  ----
<S>                           <C>                    <C>                 <C>                    <C>
United States                 $1,145,874             $ 954,605           $3,193,783             $2,726,173
Canada                           212,621               189,712              686,531                616,253
                          -----------------     ----------------     -----------------     -----------------

Total Net Sales               $1,358,495            $1,144,317           $3,880,314             $3,342,426
                          =================     ================     =================     =================
</TABLE>

<TABLE>
<CAPTION>


Hardware/Software Sales
                                     (In thousands)                              (In thousands)
                                   Three months ended                          Nine months ended
                                      September 30,                              September 30,
                                1999                 1998                  1999                  1998
                                ----                 ----                  ----                  ----
<S>                           <C>                    <C>                 <C>                    <C>
Hardware                      $1,100,381             $ 904,010           $3,065,448             $2,607,092
Software                         258,114               240,307              814,866                735,334
                          -----------------     ----------------     -----------------     -----------------

Total Net Sales               $1,358,495            $1,144,317           $3,880,314             $3,342,426
                          =================     ================     =================     =================
</TABLE>


Note A: For each of its operating  segments,  the Company evaluates  performance
based upon operating (loss) profit or profit contribution.  However, the Company
has  not   historically   allocated   corporate   overhead,   depreciation   and
amortization,  or shared operating expenses to the MOCA operating segment.  As a
result,  the Company  believes that the segment profit  contribution for MOCA in
the tables  above would be  substantially  lower than the amounts  shown if such
costs were allocated.  Corporate  overhead,  amortization  and shared  operating
expenses are allocated to Canada on a pro rata basis.  Segment  operating (loss)
profit  for  the  United  States  business  includes  all  corporate   overhead,
amortization and shared operating expenses not allocated to Canada and MOCA, and
in 1999, segment operating loss includes the  litigation-related  charge and the
offsetting insurance recovery.



<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.  The Company  operates three distinct  business
segments: United States distribution, Canadian distribution and the Merisel Open
Computing  Alliance  ("MOCA(TM)").  The Company  markets  products  and services
throughout  the  United  States  and  Canada,   and  has  achieved   operational
efficiencies  that have made it a valued  partner to a broad  range of  computer
resellers,  including value-added resellers ("VARs"),  commercial resellers, and
retailers.   Through   MOCA(TM),   the  Company   supports   Sun   Microsystems'
UNIX(R)-based products and complementary third-party products.

RESULTS OF OPERATIONS

Three  Months  Ended  September  30, 1999 as Compared to the Three  Months Ended
September 30, 1998

Net sales increased 18.7% from $1,144,317,000 in the quarter ended September, 30
1998 to  $1,358,495,000  in the quarter ended  September 30, 1999.  The increase
resulted  from an 11.4%  increase  in net sales for U.S.  distribution,  a 67.9%
increase for MOCA and a 10.0% increase for the Canadian  distribution  business.
The U.S.  growth rate resulted from increased  sales of 18.1% for the commercial
customer  group,  3.9%  for the  retail  customer  group,  and  1.5% for the VAR
customer  group.  The Company expects that the growth rate in MOCA will decrease
in future  periods.  The growth rate in Canada in terms of Canadian  dollars was
7.4%,  which is lower than in recent  quarters and  reflects in part the effect
of general  softness in the Canadian market.

Hardware and accessories  accounted for 81% of net sales and software  accounted
for 19% of net sales in the third  quarter of 1999,  as  compared to 79% and 21%
for the same categories, respectively, for the third quarter of 1998.

Gross profit  decreased 7.2% or $4,852,000 from $67,275,000 in the third quarter
of 1998 to  $62,423,000  in the 1999 period.  Gross  profit as a  percentage  of
sales,  or gross margin,  decreased  from 5.9% in the 1998 period to 4.6% in the
1999  period.  The  decline  in  margins  was  primarily  related  to  the  U.S.
distribution  segment,  which  was  significantly  negatively  affected  by  (i)
changing  vendor terms and  conditions,  including a reduction in vendor rebates
and  an  increase  in  price  protection  exposure,   (ii)  competitive  pricing
pressures,  and (iii) increased systems sales,  which have  comparatively  lower
margins than non-system products, as a result of a significant increase in sales
of Compaq product following the launch of Compaq's  Distributor Alliance Program
under which the Company is one of four distributors and resellers able to source
product directly from Compaq. To address the issue of declining margins in the
<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


U.S., the Company is adjusting  selling  margins,  particularly on product lines
that have been affected by vendor rebate reductions, leveraging SAP to implement
system  controls for enhanced  margin  management  and  increasing the extent to
which sales compensation is tied to margin-goal achievement. The Company is also
accelerating  customer  recruitment efforts to expand its account base, focusing
attention on more profitable  product lines,  and enhancing  customer support by
assigning  dedicated sales teams according to customer  specific business models
and geographical locations.  There is no assurance that the Company's efforts to
improve margins will be successful. In addition, changing manufacturer terms and
conditions,  particularly  in price  protection,  have  contributed  to  greater
inventory  risk and  necessitated  changes in purchasing  practices that in turn
have affected selling and pricing activities.

Selling, general and administrative expenses increased by 25.5% from $49,792,000
in the  third  quarter  of 1998 to  $62,475,000  in the third  quarter  of 1999,
increasing  as a percentage  of sales from 4.4% of sales in 1998 to 4.6% for the
same period in 1999. This reflects an increase in depreciation  expenses for the
1999 quarter of approximately $4,000,000,  which is primarily related to the SAP
R/3 operating  system,  other  information  systems  expenditures  and strategic
initiatives.  Selling,  general and administrative  expenses for the 1999 period
also included approximately $1,430,000 of payroll and payroll related costs that
were capitalized in the 1998 period for employees  directly  associated with the
SAP  implementation  project.  Such costs are  expected  to  continue  in future
periods. Additionally, the Company spent approximately $762,000 during the third
quarter of 1999 in Year 2000  compliance-related  expenses. No other significant
future expenses related to Year 2000 compliance are expected to be incurred. See
"Year 2000 Issues"  below.  The remainder of the increase  resulted  principally
from  increased   variable  costs   associated  with  growth  of  the  Company's
businesses.

As a result of the above items,  operating  income decreased by $17,535,000 from
$17,483,000  for the third  quarter of 1998 to a loss of  $52,000  for the third
quarter of 1999.

Interest  expense for the Company  increased  $331,000  from  $3,649,000  in the
quarter ended  September  30, 1998 to $3,980,000 in the quarter ended  September
30, 1999.  The increase is due  primarily to the  utilization  of the  Company's
revolving line of credit to fund working capital requirements.

Other expenses for the Company  increased from  $5,786,000 for the quarter ended
September  30, 1998 to $7,537,000  for the same period in 1999.  The increase is
due primarily to asset  securitization  fees which increased  $2,891,000 for the
third quarter due to increased  sales of accounts  receivable and an increase in
the underlying  rate  associated with the fees that the Company pays on the sale
of  receivables.  The  average  proceeds  resulting  from the  sale of  accounts
receivable at month end under the Company's securitization  facilities increased
from  $293,728,000  for the third quarter of 1998 to  $440,593,000  for the same


<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


period in 1999. The increase in asset  securitization  fees was partially offset
by a  $1,087,000  decrease  in  foreign  currency  losses  as a  result  of more
favorable volatility in the Canadian dollar.

The income tax  provision  decreased  from an expense of $444,000  for the third
quarter of 1998 to an expense of  $147,000  for the same period in 1999 due to a
current  quarter  net loss  position  versus a net income  position in the prior
period. In both periods,  the income tax expense reflects  primarily the minimum
statutory  tax  requirements  in the  provinces  and states in which the Company
conducts  business.  The Company has sufficient net operating loss provisions to
offset federal income taxes in the current period.

On a consolidated  basis,  net income for the Company  decreased from $7,604,000
for the third quarter of 1998 to a net loss of $11,716,000 for the third quarter
of 1999, due to the factors described above. Net income per share decreased from
$.09 per share for the third quarter of 1998 to a net loss of $.15 per share for
the third quarter of 1999.


Nine Months  Ended  September  30,  1999 as  Compared  to the Nine Months  Ended
September 30, 1998

For the nine months ended  September 30, 1999, net sales increased by 16.1% from
$3,342,426,000  for the nine months ended  September 30, 1998 to  $3,880,314,000
for the nine months ended September 30, 1999. The increase  resulted from a 7.3%
increase in net sales in U.S. distribution, a 72.4% increase in MOCA and a 10.2%
increase in Canadian  distribution.  The growth rate in the U.S.  reflects sales
growth  of 27.5%  for the  retail  customer  group  and 8.7% for the  commercial
customer group,  with  essentially no growth for the VAR customer group over the
prior  year  period.  The  Company  does not expect  that  growth rate to
continue. The increase in year-over-year performance in Canadian distribution is
due to substantially the same factors  summarized in the discussion of sales for
the three months ended September 30, 1999 and 1998. The growth rate in Canada in
terms of  Canadian  dollars  was  12.6%,  but the  decline  in the  value of the
Canadian dollar hampered the growth rate in terms of U.S. dollars.

Hardware and accessories  accounted for 79% of net sales and software  accounted
for 21% of net sales in the first nine  months of 1999,  as  compared to 78% and
22% for the same categories, respectively, in the first nine months of 1998.



<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


Gross profit  decreased 1.5% or $2,758,000 from  $190,729,000 for the first nine
months of 1998 to $187,971,000  for the first nine months of 1999.  Gross profit
as a percentage of sales decreased from 5.7% for the 1998 period to 4.8% for the
1999  period.  The  decline  in  margins  was  primarily  related  to  the  U.S.
distribution  segment and is  attributable  to  substantially  the same  factors
summarized  in the  discussion  of  gross  profit  for the  three  months  ended
September 30, 1999 and 1998.

Selling,   general  and   administrative   expenses   increased  by  21.8%  from
$146,844,000  in the nine months ended September 30, 1998 to $178,876,000 in the
nine months  ended  September  30,  1999.  Selling,  general and  administrative
expenses as a percentage of sales  increased  from 4.4% of sales in 1998 to 4.6%
for the same  period in 1999.  Contributing  to the  increase  for the year were
depreciation  expenses  related  to the  SAP  R/3  operating  system  and  other
strategic initiatives; post "go-live" costs for expenses associated with the SAP
implementation;   payroll  and  payroll-related   costs  of  employees  directly
associated  with the SAP  project,  which  payroll  costs for  periods  prior to
implementation  had been  capitalized  and which will continue to be incurred in
future periods;  expenses related to the Company's  strategic  initiatives;  and
costs  associated  with Year 2000  compliance.  The  remainder  of the  increase
resulted  largely from increased  variable costs  associated  with growth of the
Company's business and other costs incurred to support growth.

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  Company's  12-1/2%
Senior Notes,  offset in part by the $9,000,000  insurance  recovery recorded by
the Company in the second quarter.

As a result of the above items,  operating  income decreased by $46,790,000 from
$43,885,000 for the nine months ended September 30, 1998 to a loss of $2,905,000
for the nine months ended September 30, 1999.  Excluding the  litigation-related
charge and related  insurance  recovery,  the Company  would have had  operating
income of $9,095,000 for the nine months ended September 30, 1999.

Interest  expense for the nine months ended  September 30, 1999  decreased  4.8%
from  $11,323,000  in the 1998 period to  $10,777,000  in the 1999  period.  The
decrease in interest expense is primarily  attributable to the capitalization of
$1,230,000 in interest related to the SAP implementation in the first quarter of
1999.  The  decrease  was  offset in part by an  increase  in  interest  expense
resulting from higher average  borrowings under the Company's  revolving line of
credit to fund working capital requirements.

Other expenses for the Company  increased from  $15,407,000  for the nine months
ended  September 30, 1998, to  $20,929,000  for the nine months ended  September
30,1999.  The increase is due  primarily  to asset  securitization  fees,  which
increased  $6,518,000 over the prior year period.  The increased  securitization
fees are primarily due to increased sales of accounts

<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


receivable and an increase in the underlying  rate associated with the fees that
the Company pays on the sale  of  receivables.  The average  proceeds  resulting
from  the  sale  of  accounts  receivable  at  month  end  under  the  Company's
securitization  facilities increased from $272,272,000 for the nine months ended
September 30, 1998 to $431,666,000 for the same period in 1999.

The income tax  provision  decreased  from an expense of  $807,000  for the nine
months ended  September  30, 1998, to an expense of $598,000 for the same period
in 1999.  In both periods,  the income tax rate  reflects  primarily the minimum
statutory  tax  requirements  in the  provinces  and states in which the Company
conducts  business.  The Company has sufficient net operating loss provisions to
offset federal income taxes in the current period.

On a consolidated  basis, net income for the Company  decreased from $16,348,000
for the nine months ended  September 30, 1998, to a net loss of $35,209,000  for
the nine months ended  September 30, 1999, due to the factors  described  above.
Net income per share  decreased  from $.20 per share for the nine  months  ended
September  30,  1998 to a net loss of $.44 per share for the nine  months  ended
September 30, 1999.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow Activity

Net cash used by operating activities during the nine months ended September 30,
1999 was  $2,509,000.  The  primary  uses of cash  during the period  include an
increase in accounts  receivable of  $35,420,000  due to an increase in sales, a
$12,000,000  charge net of insurance  recoveries  paid in the first half of 1999
relating to the settlement of litigation between the Company and certain holders
and former  holders of the Company's  12-1/2%  Senior  Notes,  and a decrease in
current liabilities that resulted from industry-wide changes in vendor terms and
conditions and an increased used of vendor early-pay opportunities.  The primary
source  of cash  from  operating  activities  was a  decrease  in  inventory  of
$49,291,000  from the unusually  high level of inventory at the end of 1998. The
Company  believes that it needs to continue to decrease its  inventory  level in
order to offset  inventory risks related to changing vendor terms and conditions
and to improve its working capital position.

Net cash used in investing activities during the nine months ended September 30,
1999 consisted of capital expenditures of $24,468,000.

Net cash provided by financing activities during the nine months ended September
30, 1999 was $555,000 and was  comprised  primarily  of the  difference  between
borrowings and  repayments of the revolving  line of credit and other  financing
arrangements.

<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


Securitization Facilities

Funds  generated by the sale of  receivables  in the U.S.  are provided  through
Merisel  Capital  Funding,  Inc.  ("Merisel  Capital  Funding"),  a wholly owned
subsidiary of Merisel Americas,  Inc. ("Merisel  Americas"),  which in turn is a
wholly owned subsidiary of Merisel, Inc. Merisel Capital Funding's sole business
is the ongoing  purchase of trade  receivables  from Merisel  Americas.  Merisel
Capital  Funding sells these  receivables,  in turn,  under an agreement  with a
securitization  company, whose purchases yield proceeds of up to $500,000,000 at
any point in time.  Merisel Capital Funding is a separate  corporate entity with
separate  creditors who, upon its liquidation,  are entitled to be satisfied out
of  Merisel  Capital  Funding's  assets  prior to any  value  in the  subsidiary
becoming available to the subsidiary's  equity holder. This agreement expires in
October 2003.

Funds are also provided to Merisel Canada,  Inc.  ("Merisel  Canada"),  a wholly
owned  subsidiary  of Merisel  Americas,   through a  receivables  purchase
agreement with a  securitization  company.  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  13,  2000,  but is  extendible  by notice  from the
securitization company, subject to the Company's approval.

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, 1999, the total amount  outstanding under these agreements was $435,202,000.
Fees incurred in connection  with the sale of accounts  receivable for the three
and nine  months  ended  September  30,  1999 were  $7,102,000  and  $19,394,000
compared to $4,211,000  and  $12,876,000  incurred for the three and nine months
ended September 30, 1998 and are recorded as other expense.

Debt Obligations, Financing Sources and Capital Expenditures

At September 30, 1999,  Merisel,  Inc. had  outstanding  $125,000,000  principal
amount of 12-1/2%  Senior  Notes due 2004 (the "12.5%  Notes").  The 12.5% Notes
provide for an interest rate of 12.5% payable semi-annually.  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  imposes  limitations  on  investments,  loans,
advances,  asset sales or transfers,  dividends and other payments, the creation
of liens, sale-leasebacks, transactions with affiliates and certain mergers.

At September 30, 1999,  the Company had  promissory  notes  outstanding  with an
aggregate balance of $5,329,000.  Such notes provide for interest at the rate of
approximately 7.7% per annum and are repayable in 48 and 60 monthly installments
that commenced February 1, 1996,

<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


with  balloon  payments of $500,000  and  $3,900,000  due on January 1, 2000 and
January 1, 2001,  respectively.  The notes are  collateralized by certain of the
Company's real property and equipment.

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. The Loan and
Security Agreement permits  borrowings of up to $100,000,000  outstanding at any
one time  (including  face  amounts of letters  of  credit),  subject to meeting
certain  availability  requirements  under a  borrowing  base  formula and other
limitations.  Borrowings under the Loan and Security  Agreement are secured by a
pledge  of  substantially  all  of  the  inventory  held  by  Merisel  Americas.
Borrowings bear interest at the rate of 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.  As of September 30, 1999,
$2,500,000 was outstanding under the Loan and Security Agreement.

In addition to its requirements for working capital for operations,  the Company
presently   anticipates  that  its  capital   expenditures  will  be  less  than
$35,000,000 for 1999,  primarily consisting of costs associated with information
systems,  including  systems for enhancing  electronic  services and growing the
Company's infrastructure,  developing and implementing the SAP operating system,
developing  the  Company's  configuration  and  co-location  capabilities,   and
upgrading warehouse systems and other Company facilities. The Company intends to
fund its capital  expenditures  primarily through internally  generated cash and
lease financing.

At September 30, 1999, the Company had cash and cash  equivalents of $9,264,000.
In the opinion of management,  anticipated cash from  operations,  together with
proceeds  from  the  sale of  receivables  under  the  Company's  securitization
agreements,  trade  credit  from  vendors  and  borrowings  under the  Company's
revolving credit facility, will be sufficient to meet the Company's requirements
for the next 12 months, without the need for additional financing. This assumes,
however,   that  there  are  not  material  adverse  changes  in  the  Company's
relationships  with  its  vendors,   customers  or  lenders.  In  addition,  any
unforeseen event that adversely  impacts the industry or the Company's  position
in the  industry  could have a direct  and  material  unfavorable  effect on the
liquidity of the Company.

ASSET MANAGEMENT

Merisel attempts to manage its inventory  position to maintain levels sufficient
to achieve high product  availability  and same-day order fill rates.  Inventory
levels may vary from period to period,  due to factors  including  increases  or
decreases in sales levels,  Merisel's practice of making large-volume  purchases
when  it  deems  such  purchases  to be  attractive,  and  the  addition  of new
manufacturers and products.  The Company has negotiated  agreements with many of
its

<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


manufacturers  that contain  stock  balancing  and price  protection  provisions
intended  to  reduce,  in part,  Merisel's  risk of loss due to  slow-moving  or
obsolete inventory or manufacturer price reductions.  The Company is not assured
that these  agreements  will  succeed in reducing  this risk.  In the event of a
manufacturer  price  reduction,  the  Company  generally  receives  a credit for
products  in  inventory.  In  addition,  the  Company  has the right to return a
certain percentage of purchases,  subject to certain limitations.  Historically,
price protection and stock return privileges, as well as the Company's inventory
management  procedures,  have  helped  to  reduce  the risk of loss of  carrying
inventory.  In the past year,  however,  certain computer systems  manufacturers
that are among the Company's  largest  vendors have  announced  changes in price
protection  and other terms and  conditions  that have  adversely  affected U.S.
distribution  margins  during  1999.  The Company is working  closely with these
manufacturers  and is  developing  buying  procedures  and  controls  to  manage
inventory  purchases to reduce the potential  adverse  impact from these changes
while balancing the need to maintain sufficient levels of inventory. There is no
assurance that such efforts will be successful in preventing a material  adverse
effect on the Company in future periods.

The Company  purchases  foreign exchange  contracts to minimize 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.

SYSTEMS AND PROCESSES

In April 1999,  Merisel  completed the conversion of its U.S.  operations to the
SAP R/3  client/server  operating  system.  The Company  converted  its Canadian
operations from a mainframe to the SAP client/server  operating system in August
1995. With the U.S.  implementation  complete,  the U.S. and Canadian operations
are each operating on a single platform.  SAP is an enterprise-wide system which
integrates  substantially  all  functional  areas of the business in a real-time
environment.   The  new  system  is  designed  to  provide  greater  transaction
functionality,  real-time information access,  automated controls,  flexibility,
and custom pricing applications.


<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


YEAR 2000 ISSUES

Introduction

The term  "Year  2000  issue" is a general  term used to  describe  the  various
problems  that  may  result  from the  improper  processing  of  dates  and date
sensitive  calculations  by  computers  and other  equipment as the year 2000 is
approached  and  reached.  These  problems  generally  arise  from the fact that
computers and equipment have  historically  used two-digit fields that recognize
dates  using the  assumption  that the first two  digits are "19." On January 1,
2000,  systems using  two-digit date fields could recognize a date using "00" as
the year 1900 rather than the year 2000.

Year 2000 Project and the Company's State of Readiness

The Company believes that  implementation  of the SAP operating system addresses
its major Year 2000 issues for its core information  technology  ("IT") systems.
See "Systems and Processes" above. The Company developed and executed a plan for
addressing  the remainder of its Year 2000 issues which focused on the following
six areas:  core IT systems;  off-line IT subsystems;  technical  infrastructure
(e.g.,  networks,   servers,  desktop  computers);   vendor/customer  interfaces
(consisting  of electronic  data  interchange or "EDI");  facilities  (including
security systems,  elevators,  and heating and cooling systems); and third-party
suppliers, vendors and customers ("External Parties"). For the first five areas,
the Company's Year 2000 plan consisted of the following  phases:  (1) conducting
an inventory of items with Year 2000  implications;  (2) assessment of Year 2000
compliance; (3) remediation or replacement of material items that are determined
not to be Year 2000  compliant;  (4) testing  (including  re-testing of material
items that were  remediated or  replaced);  and (5)  certification  of Year 2000
compliancy. The Company has completed all six phases of its Year 2000 plan.

Costs

The Company has incurred  aggregate  costs of $2,667,000  through  September 30,
1999 in connection with its Year 2000 project,  which is substantially below the
Company's original budget estimate of $4.2 million.  The Company does not expect
to incur any  significant  additional  amounts.  The aggregate costs exclude the
cost of  implementing  the SAP operating  system in the U.S. and costs  incurred
pursuant to the Company's  technology  upgrade  strategy where the upgrades were
not accelerated due to the Year 2000 issues.  The Company's  aggregate cost does
not include costs that may be incurred by the Company as a result of the failure
of any third parties, including suppliers, to become Year 2000 ready or costs to
implement  any  contingency.  The Year 2000  project  costs are  expensed by the
Company as incurred.


<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


Risks

The  Company  believes  that the  completion  of its Year 2000  project  and the
implementation  of the SAP  operating  system in the U.S.  has  resulted  in the
Company being Year 2000  compliant.  However,  the failure to correct a material
Year 2000 problem could result in an  interruption  in, or a failure of, certain
normal business  activities or operations,  which could materially and adversely
affect the Company's results of operations,  liquidity and financial  condition.
In addition,  if third  parties that provide goods or services that are critical
to the Company's business  activities fail to adequately address their Year 2000
issues,  there could be a similar  material  adverse effect on the Company.  The
Company  believes  that its most  reasonably  likely worst case  scenario is the
failure of such a third party. Such a failure could result in, for example,  the
inability of the Company to ship product, a telecommunications failure at one or
more of the Company's  call centers,  a decrease in customer  orders,  delays in
product deliveries from vendors or power outages at one or more of the Company's
facilities.  The Company  believes that its Year 2000 project has  significantly
reduced the uncertainty  surrounding the Year 2000 issue, including uncertainity
related to External  Parties.  The Company believes that, with the completion of
its Year 2000 project,  the possibility of significant  interruptions  of normal
operations has been reduced.

Contingency Plans

As part of the Company's Year 2000 project, Year 2000-specific contingency plans
have been  developed.  The Company  expects that these plans will continue to be
modified throughout 1999 as the Company obtains additional information regarding
the status of the Year 2000  readiness of External  Parties.  In addition,  as a
normal course of business,  the Company maintains and deploys  contingency plans
as part of its disaster  recovery  program that are designed to address  various
other potential business interruptions. These plans may be applicable to address
the failure of External Parties to provide goods or services to the Company as a
result of their  failure to be Year 2000  ready.  During  1999,  the  Company is
expanding its disaster  recovery program to cover  substantially all systems for
which detailed contingency plans do not currently exist.

Readers are cautioned that forward-looking statements contained under "Year 2000
Issues" should be read in conjunction with the Company's  disclosures  under the
heading: "SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION" on page ii.

VARIABILITY OF QUARTERLY RESULTS AND SEASONALITY

Historically,  the  Company  has  experienced  variability  in its net sales and
operating margins on a quarterly basis and expects these patterns to continue in
the  future.   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 of existing  products;  (iii) the
intensity of price

<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


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. In addition,  quarterly variability could be
affected by the Year 2000 issue by shifting demand for computer  products during
1999 and future years.  Due to the factors  noted above,  as well as the dynamic
characteristics  of the computer product  distribution  industry,  the Company's
revenues and earnings may be subject to material  volatility,  particularly on a
quarterly basis.

Additionally,   the  Company's  net  sales  in  the  fourth  quarter  have  been
historically  higher  than  in its  other  three  quarters,  although  there  is
uncertainty as to whether 1999 fourth  quarter sales will be adversely  affected
by Year 2000  issues.  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" above.

COMPETITION

Competition  in  the  computer  products   distribution   industry  is  intense.
Competitive factors include price, brand selection,  breadth and availability of
product  offering,  purchasing  arrangements,  financing  options,  shipping and
packaging accuracy,  speed of delivery, level of training and technical support,
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 businesses include large
distributors  and  aggregators  such as Gates/Arrow,  GE IT Distribution  Group,
Inacom, Ingram Micro, Pinacor,  Synnex Information  Technologies,  Inc. and Tech
Data, as well as regional distributors and franchisers.

Merisel  also  competes  with  manufacturers  that  sell  directly  to  computer
resellers,  sometimes  at prices  below  those  charged by Merisel  for  similar
products. The Company believes its broad product offering, product availability,
prompt  delivery  and  support  services  may  offset  a  manufacturer's   price
advantage.  In addition,  many  manufacturers  concentrate their direct sales on
large computer  resellers  because of the relatively high costs  associated with
dealing with small-volume computer resellers.




<PAGE>





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 year ended December 31, 1998.


<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. The plaintiff  alleges that certain  executive  officers of Media
Vision Technology,  Inc. ("Media Vision") committed fraud and breached fiduciary
duties owed to Media Vision  through,  inter alia, the improper  recognition and
reporting of sales, revenue and income and the failure to properly recognize and
report product returns during 1993 and 1994,  thereby  overstating the financial
condition of Media Vision as reflected in its financial statements for 1993. The
plaintiff further alleges that the Company aided, abetted, conspired and/or made
possible such acts and omissions of the Media Vision  executives.  The plaintiff
seeks to recover compensatory damages, including interest thereon, exemplary and
punitive  damages,  and costs  including  attorneys'  fees. On May 6, 1998,  the
Company filed a motion to dismiss the complaint on various legal grounds as well
as a motion to strike the punitive  damages prayer.  In response to the motions,
the plaintiff filed a first amended complaint on August 31, 1998, adding a claim
for unfair  business  practices  under  California  Business & Professions  Code
ss.17200  and  additional  allegations.  The  plaintiff's  filing of an  amended
complaint mooted the Company's  original motions.  The Company filed a motion to
dismiss  the  amended  complaint  on various  grounds and a motion to strike the
punitive  damages prayer.  In its opposition to the Company's  motion to strike,
the plaintiff withdrew its prayer for punitive damages. On January 15, 1999, the
Court issued an Order  staying  prosecution  of the action under the doctrine of
exclusive  concurrent  federal  jurisdiction.  Plaintiff  filed a motion to seek
relief from the stay and in October  1999 such motion was  granted.  The Company
intends to file a renewed  motion to dismiss and expects that its renewed motion
will be heard during  December  1999,  although it is uncertain  when a decision
will be issued.  The Company has defended itself  vigorously  against this claim
and will continue to do so.

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. 6 to Purchase  Agreement and Waiver dated as of August
         13, 1999 among Merisel  Americas,  Inc.,  Merisel Capital Funding,
         Inc., Redwood Receivables Corporation and General Electric Capital
         Corporation.

10.2     Change of Control Agreement dated as of August 18, 1999 between
         Merisel, Inc., Merisel Americas, Inc. and William Page.

10.3     Change of Control Agreement dated as of August 18, 1999 between
         Merisel, Inc., Merisel Americas, Inc. and Karen Tallman.

10.4     Amendment No. 2 dated as of September 30, 1999, among Merisel Americas,
         Inc., Inc., the financial  institutions listed on the signature pages
         thereto and Bank of America, N.A.


         (b) The  following  Reports on Form 8-K were filed  during the  quarter
ended September, 1999.

                  None.




<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 15, 1999


                                  Merisel, Inc.



                                   By  /s/ Timothy N. Jenson
                                       ---------------------------
                                       Timothy N. Jenson
                                       Chief Financial Officer and
                                       Senior Vice President, Finance