----

----

| x | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|---|---------------------------------------------------------------------------------------------------|

| ¨ | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|----------------------------------------------------------------------------------------------------|

| Delaware                                                            | 95-4172359                                  |
|---------------------------------------------------------------------|---------------------------------------------|
| (State      or Other Jurisdiction of Incorporation or Organization) | (I.      R. S. Employer Identification No.) |
|                                                                |                                        |
| 127      West 30th      Street, 5th      FloorNew      York, NY     |  10001                                 |
| (Address      of Principal Executive Offices)                       | (Zip      Code)                             |
|                                                                |
| 1      (212) 594-4800                                               |
| (Registrant's      Telephone Number, Including Area Code)           |
|                                                                |

----

|                                                     |                                                                                                                                  | Reference |
|----------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|-----------|
| PART      I    FINANCIAL INFORMATION |
| Item      1.                                             | Financial      Statements                                                                                                             |      |
|                                                     | Condensed      Consolidated Balance Sheets as of September 30, 2008 (Unaudited) and      December 31, 2007                            | 1         |
|                                                     | Condensed      Consolidated Statements of Operations for the Three and Nine Months Ended      September 30, 2008 and 2007 (Unaudited) | 3         |
|                                                     | Condensed      Consolidated Statements of Cash Flows for the Nine Months Ended September      30, 2008 and 2007 (Unaudited)           | 4         |
|                                                     | Notes      to Condensed Consolidated Financial Statements (Unaudited)                                                                 | 6         |
| Item      2.                                             | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations                                 | 19        |
| Item      3.                                             | Quantitative      and Qualitative Disclosures About Market Risk                                                                       | 26        |
| Item      4.                                             | Controls      and Procedures                                                                                                          | 27        |
| PART      II    OTHER INFORMATION    |                                                                                                                                  |
| Item      1.                                             | Legal      Proceedings                                                                                                                | 28        |
| Item      2                                              | Purchases      of Merisel Equity Securities                                                                                           | 29        |
| Item      6.                                             | Exhibits                                                                                                                              | 30        |
|                                                     | SIGNATURES                                                                                                                            | 36        |

----

| ·   | the      implementation of the Company’s business strategies and    goals; |
|--------------------|----------------------------------------------------------------------------------|

| ·   | the      integration of past and futureacquisitions; |
|--------------------|------------------------------------------------------|

| ·   | the      Company’s dependence on its senior management and key personnel and its      ability to attract and retain additional qualified    personnel; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the      Company’s ability to expand its business, through, among other things,      future acquisitions; |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | a      deterioration in general economicconditions; |
|--------------------|-----------------------------------------------------|

| ·   | competitive      pricing and other competitive pressures in the graphic image arts      industry; |
|--------------------|---------------------------------------------------------------------------------------------------|

| ·   | changes      in technology, resulting inobsolescence; |
|--------------------|-------------------------------------------------------|

| ·   | the      Company’s involvement in litigation as a defendant or its incurring      judgments, fines or legal costs; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | the      loss of significant customers; and |
|--------------------|---------------------------------------------|

| ·   | other      risks detailed in “Business – Risk Factors” in the Company’s most recent      Annual Report on Form 10-K on file with theSEC. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                     |   | September      30, 2008 |    |   | December      31, 2007 |   |
|--------------------------------------------------------------------------|--------|-------------------------|---------|--------|------------------------|--------|
| Current      assets:                                                     |   | (Unaudited)             |    |   |                   |   |
| Cash      and cash equivalents                                           |   | $                       | 8,594   |   |                   | $      | 15,254 |   |
| Accounts      receivable, net of allowance of $467 and $478,respectively |   |                    | 19,702  |   |                   |   | 17,114 |   |
| Inventories                                                              |   |                    | 3,523   |   |                   |   | 2,014 |   |
| Prepaid      expenses and other current assets                           |   |                    | 1,431   |   |                   |   | 974 |   |
| Deferred      tax asset, net                                             |   |                    | 1,165   |   |                   |   | 3,078 |   |
|   Total      current assets                                    |   |                    | 34,415  |   |                   |   | 38,434 |   |
|                                                                     |   |                    |    |   |                   |   |   |   |
| Property      and equipment, net                                         |   |                    | 8,078   |   |                   |   | 8,435 |   |
|                                                                     |   |                    |    |   |                   |   |   |   |
| Restricted      cash                                                     |   |                    | 2,973   |   |                   |   | 3,195 |   |
| Other      assets                                                        |   |                    | 139     |   |                   |   | 73 |   |
| Intangible      assets, net                                              |   |                    | 5,524   |   |                   |   | 6,708 |   |
| Trademarks                                                               |   |                    | 10,609  |   |                   |   | 10,609 |   |
| Goodwill                                                                 |   |                    | 20,398  |   |                   |   | 19,737 |   |
| Deferred      tax asset, net                                             |   |                    | 34,889  |   |                   |   | 31,894 |   |
|                                                                     |   |                    |    |   |                   |   |   |   |
| Total      assets                                                        |   | $                       | 117,025 |   |                   | $      | 119,085 |   |

----

|                                                                                                                                                                                              |   | September      30, 2008 |     |   | December      31, 2007 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|----------|--------|------------------------|--------|
|                                                                                                                                                                                              |   | (Unaudited)                  |     |   |                   |   |
| Current      liabilities:                                                                                                                                                                         |   |                         |     |   |                   |   |
| Accounts      payable                                                                                                                                                                             |   | $                            | 4,899    |   |                   | $      | 2,229 |   |
| Accrued      liabilities                                                                                                                                                                          |   |                         | 4,273    |   |                   |   | 6,978 |   |
| Capital      lease obligations, current maturities                                                                                                                                                |   |                         | 147      |   |                   |   | 340 |   |
| Installment      notes, current maturities                                                                                                                                                        |   |                         | 500      |   |                   |   | 465 |   |
|   Total      current liabilities                                                                                                                                                        |   |                         | 9,819    |   |                   |   | 10,012 |   |
|                                                                                                                                                                                              |   |                         |     |   |                   |   |   |   |
| Note      payable, bank                                                                                                                                                                           |   |                         | 8,630    |   |                   |   | 8,630 |   |
| Capital      lease obligations, less current maturities                                                                                                                                           |   |                         | -        |   |                   |   | 44 |   |
| Installment      notes, less current maturities                                                                                                                                                   |   |                         | 100      |   |                   |   | 410 |   |
| Other      liabilities                                                                                                                                                                            |   |                         | 699      |   |                   |   | 666 |   |
| Total      liabilities                                                                                                                                                                            |   |                         | 19,248   |   |                   |   | 19,762 |   |
|                                                                                                                                                                                              |   |                         |     |   |                   |   |   |   |
| Stockholders’      equity:                                                                                                                                                                  |   |                         |     |   |                   |   |   |   |
| Convertible      preferred stock, $.01 par value, authorized   1,000,000      shares; 283,974 shares issued and   outstanding                                       |   |                         | 28,965   |   |                   |   | 27,294 |   |
| Common      stock, $.01 par value, authorized 30,000,000   shares;      8,473,503 and 8,452,723 issued and 7,911,358   and      8,033,943 outstanding, respectively |   |                         | 85       |   |                   |   | 85 |   |
| Additional      paid-in capital                                                                                                                                                                   |   |                         | 271,220  |   |                   |   | 272,593 |   |
| Accumulated      deficit                                                                                                                                                                          |   |                         | (201,300 | )      |                   |   | (199,775 | ) |
| Treasury      stock at cost, 562,145 and 418,780 shares   repurchased,      respectively                                                                                           |   |                         | (1,193   | )      |                   |   | (874 | ) |
| Total      stockholders’ equity                                                                                                                                                             |   |                         | 97,777   |   |                   |   | 99,323 |   |
|                                                                                                                                                                                              |   |                         |     |   |                   |   |   |   |
| Total      liabilities and stockholders’ equity                                                                                                                                             |   | $                            | 117,025  |   |                   | $      | 119,085 |   |

----

|                                                                                                    |   | Three      Months Ended September 30, |   |   | Nine      Months Ended September 30, |   |
|---------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|--------------------------------------|--------|
|                                                                                                    |   | 2008                                  |   |   | 2007                                 |   |   | 2008 |   |   | 2007 |   |
| Net      sales                                                                                          |   | $                                     | 21,607 |   |                                 | $      | 22,919 |   |   | $ | 63,301 |   |   | $ | 69,126 |   |
|                                                                                                    |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of sales                                                                                      |   |                                  | 11,942 |   |                                 |   | 12,311 |   |   |   | 35,642 |   |   |   | 36,992 |   |
|                                                                                                    |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                                                       |   |                                  | 9,665  |   |                                 |   | 10,608 |   |   |   | 27,659 |   |   |   | 32,134 |   |
|                                                                                                    |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general & administrative expenses                                                     |   |                                  | 9,359  |   |                                 |   | 9,487 |   |   |   | 30,246 |   |   |   | 28,075 |   |
|                                                                                                    |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                                                            |   |                                  | 306    |   |                                 |   | 1,121 |   |   |   | (2,587 | ) |   |   | 4,059 |   |
|                                                                                                    |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense, net                                                                              |   |                                  | 53     |   |                                 |   | 74 |   |   |   | 78 |   |   |   | 350 |   |
|                                                                                                    |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations  before provision (benefit)      for income tax |   |                                  | 253    |   |                                 |   | 1,047 |   |   |   | (2,665 | ) |   |   | 3,709 |   |
|                                                                                                    |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Income      tax provision (benefit)                                                                     |   |                                  | 109    |   |                                 |   | 445 |   |   |   | (1,140 | ) |   |   | 1,584 |   |
|                                                                                                    |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                           |   |                                  | 144    |   |                                 |   | 602 |   |   |   | (1,525 | ) |   |   | 2,125 |   |
|                                                                                                    |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Income      from discontinued operations, net of taxes                                                  |   |                                  | -      |   |                                 |   | 12 |   |   |   | - |   |   |   | 143 |   |
| Net      income (loss)                                                                                  |   |                                  | 144    |   |                                 |   | 614 |   |   |   | (1,525 | ) |   |   | 2,268 |   |
| Preferred      stock dividends                                                                          |   |                                  | 568    |   |                                 |   | 524 |   |   |   | 1,671 |   |   |   | 1,543 |   |
| Net      income (loss) available to common stockholders                                                 |   | $                                     | (424   | )      |                                 | $      | 90 |   |   | $ | (3,196 | ) |   | $ | 725 |   |
|                                                                                                    |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) per share (basic and diluted):                                                       |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations available to common      stockholders                     |   | $                                     | (0.05  | )      |                                 | $      | 0.01 |   |   | $ | (0.41 | ) |   | $ | 0.07 |   |
| Income      from discontinued operations, net of taxes                                                  |   |                                  | 0.00   |   |                                 |   | 0.00 |   |   |   | 0.00 |   |   |   | 0.02 |   |
| Net      income (loss) available to common stockholders                                                 |   | $                                     | (0.05  | )      |                                 | $      | 0.01 |   |   | $ | (0.41 | ) |   | $ | 0.09 |   |
| Weighted      average number of shares                                                                  |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
|   Basic                                                                                       |   |                                  | 7,838  |   |                                 |   | 7,791 |   |   |   | 7,865 |   |   |   | 7,776 |   |
|   Diluted                                                                                     |   |                                  | 7,987  |   |                                 |   | 8,030 |   |   |   | 8,024 |   |   |   | 8,019 |   |

----

|                                                                                           |   | Nine      Months Ended September 30, |   |
|------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                                           |   | 2008                                 |   |   | 2007 |   |
| CONTINUING      OPERATIONS                                                                     |   |                                 |   |   |   |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                     |   |                                 |   |   |   |   |
| Net      income (loss)                                                                         |   | $                                    | (1,525 | ) |   | $ | 2,268 |   |
| Less:      income from discontinued operations                                                 |   |                                 | -      |   |   |   | 143 |   |
| Net      income (loss) from continuing operations                                              |   |                                 | (1,525 | ) |   |   | 2,125 |   |
| Adjustments      to reconcile net income (loss) to net cash used in operating      activities: |   |                                 |   |   |   |   |   |   |
|   Stock-based      compensation expense                                              |   |                                 | 298    |   |   |   | 554 |   |
|   Deferred      occupancy costs                                                      |   |                                 | 33     |   |   |   | 128 |   |
|   Deferred      income taxes                                                         |   |                                 | (1,082 | ) |   |   | 1,188 |   |
|   Depreciation      and amortization                                                 |   |                                 | 3,572  |   |   |   | 2,992 |   |
| Changes      in operating assets and liabilities:                                              |   |                                 |   |   |   |   |   |   |
|   Accounts      receivable                                                           |   |                                 | (2,588 | ) |   |   | 2,724 |   |
|   Inventories                                                                        |   |                                 | (1,509 | ) |   |   | 340 |   |
|   Prepaid      expenses and other assets                                             |   |                                 | (523   | ) |   |   | (131 | ) |
|   Restricted      cash                                                               |   |                                 | 222    |   |   |   | 511 |   |
|   Accounts      payable                                                              |   |                                 | 2,670  |   |   |   | (401 | ) |
|   Accrued      liabilities                                                           |   |                                 | (2,617 | ) |   |   | (1,147 | ) |
| Net      cash provided by (used in) operating activities                                       |   |                                 | (3,049 | ) |   |   | 8,883 |   |
|                                                                                           |   |                                 |   |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                     |   |                                 |   |   |   |   |   |   |
|   Acquisitions,      net of cash acquired                                            |   |                                 | (750   | ) |   |   | (1,475 | ) |
|   Capital      expenditures                                                          |   |                                 | (2,030 | ) |   |   | (1,838 | ) |
| Net      cash used in investing activities                                                     |   |                                 | (2,780 | ) |   |   | (3,313 | ) |
|                                                                                           |   |                                 |   |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                                     |   |                                 |   |   |   |   |   |   |
| Capital      lease payments                                                                    |   |                                 | (237   | ) |   |   | (531 | ) |
| Bank      debt repayments                                                                      |   |                                 | (275   | ) |   |   | (349 | ) |
| Purchase      of treasury stock                                                                |   |                                 | (319   | ) |   |   | - |   |
| Net      cash used in financing activities                                                     |   |                                 | (831   | ) |   |   | (880 | ) |
|                                                                                           |   |                                 |   |   |   |   |   |   |
| NET      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FROM CONTINUING      OPERATIONS      |   |                                 | (6,660 | ) |   |   | 4,690 |   |
|                                                                                           |   |                                 |   |   |   |   |   |   |
| DISCONTINUED      OPERATIONS                                                                   |   |                                 |   |   |   |   |   |   |
| Cash      provided by discontinued operations                                                  |   |                                 | -      |   |   |   | 1,169 |   |
| NET      CASH PROVIDED BY DISCONTINUED OPERATIONS                                              |   |                                 | -      |   |   |   | 1,169 |   |
|                                                                                           |   |                                 |   |   |   |   |   |   |
| NET      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                      |   |                                 | (6,660 | ) |   |   | 5,859 |   |
|                                                                                           |   |                                 |   |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                            |   |                                 | 15,254 |   |   |   | 6,464 |   |
| CASH      AND CASH EQUIVALENTS, END OF PERIOD                                                  |   | $                                    | 8,594  |   |   | $ | 12,323 |   |
|                                                                                           |   |                                 |   |   |   |   |   |   |

----

|                                              |   |  For      the Nine Months Ended September 30, |   |
|---------------------------------------------------|--------|----------------------------------------------------|--------|
| Cash      paid during the period for:             |   | 2008                                               |   |   | 2007 |   |
|   Income      taxes                     |   | $                                                  | 255    |   |   | $ | 269 |   |
|   Interest      expense                 |   |                                               | 455    |   |   |   | 651 |   |
| Non-cash      investing and financing activities: |   |                                               |   |   |   |   |   |   |
|   Preferred      dividends accumulated  |   |                                               | 1,671  |   |   |   | 1,543 |   |
|   Reversal      of acquisition accruals |   |                                               | 89     |   |   |   | - |   |

----

----

| 3.   | New      Accounting Standards |
|----------------|-------------------------------|

----

| 4.   | Inventories |
|----------------|-------------|

|                          |   | September 30, 2008 |   |   | December 31, 2007 |   |
|-------------------------------|--------|-------------------------|--------|--------|-------------------|--------|
| Raw      materials            |   | $                       | 1,594  |   |              | $      | 1,315 |   |
| Work      in process          |   |                    | 1,935  |   |              |   | 720 |   |
| Reserve      for obsolescence |   |                    | (6     | )      |              |   | (21 | ) |
| Total      inventory, net     |   | $                       | 3,523  |   |              | $      | 2,014 |   |

| 5.   | Intangibles |
|----------------|-------------|

|                        |   | September 30, 2008 |   |   | December 31, 2007 |   |
|-----------------------------|--------|--------------------|--------|--------|-------------------|--------|
| Customer      relationships |   | $                  | 2,987  |   |              | $      | 3,170 |   |
| Non-compete      agreements |   |               | 1,302  |   |              |   | 1,919 |   |
| Employee      agreements    |   |               | 326    |   |              |   | 581 |   |
| Trade      know-how         |   |               | 909    |   |              |   | 1,038 |   |
| Total                       |   | $                  | 5,524  |   |              | $      | 6,708 |   |

----

| For      the Twelve-Month Period Ended September 30, |   |
|------------------------------------------------------|--------|
|                                                 |   | Amount |   |
| 2009                                                 |   | $ | 1,566 |   |
| 2010                                                 |   |   | 874 |   |
| 2011                                                 |   |   | 426 |   |
| 2012                                                 |   |   | 412 |   |
| 2013                                                 |   |   | 399 |   |
| Thereafter                                           |   |   | 1,847 |   |
| Total                                                |   | $ | 5,524 |   |

----

| 6.   | Accrued      Liabilities |
|----------------|--------------------------|

|                                             |   | September      30, 2008 |   |   | December      31, 2007 |   |
|--------------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|
| Accrued      liabilities:                        |   |                    |   |   |                   |   |
| Compensation      and other benefit accruals     |   | $                       | 2,883  |   |                   | $      | 4,376 |   |
| State      and local sales taxes and other taxes |   |                    | 209    |   |                   |   | 260 |   |
| Other      accruals                              |   |                    | 1,181  |   |                   |   | 2,342 |   |
|   Total      accrued liabilities       |   | $                       | 4,273  |   |                   | $      | 6,978 |   |

| 7.   | Income      Taxes |
|----------------|-------------------|

----

|                                                                                              |   | For      the Three Months Ended September 30, |   |   | For      the Nine Months Ended September 30, |   |
|---------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|--------|----------------------------------------------|--------|
|                                                                                              |   | 2008                                          |   |   | 2007                                         |   |   | 2008 |   |   | 2007 |   |
|                                                                                              |   |                                          |   |   |                                         |   |   |   |   |   |   |   |
| Continuing      Operations:                                                                       |   |                                          |   |   |                                         |   |   |   |   |   |   |   |
|        Current                                                 |   |                                          |   |   |                                         |   |   |   |   |   |   |   |
|                Federal |   | $                                             | (2     | )      |                                         | $      | 14 |   |   | $ | (2 | ) |   | $ | 60 |   |
|    State                                                                           |   |                                          | (74    | )      |                                         |   | 59 |   |   |   | (56 | ) |   |   | 336 |   |
| Total current provision      (benefit)                                                            |   |                                          | (76    | )      |                                         |   | 73 |   |   |   | (58 | ) |   |   | 396 |   |
|                                                                                              |   |                                          |   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|         Deferred,      net of valuation allowance         |   |                                          |   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|               Federal       |   |                                          | 148    |   |                                         |   | 362 |   |   |   | (754 | ) |   |   | 1,206 |   |
|   State                                                                                 |   |                                          | 37     |   |                                         |   | 10 |   |   |   | (328 | ) |   |   | (18 | ) |
| Total deferred provision      (benefit)                                                           |   |                                          | 185    |   |                                         |   | 372 |   |   |   | (1,082 | ) |   |   | 1,188 |   |
|                                                                                              |   |                                          |   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Total      income tax (benefit) provision                                                         |   | $                                             | 109    |   |                                         | $      | 445 |   |   | $ | (1,140 | ) |   | $ | 1,584 |   |

| 8.   | Debt |
|----------------|------|

----

| 9.   | Discontinued      Operations |
|----------------|------------------------------|

| 10.   | Commitments      and Contingencies |
|-----------------|------------------------------------|

----

----

| 11.   | Stock-Based      Compensation |
|-----------------|-------------------------------|

----

|                                                                                                               |   |         |       |
|--------------------------------------------------------------------------------------------------------------------|--------|--------------|------------|
|                                                                                                               |   |  Shares |       |   | WeightedAverageExercise      Price |   |
| Outstanding      at December      31, 2007                                                                    |   |         | 300,000    |   |   | $ | 8.33 |   |
| Granted                                                                                                            |   |         | -          |   |   |   | N/A |   |
| Exercised                                                                                                          |   |         | -          |   |   |   | N/A |   |
| Canceled                                                                                                           |   |         | -          |   |   |   | N/A |   |
| Outstanding      at September      30, 2008                                                                   |   |         | 300,000    |   |   | $ | 8.33 |   |
|  Options      exercisable at September 30, 2008                                                               |   |         | 300,000    |   |   | $ | 8.33 |   |
| Weighted      average fair value  at date of grant of      options  granted during the quarter |   |         |   N/A |   |   |   |   N/A |   |

|                 | Options      Outstanding  |          | Options      Exercisable |
|----------------------|--------------------------------|---------------|--------------------------|
|                 |                           | Weighted      |                     |   |   |   |
|                 |                           | Average       | Weighted                 |   |   | Weighted |
|                 | Number                         | Remaining     | Average                  |   | Number | Average |
| Range      of        | Outstanding                    | Life          | Exercise                 |   | Exercisable | Exercise |
| Exercise      Prices | at      9/30/08                | In      Years | Price                    |   | at      9/30/08 | Price |
|                 |                           |          |                     |   |   |   |
| $5.00                | 100,000                        | 7             | $5.00                    |   | 100,000 | $5.00 |
| $8.00                | 100,000                        | 7             | $8.00                    |   | 100,000 | $8.00 |
| $12.00               | 100,000                        | 7             | $12.00                   |   | 100,000 | $12.00 |
|                 |                           |          |                     |   |   |   |
| $5.00      to $12.00 | 300,000                        |          | $      8.33              |   | 300,000 | $      8.33 |

----

----

|                                                    | Shares  | Weighted      Average Grant-Date Fair Value  |   |
|---------------------------------------------------------|--------------|---------------------------------------------------|--------|
| Nonvested      shares at December 31, 2007              | 173,959      | $4.00                                             |   |
| Granted                                                 | -            | N/A                                               |   |
| Vested                                                  | (26,345)     | 5.18                                              |   |
| Cancelled                                               | -            | N/A                                               |   |
|   Nonvested      shares at September 30, 2008 | 147,614      | $3.79                                             |   |

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| 12.   | Earnings      Per Share and Stockholders Equity |
|-----------------|-------------------------------------------------|

| 13.   | Related      Party Transactions |
|-----------------|---------------------------------|

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| ·   | On      March 1, 2005, the Company acquired its New York-based graphics solutions,      premedia and retouching services businesses, Color Edge, Inc. (“Color      Edge”) and Color Edge Visual, Inc. (“Color Edge Visual”), and its New      York-based prototype services provider, Comp 24, LLC (“Comp      24”); |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      August 8, 2005, the Company acquired its California-based graphics      solutions business, Crush Creative, Inc.  (“Crush”); |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      May 5, 2006, the Company acquired its California-based prototypes      business, Dennis Curtin Studios, Inc.(“DCS”); |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      May 10, 2006, the Company acquired its Georgia-based prototypes business,      Advertising Props, Inc. (“AdProps”);and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      October 1, 2006, the Company acquired its New York-based premedia and      retouching services business, Fuel Digital, Inc.  (“Fuel”). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (in      thousands)              |   | Payment      due by period |   |
|----------------------------------|--------|----------------------------|--------|
| Contractual      Obligations     |   | Total                      |   |   | Less      than 1 Year |   |   | 1-3      Years |   |   | 3-5      Years |   |   | More      than 5 Years |   |
| Long-Term      Debt Obligations  |   |                       | 9,230  |   |   |   | 500 |   |   |   | 8,730 |   |   |   | - |   |   |   | - |   |
| Capital      Lease Obligations   |   |                       | 147    |   |   |   | 147 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Operating      Lease Obligations |   |                       | 18,559 |   |   |   | 3,929 |   |   |   | 8,161 |   |   |   | 4,634 |   |   |   | 1,835 |   |
| Total                            |   |                       | 27,936 |   |   |   | 4,576 |   |   |   | 16,891 |   |   |   | 4,634 |   |   |   | 1,835 |   |

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| Period                    | Total      Number of Shares Purchased (1)(4) |   | Average      Price Paid per Share (2) |   | Total      Number of Shares Purchased as Part of a Publicly Announced Plans or      Programs (3)      (4) |    | Maximum      Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased      Under the Plans or Programs (3)(4) |   |
|---------------------------|----------------------------------------------|--------|---------------------------------------|--------|-----------------------------------------------------------------------------------------------------------|---------|-------------------------------------------------------------------------------------------------------------------------------|--------|
|                      |                                         |   |                                  |   |                                                                                                      |    |                                                                                                                          |   |
| July      1-31, 2008      | 54,030                                       |   | $                                     | 2.19   |                                                                                                      | 54,030  |                                                                                                                          | $      | 3,008 |   |
| August      1-31, 2008    | 7,545                                        |   | $                                     | 1.70   |                                                                                                      | 7,545   |                                                                                                                          |   | 2,995 |   |
| September      1-30, 2008 | 81,790                                       |   | $                                     | 2.29   |                                                                                                      | 81,790  |                                                                                                                          |   | 2,808 |   |
|                      |                                         |   | $                                     |   |                                                                                                      |    |                                                                                                                          |   |   |   |
|                      |                                         |   |                                  |   |                                                                                                      |    |                                                                                                                          |   |   |   |
| Total                     | 143,365                                      |   |                                  |   |                                                                                                      | 143,365 |                                                                                                                          |   |   |   |

| Date      Share Repurchase Programs were Publicly Announced                                             |   | Approximate      Dollar Value Authorized to be Repurchased |   |
|---------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|--------|
| July      3, 2001                                                                                       |   |   $                                              | 1,000  |   |
| September      1, 2004                                                                                  |   |                                                       | 1,000  |   |
| August      14, 2006*                                                                                   |   |                                                       | 2,000  |   |
|                                                                                                    |   |                                                       |   |   |
| Total      dollar value of shares authorized to be repurchased as      of  September 30, 2008 |   |   $                                              | 4,000  |   |

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Item 6. Exhibits

| Exhibit  | Description                                                                                                                                                                                                                                                                                                          |   | Method      of Filing                                                                                                    |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------|
| 2.1           | Agreement      and Plan of Merger dated March 28, 2008, among TU Holdings, Inc., TU      Merger, Inc. and Merisel, Inc.                                                                                                                                                                                                   |   | Filed      as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the      SEC on April 1, 2008.**  |
| 2.2           | Voting,      Support and Redemption Agreement, dated as of March 28, 2008, between TU      Holdings, Inc., Merisel, Inc., Stonington Capital Appreciation 1994 Fund,      L.P. and Phoenix Acquisition Company II, L.L.C.                                                                                                 |   | Filed      as Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the      SEC on April 1, 2008.**  |
| 2.3           | Commitment      Agreement dated as of March 28, 2008, between American Capital Strategies,      Ltd. and Merisel, Inc.                                                                                                                                                                                                    |   | Filed      as Exhibit 2.3 to the Company’s Current Report on Form 8-K filed with the      SEC on April 1, 2008. ** |
| 2.4           | Asset      Purchase Agreement dated as of December 24, 2004, as amended, by and among      Merisel, Inc., MCEV, LLC, Color Edge Visual, Inc. (“CEV”), Photobition New      York, Inc. (“PBNY”) and the direct or indirect shareholders or members of      CEV and PBNY signatories thereto.  |   | Filed      as Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the      SEC on March 7, 2005. ** |
| 2.5           | Asset      Purchase Agreement dated as of December 24, 2004, as amended, by and among      Merisel, Inc., MC24, LLC, Comp 24, LLC (“Comp 24”) and the direct and      indirect shareholders or members of Comp 24 signatories      thereto.                                                              |   | Filed      as Exhibit 2.3 to the Company’s Current Report on Form 8-K filed with the      SEC on March 7, 2005. ** |
| 2.6           | Amendment      and Waiver to Asset Purchase Agreement dated as of March 1, 2005 by and      among MCEI, LLC, Merisel, Inc. and Color Edge, Inc. and the direct and      indirect shareholders set forth on the signature pages      thereto.                                                                         |   | Filed      as Exhibit 2.4 to the Company’s Current Report on Form 8-K filed with the      SEC on March 7, 2005. ** |
| 2.7           | Amendment      and Waiver to Asset Purchase Agreement dated as of March 1, 2005 by and      among MCEV, LLC, Merisel, Inc. and Color Edge Visual, Inc. and the direct      and indirect shareholders set forth on the signature pages      thereto.                                                                  |   | Filed      as Exhibit 2.5 to the Company’s Current Report on Form 8-K filed with the      SEC on March 7, 2005. ** |
| 2.8           | Amendment      and Waiver to Asset Purchase Agreement dated as of March 1, 2005 by and      among MC24, LLC, Merisel, Inc. and Comp 24, LLC and the direct and      indirect shareholders set forth on the signature pages      thereto.                                                                             |   | Filed      as Exhibit 2.6 to the Company’s Current Report on Form 8-K filed with the      SEC on March 7, 2005. ** |

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| 2.9   | Asset      Purchase Agreement dated as of July 6, 2005 by and among Merisel, Inc.,      MCRU, LLC, Crush Creative, Inc. (“Crush”) and the shareholders of Crush      signatories thereto, as amended by that certain Amendment and Waiver to      Asset Purchase Agreement, dated as of August 8, 2005 by and among Merisel,      MCRU, Crush and Guy Claudy as Shareholders Representative.  |   | Filed      as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the      SEC on August 9, 2005. **        |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|
| 2.10  | Amendment      and Waiver to Asset Purchase Agreement, dated as of August 8, 2005 by and      among Merisel, Inc., MCRU, LLC, Crush Creative, Inc. and Guy Claudy as      Shareholders Representative.                                                                                                                                                                                                    |   | Filed      as Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the      SEC on August 9, 2005. **        |
| 2.11  | Asset      Purchase Agreement dated as of October 4, 2006 by and among Merisel, Inc.,      Merisel FD, Fuel Digital, LLC and the shareholders of Fuel signatories      thereto.                                                                                                                                                                                                                           |   | Filed      as Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the      SEC on October 6, 2006. **             |
| 3.1   | Restated      Certificate of Incorporation of Merisel, Inc., as amended.                                                                                                                                                                                                                                                                                                                                  |   | Filed      as Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year      ended December 31, 2005. **   |
| 3.2   | Bylaws      of Merisel, Inc., as amended.                                                                                                                                                                                                                                                                                                                                                                      |   | Filed      as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year      ended December 31, 2005. **   |
| 4.1   | Certificate      of Designation of Convertible Preferred Stock of Merisel,    Inc.                                                                                                                                                                                                                                                                                                                             |   | Filed      as Exhibit 99.2 to the Company’s Current Report on Form 8-K dated June 9,      2000. **                    |
| *10.1 | Merisel,      Inc. 1997 Stock Award and Incentive Plan.                                                                                                                                                                                                                                                                                                                                                        |   | Filed      as Annex II to the Company’s Schedule 14A dated October 6, 1997.      **                                   |
| *10.2 | Form      of Nonqualified Stock Option Agreement under the Merisel, Inc. 1997 Stock      Award and Incentive Plan.                                                                                                                                                                                                                                                                                             |   | Filed      as Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the year      ended December 31, 1997. **  |
| 10.3  | Stock      Subscription Agreement by and between Merisel, Inc. and Phoenix      Acquisition Company II, L.L.C. dated as of June 2, 2000.                                                                                                                                                                                                                                                                  |   | Filed      as Exhibit 99.1 to the Company’s Current Report on Form 8-K, dated June 9,      2000. **                        |

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| 10.4  | Amended      and Restated Registration Rights Agreement dated June 9, 2000 (executed      November 7, 2002) between Merisel, Inc. and Phoenix Acquisition Company      II, L.L.C.                                                                             |   | Filed      as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the      quarter ended September 30, 2002. **  |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
| *10.5 | Employment      Agreement dated November 22, 2004 between Merisel, Inc. and Donald R.      Uzzi.                                                                                                                                                              |   | Filed      as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the      SEC on November 24, 2004. **      |
| *10.6 | Settlement      Agreement and Mutual General Release dated as of February 3, 2005 by and      between Merisel, Inc., Merisel Americas, Inc. and Timothy Jenson, Tina      Wurtz, Craig Wurtz, John Low, D&H Services, LLC and TDH Enterprises,      LLC.  |   | Filed      as Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year      ended December 31, 2006.                |
| *10.7 | Employment      Agreement dated as of March 1, 2005 by and between Merisel Americas, Inc.      and Kenneth Wasserman.                                                                                                                                         |   | Filed      as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the      SEC on March 7, 2005. **               |
| *10.8 | Employment      Agreement dated as of March 1, 2005 by and between Merisel Americas, Inc.      and John Sheehan.                                                                                                                                              |   | Filed      as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the      SEC on March 7, 2005. **               |
| 10.9  | Credit      Agreement dated as of March 1, 2005 by and among MCEI, LLC, MCEV, LLC,      Merisel, Inc., Merisel Americas, Inc., MC24, LLC and Amalgamated      Bank.                                                                                           |   | Filed      as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the      SEC on March 7, 2005. **               |
| 10.10 | Pledge      Agreement, dated as of March 1, 2005, made among MCEI, LLC, MCEV, LLC,      Merisel, Inc., Merisel Americas, Inc., and Amalgamated Bank.                                                                                                          |   | Filed      as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the      SEC on March 7, 2005. **               |
| 10.11 | Security      Agreement, dated as of March 1, 2005, made by MCEI, LLC, MCEV, LLC,      Merisel, Inc., Merisel Americas, Inc., and MC24, LLC, in favor of      Amalgamated Bank.                                                                               |   | Filed      as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the      SEC on March 7, 2005. **               |
| 10.12 | Corporate      Guarantee, dated as of March 1, 2005, made among each signatory hereto, in      favor of Amalgamated Bank.                                                                                                                                     |   | Filed      as Exhibit 10.7 to the Company’s Current Report on Form 8-K filed with the      SEC on March 7, 2005. **               |

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| 10.13  | Credit      Agreement dated as of March 1, 2005 by and among MC24, LLC, Merisel, Inc.,      Merisel Americas, Inc., MCEI, LLC, MCEV, LLC and Amalgamated      Bank.                                                                                                                                                                                                                 |   | Filed      as Exhibit 10.8 to the Company’s Current Report on Form 8-K filed with the      SEC on March 7, 2005. **      |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------|
| 10.14  | Pledge      Agreement, dated as of March 1, 2005, made among MC24, LLC, Merisel, Inc.,      Merisel Americas, Inc., and Amalgamated Bank.                                                                                                                                                                                                                                           |   | Filed      as Exhibit 10.9 to the Company’s Current Report on Form 8-K filed with the      SEC on March 7, 2005. **      |
| 10.15  | Security      Agreement, dated as of March 1, 2005 made by MC24, LLC, Merisel, Inc.,      Merisel Americas Inc., MCEI, LLC, MCEV, LLC, and each of their      Subsidiaries from time to time parties thereto, in favor of Amalgamated      Bank.                                                                                                                                    |   | Filed      as Exhibit 10.10 to the Company’s Current Report on Form 8-K filed with      the SEC on March 7, 2005. **     |
| 10.16  | Corporate      Guarantee, dated as of March 1, 2005, made among each signatory hereto, in      favor of Amalgamated Bank.                                                                                                                                                                                                                                                           |   | Filed      as Exhibit 10.11 to the Company’s Current Report on Form 8-K filed with      the SEC on March 7, 2005. **     |
| 10.17  | Amendment      No. 1 to Credit Agreement dated as of August 8, 2005 by and among MCRU,      Color Edge LLC (formerly known as MCEI, LLC), Color Edge Visual, LLC      (formerly known as MCEV, LLC), Comp 24 LLC (formerly known as MC24, LLC),      Merisel Americas, Inc. the Company and Amalgamated Bank, entered into in      connection with the MCEI/MCEV Credit Agreement.  |   | Filed      as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the      SEC on August 9, 2005. **     |
| *10.18 | Amendment      to Employment Agreement dated November 22, 2004 between Merisel, Inc. and      Donald R. Uzzi.                                                                                                                                                                                                                                                                            |   | Filed      as Exhibit 10.1 to the Company’s current report on Form 8-K filed with the      SEC on March 9, 2006.**  |
| *10.19 | Form      of Indemnity Agreement entered into between Merisel, Inc. and each of its      Directors and certain Officers.                                                                                                                                                                                                                                                            |   | Filed      as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the      SEC on March 9, 2006.**       |
| 10.20  | Amendment      No. 2 to Asset Purchase Agreement and Amendment to Confidentiality and      Non-Competition Agreement (MCEI).                                                                                                                                                                                                                                                        |   | Filed      as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the      SEC on May 1, 2006. **        |
| 10.21  | Amendment      No. 2 to Asset Purchase Agreement and Amendment to Confidentiality and      Non-Competition Agreement (MCEV).                                                                                                                                                                                                                                                        |   | Filed      as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the      SEC on May 1, 2006. **              |

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| *10.22       | 1997      Merisel Inc. Stock Award and Incentive Plan Form of Restricted Stock      Agreement for Executives and Key Employees.                                                                                                                                                                                                                                                          |   | Filed      as Exhibit 10.1 to the Company’s      Current Report on Form 8-K filed with the SEC on December 19, 2006.      ** |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
| *10.23  | 1997      Merisel Inc. Stock Award and Incentive Plan Form of Restricted Stock      Agreement for Directors.                                                                                                                                                                                                                                                                        |   | Filed      as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the      SEC on December 19, 2006.**       |
| *10.24       | Employment      Agreement dated May 1, 2006 between Jon H. Peterson and Merisel,      Inc.                                                                                                                                                                                                                                                                                               |   | Filed      as Exhibit 10.47 to the Company’s Annual Report on Form 10-K for the year      ended December 31, 2006. **        |
| 10.25        | Amendment      No. 2 to Credit Agreement, dated February 27, 2008, among Color Edge LLC,      Color Edge Visual LLC and Crush Creative LLC, as borrowers, the Company,      Merisel Americas, Inc., Comp 24 LLC, Fuel Digital, LLC, Dennis Curtin      Studios, LLC, MADP, LLC and Advertising Props, Inc., as guarantors, and      Amalgamated Bank, as lender.                         |   | Filed      as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the      SEC on March 4, 2008.**           |
| 10.26        | Reaffirmation      and Confirmation Agreement (Security Documents), dated February 27, 2008,      among Color Edge LLC, Color Edge Visual LLC and Crush Creative LLC, as      borrowers, the Company, Merisel Americas, Inc., Comp 24 LLC, Fuel Digital,      LLC, Dennis Curtin Studios, LLC, MADP, LLC and Advertising Props, Inc., as      guarantors, in favor of Amalgamated Bank.  |   | Filed      as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the      SEC on March 4, 2008.**           |
| *10.27       | Amendment      to 1997 Merisel Inc. Stock Award and Incentive Plan Form of Restricted      Stock Agreement for Directors.                                                                                                                                                                                                                                                           |   | Filed      as Exhibit 10.50 to the Company’s Annual Report on Form 10-K for the year      ended December 31, 2007. **             |

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| *10.28 | Amendment      No. 2 to Employment Agreement, dated January 18, 2008, between Merisel,      Inc. and Donald R. Uzzi.  |   | Filed      as Exhibit 10.51 to the Company’s Annual Report on Form 10-K for the year      ended December 31, 2007. ** |
|--------|----------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------|
| 31.1   | Certification      of the Chief Executive Officer pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002.     |   | Filed      herewith.                                                                                                        |
| 31.2   | Certification      of the Chief Financial Officer pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002.     |   | Filed      herewith.                                                                                                        |
| 32     | Certification      of Chief Executive Officer and Chief Financial Officer pursuant to 18      U.S.C. Section 1350.    |   | Filed      herewith.                                                                                                        |

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