**UNITED      STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington      DC 20549**

**Form 10-K/A**

|        |    |                                                                                                                                      |
|------------------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------|
|  **þ** |    |  **ANNUAL                REPORT PURSUANT TO SECTION 13 or 15(d) OF** **THE                SECURITIES EXCHANGE ACT OF 1934**     |
|        |    |  **For                the fiscal year ended December 31, 2005**                                                                      |
|  **OR**     |
|  **o**      |    |  **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF** **THE                SECURITIES EXCHANGE 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 incorporation)* |    |  *(IRS                Employer Identification                Number)* |

**127      W. 30**
**th**

**      Street, 5**
**th**

**      Floor, New York, NY 10001**

*(Address      of Principal Executive Offices and Zip Code)*

**(212)      594-4800**

*(Registrant’s      Telephone Number, Including Area Code)*

**None**

**Common      Stock, $0.01 Par Value**

*(Title      of class)*

**None**

*(Name      of Each Exchange on Which Registered)*

**DOCUMENTS      INCORPORATED BY REFERENCE**

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**EXPLANATORY      NOTE**

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**PART      II**

**Item      8. Financial Statements and Supplementary Data. **

**MERISEL,      INC. AND SUBSIDIARIES**

**INDEX      TO CONSOLIDATED FINANCIAL STATEMENTS**

Report      of Independent Registered Public Accounting      Firm

Independent      Auditors’ Reports

Consolidated      Balance Sheets

Consolidated      Statements of Operations

Consolidated      Statements of Stockholders’Equity

Consolidated      Statements of Cash Flows

Notes      to Consolidated Financial Statements

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**Report      of Independent Registered Public Accounting      Firm**

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**THISREPORT      IS A COPY OF A REPORT PREVIOUSLY ISSUED BY      WEINICK, SANDERS AND LEVENTHAL. THE AUDITING FIRM OF WEINICK, SANDERS AND      LEVENTHAL IS NO LONGER IN OPERATION, AND AS SUCH, HAS NOT REISSUED ITS      INDEPENDENT AUDITORS’ REPORT.**

**INDEPENDENT      AUDITORS' REPORT**

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**THIS      REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY WEINICK, SANDERS AND      LEVANTHAL. THE AUDITING FIRM OF WEINICK, SANDERS AND LEVANTHAL IS NO LONGER      IN      OPERATION, AND AS SUCH, HAS NOT REISSUED ITS INDEPENDENT AUDITORS’ REPORT. THE      2002 FINANCIAL INFORMATION AND RELATED FOOTNOTE AS MENTIONED BELOW IS NOT      INCLUDED HEREIN.**

**INDEPENDENT      AUDITORS' REPORT**

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**MERISEL,INC.      AND SUBSIDIARIES**

**CONSOLIDATED      BALANCE SHEETS**

**(In      thousands, except share and per share data)**

|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | **December                31,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | **2004**                        |   | **2004** |   | **2005** |   |
| **ASSETS**                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | **Predecessor**                 |   | **Successor** |   | **Successor** |   |
| Current                assets:                                                                                                                                                                                                                                                                                                                                                                                                               |   |                            |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                               | 2,053  |   | $ | 46,861 |   | $ | 12,548 |   |
| Accounts                receivable, net of allowance of $518, $0 and $948,                respectively                                                                                                                                                                                                                                                                                                                                       |   |                            | 10,166 |   |   | - |   |   | 17,416 |   |
| Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                            | 1,106  |   |   | - |   |   | 1,615 |   |
| Restricted                cash                                                                                                                                                                                                                                                                                                                                                                                                               |   |                            | -      |   |   | 759 |   |   | - |   |
| Due                from related company                                                                                                                                                                                                                                                                                                                                                                                                      |   |                            | 133    |   |   | - |   |   | - |   |
| Deferred                income taxes                                                                                                                                                                                                                                                                                                                                                                                                         |   |                            | 610    |   |   | - |   |   | - |   |
| Stockholders’                loans                                                                                                                                                                                                                                                                                                                                                                                                     |   |                            | 4,393  |   |   | - |   |   | - |   |
| Prepaid                expenses and other current assets                                                                                                                                                                                                                                                                                                                                                                                     |   |                            | 68     |   |   | 256 |   |   | 711 |   |
| Total                current assets                                                                                                                                                                                                                                                                                                                                                                                                          |   |                            | 18,529 |   |   | 47,876 |   |   | 32,290 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                            |   |   |   |   |   |   |   |   |
| Property,                plant and equipment, net                                                                                                                                                                                                                                                                                                                                                                                            |   |                            | 3,161  |   |   | - |   |   | 6,982 |   |
| Restricted                cash                                                                                                                                                                                                                                                                                                                                                                                                               |   |                            | 1,683  |   |   | - |   |   | 6,775 |   |
| Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                            | -      |   |   | - |   |   | 12,733 |   |
| Trademarks                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                            | -      |   |   | - |   |   | 10,452 |   |
| Other                intangible assets, net                                                                                                                                                                                                                                                                                                                                                                                                  |   |                            | -      |   |   | - |   |   | 7,034 |   |
| Deferred                income taxes                                                                                                                                                                                                                                                                                                                                                                                                         |   |                            | 4,243  |   |   | - |   |   | - |   |
| Other                assets                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                            | 307    |   |   | 74 |   |   | 183 |   |
| Non-current                assets of discontinued operations                                                                                                                                                                                                                                                                                                                                                                                 |   |                            | -      |   |   | - |   |   | 914 |   |
| Total                assets                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                               | 27,923 |   | $ | 47,950 |   | $ | 77,363 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                            |   |   |   |   |   |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                                                                                                                                      |   |                            |   |   |   |   |   |   |   |   |
| Current                liabilities:                                                                                                                                                                                                                                                                                                                                                                                                          |   |                            |   |   |   |   |   |   |   |   |
| Accounts                payable                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                               | 3,474  |   | $ | 10 |   | $ | 2,166 |   |
| Accrued                liabilities                                                                                                                                                                                                                                                                                                                                                                                                           |   |                            | 3,680  |   |   | 4,099 |   |   | 6,241 |   |
| Capital                lease obligations, current maturities                                                                                                                                                                                                                                                                                                                                                                                 |   |                            | 658    |   |   | - |   |   | 536 |   |
| Installment                notes, current maturities                                                                                                                                                                                                                                                                                                                                                                                         |   |                            | 400    |   |   | - |   |   | 719 |   |
| Income                tax payable                                                                                                                                                                                                                                                                                                                                                                                                            |   |                            | 803    |   |   | - |   |   | 1,808 |   |
| Customer                deposits                                                                                                                                                                                                                                                                                                                                                                                                             |   |                            | 67     |   |   | - |   |   | 51 |   |
| Total                current liabilities                                                                                                                                                                                                                                                                                                                                                                                                     |   |                            | 9,082  |   |   | 4,109 |   |   | 11,521 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                            |   |   |   |   |   |   |   |   |
| Revolving                credit agreement                                                                                                                                                                                                                                                                                                                                                                                                    |   |                            | 5,500  |   |   | - |   |   | 8,630 |   |
| Installment                notes, less current maturities                                                                                                                                                                                                                                                                                                                                                                                    |   |                            | 1,300  |   |   | - |   |   | 1,376 |   |
| Capital                lease obligations, less current maturities                                                                                                                                                                                                                                                                                                                                                                            |   |                            | 860    |   |   | - |   |   | 481 |   |
| Deferred                occupancy costs                                                                                                                                                                                                                                                                                                                                                                                                      |   |                            | 1,687  |   |   | - |   |   | 317 |   |
| Total                liabilities                                                                                                                                                                                                                                                                                                                                                                                                             |   |                            | 18,429 |   |   | 4,109 |   |   | 22,325 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                            |   |   |   |   |   |   |   |   |
| Commitments                and Contingencies                                                                                                                                                                                                                                                                                                                                                                                                 |   |                            |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                            |   |   |   |   |   |   |   |   |
| Stockholders'                equity:                                                                                                                                                                                                                                                                                                                                                                                                         |   |                            |   |   |   |   |   |   |   |   |
| Convertible                preferred stock, successor: $.01 par value; authorized 1,000,000                shares;150,000                shares issued and outstanding                                                                                                                                                                                                                                                                       |   |                            | -      |   |   | 21,521 |   |   | 23,295 |   |
| Common                stock, predecessor: no par value; authorized, issued and outstanding                200                shares; $0.01 par value; authorized, issued and outstanding 1,000                shares;                successor: $.01 par value; authorized 30,000,000 shares; issued:                8,033,875                and 8,183,875, respectively; outstanding: 7,623,755 and 7,773,755,                respectively |   |                            | -      |   |   | 80 |   |   | 82 |   |
| Additional                paid-in capital                                                                                                                                                                                                                                                                                                                                                                                                    |   |                            | 1,450  |   |   | 277,375 |   |   | 275,601 |   |
| Retained                earnings (accumulated deficit)                                                                                                                                                                                                                                                                                                                                                                                       |   |                            | 8,044  |   |   | (253,592 | ) |   | (242,757 | ) |
| Treasury                stock, at cost, successor: 409,980 shares repurchased                                                                                                                                                                                                                                                                                                                                                                |   |                            | -      |   |   | (851 | ) |   | (851 | ) |
| Unamortized                deferred compensation                                                                                                                                                                                                                                                                                                                                                                                             |   |                            | -      |   |   | (692 | ) |   | (332 | ) |
| Total                stockholders' equity                                                                                                                                                                                                                                                                                                                                                                                                    |   |                            | 9,494  |   |   | 43,841 |   |   | 55,038 |   |
| Total                liabilities and stockholders' equity                                                                                                                                                                                                                                                                                                                                                                                    |   | $                               | 27,923 |   | $ | 47,950 |   | $ | 77,363 |   |

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**MERISEL,INC.      AND SUBSIDIARIES **

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

**(In      thousands, except per share amounts) **

|                                                                                                                                                |   |   **For                the year ended****December                31,** |   | **For                the two months ended February 28,** |   |   **For                the year ended****December                31,** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|----------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|
|                                                                                                                                                |   | **2003**                                                                         |   | **2004**                                                 |   | **2005**                                                                         |   | **2003** |   | **2004** |   | **2005** |   |
|                                                                                                                                                |   | **Predecessor**                                                                  |   | **Predecessor**                                          |   | **Predecessor**                                                                  |   | **Successor** |   | **Successor** |   | **Successor** |   |
| Net                sales                                                                                                                            |   | $                                                                                | 46,499 |                                                     | $      | 51,742                                                                           |   | $ | 8,532 |   | $ | - |   | $ | - |   | $ | 63,009 |   |
| Cost                of sales                                                                                                                        |   |                                                                             | 23,662 |                                                     |   | 25,836                                                                           |   |   | 5,011 |   |   | - |   |   | - |   |   | 29,248 |   |
| Gross                profit                                                                                                                         |   |                                                                             | 22,837 |                                                     |   | 25,906                                                                           |   |   | 3,521 |   |   | - |   |   | - |   |   | 33,761 |   |
|                                                                                                                                                |   |                                                                             |   |                                                     |   |                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,                general and administrative expenses                                                                                         |   |                                                                             | 21,131 |                                                     |   | 22,083                                                                           |   |   | 4,615 |   |   | 2,602 |   |   | 2,276 |   |   | 26,753 |   |
| Operating                income (loss)                                                                                                              |   |                                                                             | 1,706  |                                                     |   | 3,823                                                                            |   |   | (1,094 | ) |   | (2,602 | ) |   | (2,276 | ) |   | 7,008 |   |
| Interest                expense                                                                                                                     |   |                                                                             | (374   | )                                                        |   | (489                                                                             | )      |   | (73 | ) |   | - |   |   | - |   |   | (611 | ) |
| Interest                income                                                                                                                      |   |                                                                             | 21     |                                                     |   | 48                                                                               |   |   | - |   |   | 436 |   |   | 586 |   |   | 347 |   |
| Income                (loss) from continuing operations before provision for income                tax                                              |   |                                                                             | 1,353  |                                                     |   | 3,382                                                                            |   |   | (1,167 | ) |   | (2,166 | ) |   | (1,690 | ) |   | 6,744 |   |
| Income                tax provision                                                                                                                 |   |                                                                             | 875    |                                                     |   | 1,856                                                                            |   |   | - |   |   | - |   |   | - |   |   | 925 |   |
| Income                (loss) from continuing operations                                                                                             |   |                                                                             | 478    |                                                     |   | 1,526                                                                            |   |   | (1,167 | ) |   | (2,166 | ) |   | (1,690 | ) |   | 5,819 |   |
| Income                from discontinued operations, net of taxes                                                                                    |   |                                                                             | -      |                                                     |   | -                                                                                |   |   |   |   |   | 4,926 |   |   | 3,540 |   |   | - |   |
| Gain                (loss) on sale of discontinued operations, net of taxes                                                                         |   |                                                                             | -      |                                                     |   | -                                                                                |   |   |   |   |   | - |   |   | (2,643 | ) |   | 5,016 |   |
| Net                income (loss)                                                                                                                    |   | $                                                                                | 478    |                                                     | $      | 1,526                                                                            |   | $ | (1,167 | ) | $ | 2,760 |   | $ | (793 | ) | $ | 10,835 |   |
|                                                                                                                                                |   |                                                                             |   |                                                     |   |                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred                stock dividends                                                                                                            |   |                                                                             | -      |                                                     |   | -                                                                                |   |   | - |   |   | 1,514 |   |   | 1,639 |   |   | 1,774 |   |
| Net                income (loss) available to common stockholders                                                                                   |   | $                                                                                | 478    |                                                     | $      | 1,526                                                                            |   | $ | (1,167 | ) | $ | 1,246 |   | $ | (2,432 | ) | $ | 9,061 |   |
|                                                                                                                                                |   |                                                                             |   |                                                     |   |                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income (loss) per share (basic):Loss                from continuing operations available to common                stockholders   |   |                                                                             | N/A    |                                                     |   | N/A                                                                              |   |   | N/A |   | $ | (0.48 | ) | $ | (0.44 | ) | $ | 0.53 |   |
| Discontinued                operations:                                                                                                             |   |                                                                             |   |                                                     |   |                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                from discontinued operations                                                                                                  |   |                                                                             | N/A    |                                                     |   | N/A                                                                              |   |   | N/A |   |   | 0.64 |   |   | 0.47 |   |   | - |   |
| Gain                (loss) on sale of discontinued operations                                                                                       |   |                                                                             | N/A    |                                                     |   | N/A                                                                              |   |   | N/A |   |   | - |   |   | (0.35 | ) |   | 0.66 |   |
| Net                income (loss) available to common stockholders                                                                                   |   |                                                                             | N/A    |                                                     |   | N/A                                                                              |   |   | N/A |   | $ | 0.16 |   | $ | (0.32 | ) | $ | 1.19 |   |
|                                                                                                                                                |   |                                                                             |   |                                                     |   |                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income (loss) per share (diluted):Loss                from continuing operations available to common                stockholders |   |                                                                             | N/A    |                                                     |   | N/A                                                                              |   |   | N/A |   | $ | (0.48 | ) | $ | (0.44 | ) | $ | 0.53 |   |
| Discontinued                operations:                                                                                                             |   |                                                                             |   |                                                     |   |                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                from discontinued operations                                                                                                  |   |                                                                             | N/A    |                                                     |   | N/A                                                                              |   |   | N/A |   |   | 0.64 |   |   | 0.47 |   |   | - |   |
| Gain                (loss) on sale of discontinued operations                                                                                       |   |                                                                             | N/A    |                                                     |   | N/A                                                                              |   |   | N/A |   |   | - |   |   | (0.35 | ) |   | 0.65 |   |
| Net                income (loss) available to common stockholders                                                                                   |   |                                                                             | N/A    |                                                     |   | N/A                                                                              |   |   | N/A |   | $ | 0.16 |   | $ | (0.32 | ) | $ | 1.18 |   |
|                                                                                                                                                |   |                                                                             |   |                                                     |   |                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average number of shares:                                                                                                   |   |                                                                             |   |                                                     |   |                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                               |   |                                                                             | N/A    |                                                     |   | N/A                                                                              |   |   | N/A |   |   | 7,617 |   |   | 7,620 |   |   | 7,640 |   |
| Diluted                                                                                                                                             |   |                                                                             | N/A    |                                                     |   | N/A                                                                              |   |   | N/A |   |   | 7,617 |   |   | 7,620 |   |   | 7,670 |   |

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**MERISEL,      INC. AND SUBSIDIARIES **

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS' EQUITY **

**(In      thousands, except share data) **

|                                                                 |   | **Successor**                                        |    |
|----------------------------------------------------------------------|--------|------------------------------------------------------|---------|
|                                                                 |   |    **Preferred                Stock** |    |    **Common                Stock** |   |  **Additional****Paid-in****Capital** |   |   **Deferred                Compensation** |   |   **Accumulated                Deficit** |   | **Accumulated****Other****Comprehensive****Loss** |   |    **Treasury                Stock** |   |    **Total** |   |   **Comprehensive****Income                (Loss)** |   |
|                                                                 |   | **Shares**                                           |    | **Amount** |   | **Shares** |   | **Amount** |   |   |   |   |   |   |   |   |   | **Shares** |   | **Amount** |   |   |   |   |   |
| Balance                at January 1, 2003                            |   |                                                 | 150,000 |   | $ | 18,368 |   |   | 8,026,375 |   | $ | 80 |   | $ | 279,814 |   |   | - |   | $ | (255,559 | ) | $ | (109 | ) |   | (407,280 | ) | $ | (844 | ) | $ | 41,750 |   |   |   |   |
| Accumulation                of convertible preferred stock dividend  |   |                                                 |    |   |   | 1,514 |   |   |   |   |   |   |   |   | (1,514 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Treasury                Stock                                        |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (2,700 | ) |   | (7 | ) |   | (7 | ) |   |   |   |
| Comprehensive                Income:                                 |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized                gain on investments                        |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 159 |   |   |   |   |   |   |   |   | 159 |   | $ | 159 |   |
| Net                income                                            |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,760 |   |   |   |   |   |   |   |   |   |   |   | 2,760 |   |   | 2,760 |   |
| Total                Comprehensive Income                            |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 2,919 |   |
| Balance                at December 31, 2003                          |   |                                                 | 150,000 |   | $ | 19,882 |   |   | 8,026,375 |   | $ | 80 |   | $ | 278,300 |   |   | - |   | $ | (252,799 | ) | $ | 50 |   |   | (409,980 | ) | $ | (851 | ) | $ | 44,662 |   |   |   |   |
| Accumulation                of convertible preferred stock dividend  |   |                                                 |    |   |   | 1,639 |   |   |   |   |   |   |   |   | (1,639 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercise                of stock options                             |   |                                                 |    |   |   |   |   |   | 7,500 |   |   |   |   |   | 15 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 15 |   |   |   |   |
| Deferred                compensation                                 |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   | 7 |   | $ | (7 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of deferred compensation                 |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 7 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 7 |   |   |   |   |
| Grant                of restricted stock                             |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   | 692 |   |   | (692 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                Income:                                 |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification                for net gains realized in net income |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (50 | ) |   |   |   |   |   |   |   | (50 | ) | $ | (50 | ) |
| Net                loss                                              |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (793 | ) |   |   |   |   |   |   |   |   |   |   | (793 | ) |   | (793 | ) |
| Total                Comprehensive Income                            |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | (843 | ) |
| Balance                at December 31, 2004                          |   |                                                 | 150,000 |   | $ | 21,521 |   |   | 8,033,875 |   | $ | 80 |   | $ | 277,375 |   | $ | (692 | ) | $ | (253,592 | ) | $ | 0 |   |   | (409,980 | ) | $ | (851 | ) | $ | 43,841 |   |   |   |   |
| Accumulation                of convertible preferred stock dividend  |   |                                                 |    |   |   | 1,774 |   |   |   |   |   |   |   |   | (1,774 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of deferred compensation                 |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 360 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 360 |   |   |   |   |
| Issue                of restricted stock                             |   |                                                 |    |   |   |   |   |   | 150,000 |   |   | 2 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2 |   |   |   |   |
| Comprehensive                Income:                                 |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                                            |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 10,835 |   |   |   |   |   |   |   |   |   |   |   | 10,835 |   | $ | 10,835 |   |
| Total                Comprehensive Income                            |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 10,835 |   |
| Balance                at December 31, 2005                          |   |                                                 | 150,000 |   | $ | 23,295 |   |   | 8,183,875 |   | $ | 82 |   | $ | 275,601 |   | $ | (332 | ) | $ | (242,757 | ) | $ | 0 |   |   | (409,980 | ) | $ | (851 | ) | $ | 55,038 |   |   |   |   |

----

Back            to Index

**MERISEL,      INC. AND SUBSIDIARIES **

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS' EQUITY **

**(In      thousands, except share data) **

| **Predecessor**                             |   |
|---------------------------------------------|--------|
|                                        |   |   **Common                Stock** |   | **Additional****Paid-in****Capital** |   |  **Retained                Earnings** |   |   **Total** |   |
|                                        |   | **Shares** |   | **Amount** |   |   |   |   |   |   |   |
| Balance                at December 31, 2003 |   |   | 1,200 |   |   | - |   | $ | 1,450 |   | $ | 6,518 |   | $ | 7,968 |   |
| Net                income                   |   |   |   |   |   |   |   |   |   |   |   | 1,526 |   |   | 1,526 |   |
| Balance                at December 31, 2004 |   |   | 1,200 |   |   | - |   | $ | 1,450 |   | $ | 8,044 |   | $ | 9,494 |   |
| Net                loss                     |   |   |   |   |   |   |   |   |   |   |   | (1,167 | ) |   | (1,167 | ) |
| Balance                at February 28, 2005 |   |   | 1,200 |   |   | - |   | $ | 1,450 |   | $ | 6,877 |   | $ | 8,327 |   |

----

Back            to Index

**MERISEL,      INC. AND SUBSIDIARIES **

**CONSOLIDATED      STATEMENTS OF CASH FLOWS **

**(In      thousands) **

|                                                                                                                           |   |   **For                the years ended December 31,** |   | **For                the Two Months Ended February 28,** |   |   **For                the years ended****December                31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|----------------------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|
| **CONTINUING                OPERATIONS:**                                                                                      |   | **2003**                                                        |   | **2004**                                                 |   | **2005**                                                                          |   | **2003** |   | **2004** |   | **2005** |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES:**                                                                       |   | **Predecessor**                                                 |   | **Predecessor**                                          |   | **Predecessor**                                                                   |   | **Successor** |   | **Successor** |   | **Successor** |   |
| Net                income (loss)                                                                                               |   | $                                                               | 478    |                                                     | $      | 1,526                                                                             |   | $ | (1,167 | ) | $ | 2,760 |   | $ | (793 | ) | $ | 10,835 |   |
| Less:                Gain (loss) on sale of discontinued operations                                                            |   |                                                            | -      |                                                     |   | -                                                                                 |   |   | - |   |   | - |   |   | (2,643 | ) |   | 5,016 |   |
| Less:                income from discontinued operations, net                                                                  |   |                                                            | -      |                                                     |   | -                                                                                 |   |   | - |   |   | 4,926 |   |   | 3,540 |   |   | - |   |
| Income                (loss) from continuing operations                                                                        |   |                                                            | 478    |                                                     |   | 1,526                                                                             |   |   | (1,167 | ) |   | (2,166 | ) |   | (1,690 | ) |   | 5,819 |   |
| Adjustments                to reconcile income (loss) from operations to net cash used in operating                activities: |   |                                                            |   |                                                     |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-cash                deferred compensation                                                                                  |   |                                                            | -      |                                                     |   | -                                                                                 |   |   | - |   |   | 159 |   |   | - |   |   | - |   |
| Restricted                stock units compensation income                                                                      |   |                                                            | -      |                                                     |   | -                                                                                 |   |   | - |   |   | - |   |   | 9 |   |   | 360 |   |
| Deferred                occupancy costs                                                                                        |   |                                                            | 176    |                                                     |   | 76                                                                                |   |   | - |   |   | - |   |   | - |   |   | 317 |   |
| Gain                on sale of property and equipment                                                                          |   |                                                            | 93     |                                                     |   | -                                                                                 |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Restricted                cash - security deposits                                                                             |   |                                                            | (19    | )                                                        |   | (161                                                                              | )      |   | 7 |   |   | - |   |   | - |   |   | (31 | ) |
| Depreciation                and amortization                                                                                   |   |                                                            | 1,035  |                                                     |   | 1,350                                                                             |   |   | 284 |   |   | - |   |   | - |   |   | 2,009 |   |
| Deferred                income taxes                                                                                           |   |                                                            | 1,325  |                                                     |   | 813                                                                               |   |   | 533 |   |   | - |   |   | - |   |   | - |   |
| Changes                in assets and liabilities, exclusive of acquisitions:                                                   |   |                                                            |   |                                                     |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts                receivable                                                                                             |   |                                                            | (762   | )                                                        |   | (182                                                                              | )      |   | (1,792 | ) |   | - |   |   | - |   |   | (2,049 | ) |
| Due                from related company                                                                                        |   |                                                            | (105   | )                                                        |   | (72                                                                               | )      |   | - |   |   | - |   |   | - |   |   | - |   |
| Inventories                                                                                                                    |   |                                                            | 196    |                                                     |   | 147                                                                               |   |   | 189 |   |   | - |   |   | - |   |   | 335 |   |
| Prepaid                expenses and other current assets                                                                       |   |                                                            | (94    | )                                                        |   | 143                                                                               |   |   | 27 |   |   | 103 |   |   | (335 | ) |   | 621 |   |
| Accounts                payable                                                                                                |   |                                                            | 2,042  |                                                     |   | (1,544                                                                            | )      |   | (122 | ) |   | 1 |   |   | 9 |   |   | (2,822 | ) |
| Accrued                liabilities                                                                                             |   |                                                            | (159   | )                                                        |   | 2,015                                                                             |   |   | (52 | ) |   | (789 | ) |   | (1,432 | ) |   | 487 |   |
| Net                cash provided by (used in) operating activities                                                             |   |                                                            | 4,206  |                                                     |   | 4,111                                                                             |   |   | (2,093 | ) |   | (2,692 | ) |   | (3,439 | ) |   | 5,046 |   |
|                                                                                                                           |   |                                                            |   |                                                     |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES:**                                                                       |   |                                                            |   |                                                     |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Acquisitions,                net of $878 cash acquired                                                                         |   |                                                            | -      |                                                     |   | -                                                                                 |   |   | - |   |   | - |   |   | - |   |   | (37,587 | ) |
| Capital                expenditures                                                                                            |   |                                                            | (1,341 | )                                                        |   | (344                                                                              | )      |   | (9 | ) |   | - |   |   | - |   |   | (1,457 | ) |
| Decrease                (increase) in due from stockholder                                                                     |   |                                                            | (2,018 | )                                                        |   | (2,375                                                                            | )      |   | 231 |   |   | - |   |   | - |   |   | - |   |
| Purchase                of securities                                                                                          |   |                                                            | -      |                                                     |   | -                                                                                 |   |   | - |   |   | (63 | ) |   | - |   |   | - |   |
| Net                cash used in investing activities                                                                           |   |                                                            | (3,359 | )                                                        |   | (2,719                                                                            | )      |   | 222 |   |   | (63 | ) |   | - |   |   | (39,044 | ) |
|                                                                                                                           |   |                                                            |   |                                                     |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES:**                                                                       |   |                                                            |   |                                                     |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds                from issuance of common stock                                                                          |   |                                                            | -      |                                                     |   | -                                                                                 |   |   | - |   |   | - |   |   | 15 |   |   | - |   |
| Capital                lease payments                                                                                          |   |                                                            | (1,144 | )                                                        |   | (959                                                                              | )      |   | (119 | ) |   | - |   |   | - |   |   | (572 | ) |
| Loan                origination fees                                                                                           |   |                                                            | -      |                                                     |   | (116                                                                              | )      |   | - |   |   | - |   |   | - |   |   | - |   |
| Decrease                in note payable, seller                                                                                |   |                                                            | (1,175 | )                                                        |   | -                                                                                 |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Installment                note repayments                                                                                     |   |                                                            | (667   | )                                                        |   | (1,467                                                                            | )      |   | - |   |   | - |   |   | - |   |   | (325 | ) |
| Bank                borrowings                                                                                                 |   |                                                            | 1,717  |                                                     |   | 2,447                                                                             |   |   | 400 |   |   | - |   |   | - |   |   | 157 |   |
| Purchase                of treasury stock                                                                                      |   |                                                            | -      |                                                     |   | -                                                                                 |   |   | - |   |   | (7 | ) |   | - |   |   | - |   |
| Net                cash provided by (used in) financing activities                                                             |   |                                                            | (1,269 | )                                                        |   | (95                                                                               | )      |   | 281 |   |   | (7 | ) |   | 15 |   |   | (740 | ) |
|                                                                                                                           |   |                                                            |   |                                                     |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                provided by (used in) continuing operations                                                                |   |                                                            | (422   | )                                                        |   | 1,297                                                                             |   |   | (1,590 | ) |   | (2,762 | ) |   | (3,424 | ) |   | (34,738 | ) |
|                                                                                                                           |   |                                                            |   |                                                     |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

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**MERISEL,      INC. AND SUBSIDIARIES **

**CONSOLIDATED      STATEMENTS OF CASH FLOWS (Continued)**

**(In      thousands)**

|                                                             |   |   **For                the years ended December 31,** |   | **For                the Two Months Ended February 28,** |   |   **For                the years ended****December                31,** |   |
|------------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|----------------------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|
|                                                             |   | **2003**                                                        |   | **2004**                                                 |   | **2005**                                                                          |   | **2003** |   | **2004** |   | **2005** |   |
|                                                             |   | **Predecessor**                                                 |   | **Predecessor**                                          |   | **Predecessor**                                                                   |   | **Successor** |   | **Successor** |   | **Successor** |   |
| **DISCONTINUED                OPERATIONS:**                      |   |                                                            |   |                                                     |   |                                                                              |   |   |   |   |   |   |   |
| Cash                provided by (used in) operating activities   |   |                                                            | -      |                                                     |   | -                                                                                 |   |   | - |   |   | 890 |   |   | 5,202 |   |   | (489 | ) |
| Cash                provided by investing activities             |   |                                                            | -      |                                                     |   | -                                                                                 |   |   | - |   |   | 25 |   |   | 135 |   |   | 914 |   |
| **NET                CASH PROVIDED BY DISCONTINUED OPERATIONS:** |   |                                                            | -      |                                                     |   | -                                                                                 |   |   | - |   |   | 915 |   |   | 5,337 |   |   | 425 |   |

| NET                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  |   |   | (422   | )      |   | 1,297  |   |   | (1,590 | )      |   | (1,847 | )      |   | 1,913  |   |   | (34,313 | )      |
|----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| CASH                AND CASH EQUIVALENTS, BEGINNING OF YEAR          |   |   | 1,178  |   |   | 756    |   |   | 2,053  |   |   | 46,795 |   |   | 44,948 |   |   | 46,861  |   |
| CASH                AND CASH EQUIVALENTS, END OF PERIOD YEAR         |   | $      | 756    |   | $      | 2,053  |   | $      | 463    |   | $      | 44,948 |   | $      | 46,861 |   | $      | 12,548  |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| **SUPPLEMENTAL                DISCLOSURE OF CASH FLOW INFORMATION:** |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Cash                paid during the year for:                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Interest                expense                                      |   | $      | 464    |   | $      | 491    |   | $      | 70     |   |   | -      |   |   | -      |   | $      | 453     |   |
| Income                taxes                                          |   | $      | 148    |   | $      | 73     |   |   | -      |   |   | -      |   |   | -      |   |   | -       |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Noncash                activities:                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Restricted                stock grant                                |   |   | -      |   |   | -      |   |   | -      |   |   | -      |   |   | -      |   | $      | 2       |   |
| Preferred                dividend accumulated                        |   |   | -      |   |   | -      |   |   | -      |   | $      | 1,514  |   | $      | 1,639  |   | $      | 1,774   |   |
| Unrealized                gain on securities                         |   |   | -      |   |   | -      |   |   | -      |   | $      | 159    |   |   | -      |   |   | -       |   |

----

Back            to Index

**MERISEL,      INC. AND SUBSIDIARIES **

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

**DECEMBER      31, 2003, 2004 and 2005 **

| **1.  ** | **Description                of Business and Basis of Presentation** |
|--------------------|----------------------------------------------------------------------|

*General*

*Management’s      Plans*

| **2.  ** | **Summary                of Significant Accounting                Policies** |
|--------------------|------------------------------------------------------------------------------|

*Use      of Estimates*

*Consolidation      Policy*

*Cash      and Cash Equivalents*

*Restricted      Cash*

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**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**

*Accounts      Receivable and Allowance for Doubtful Accounts*

|                                        |   | **(in                thousands)**          |   |
|---------------------------------------------|--------|--------------------------------------------|--------|
|                                        |   | **Year                Ended December 31,** |   |
|                                        |   | **2003**                                   |   | **2004** |   | **2005** |   |
|                                        |   | **Predecessor**                            |   | **Predecessor** |   | **Successor** |   |
| Balance                beginning of year    |   | $                                          | 395    |   | $ | 286 |   | $ | - |   |
| Charged                to cost and expenses |   |                                       | 152    |   |   | 1,053 |   |   | 322 |   |
| Acquisitions                                |   |                                       | -      |   |   | - |   |   | 1,201 |   |
| Deductions                (1)               |   |                                       | 261    |   |   | 821 |   |   | 575 |   |
| Balance                end of year          |   | $                                          | 286    |   | $ | 518 |   | $ | 948 |   |

*Unbilled      Accounts Receivable*

*Concentration      of Credit*
*Risk      *

*Inventories*

*Property      and Depreciation*

*Goodwill      and Other Intangible Assets*

----

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**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**

*Impairment      of Long-Lived Assets*

*Shipping      and Handling Fees and Costs*

*Income      Taxes*

*Fair      Values of Financial Instruments*

*Revenue      Recognition*

*Accounting      for Stock-Based Compensation*

----

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**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
* *

|                                                                                                                                                         |   |   **For                the Years Ended****December                31,** |   | **For                the Two Months Ended February 28,** |   |   **For                the Years Ended****December                31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|----------------------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|
|                                                                                                                                                         |   | **2003**                                                                          |   | **2004**                                                 |   | **2005**                                                                          |   | **2003** |   | **2004** |   | **2005** |   |
|                                                                                                                                                         |   | **Predecessor**                                                                   |   | **Predecessor**                                          |   | **Predecessor**                                                                   |   | **Successor** |   | **Successor** |   | **Successor** |   |
| Net                income (loss) available to common stockholders - As                Reported                                                               |   | $                                                                                 | 478    |                                                     | $      | 1,526                                                                             |   | $ | (1,167 | ) | $ | 1,246 |   | $ | (2,432 | ) | $ | 9,061 |   |
| Deduct:                Total stock-based employee compensation expense determined under                fair                value based method for all awards |   |                                                                              | -      |                                                     |   | -                                                                                 |   |   | - |   |   | (3 | ) |   | (62 | ) |   | (337 | ) |
| Net                income (loss) - Pro Forma                                                                                                                 |   | $                                                                                 | 478    |                                                     | $      | 1,526                                                                             |   | $ | (1,167 | ) | $ | 1,243 |   | $ | (2,494 | ) | $ | 8,724 |   |
| Net                income (loss) per share available to common shareholders                (Basic):                                                          |   |                                                                              |   |                                                     |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As                Reported                                                                                                                                   |   |                                                                              | N/A    |                                                     |   | N/A                                                                               |   |   | N/A |   | $ | 0.16 |   | $ | (0.32 | ) | $ | 1.19 |   |
| Pro                Forma                                                                                                                                     |   |                                                                              | N/A    |                                                     |   | N/A                                                                               |   |   | N/A |   | $ | 0.16 |   | $ | (0.33 | ) | $ | 1.14 |   |
|                                                                                                                                                         |   |                                                                              |   |                                                     |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income (loss) per share available to common shareholders                (Diluted):                                                        |   |                                                                              |   |                                                     |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As                Reported                                                                                                                                   |   |                                                                              | N/A    |                                                     |   | N/A                                                                               |   |   | N/A |   | $ | 0.16 |   | $ | (0.32 | ) | $ | 1.18 |   |
| Pro                Forma                                                                                                                                     |   |                                                                              | N/A    |                                                     |   | N/A                                                                               |   |   | N/A |   | $ | 0.16 |   | $ | (0.33 | ) | $ | 1.13 |   |

*Earnings      Per Share - *

*Segment      Reporting*

*Deferred      Rent Policy*

*Reclassifications*

*New      Accounting Pronouncements*

----

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**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
* *

| **3.  ** | **Acquisitions** |
|--------------------|------------------|

| **(in                  thousands)**                              |   |
|------------------------------------------------------------------|--------|
| Trade                  accounts receivable                       |   | $ | 12,178 |   |
| Inventory                                                        |   |   | 1,406 |   |
| Other                  current assets                            |   |   | 299 |   |
| Fixed                  assets                                    |   |   | 3,773 |   |
| Restricted                  cash                                 |   |   | 2,310 |   |
| Other                  assets                                    |   |   | 39 |   |
| Intangible                  assets                               |   |   | 5,900 |   |
| Trademark                                                        |   |   | 10,311 |   |
| Goodwill                                                         |   |   | 10,505 |   |
| Accounts                  payable                                |   |   | (3,969 | ) |
| Accrued                  liabilities                             |   |   | (2,085 | ) |
| Long                  term debt and capital lease obligations    |   |   | (9,935 | ) |
|                                                             |   |   |   |   |
| Total                  purchase price, net of $424 cash received |   | $ | 30,732 |   |

----

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**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**

| **(in                thousands)**                              |   |
|----------------------------------------------------------------|--------|
| Trade                accounts receivable                       |   | $ | 3,189 |   |
| Inventory                                                      |   |   | 543 |   |
| Other                assets                                    |   |   | 79 |   |
| Fixed                assets                                    |   |   | 2,911 |   |
| Goodwill                                                       |   |   | 2,228 |   |
| Trademark                                                      |   |   | 141 |   |
| Other                intangible assets                         |   |   | 1,993 |   |
| Accounts                payable                                |   |   | (1,009 | ) |
| Accrued                liabilities                             |   |   | (684 | ) |
| Long                term debt and capital lease obligations    |   |   | (2,536 | ) |
| Total                purchase price, net of $454 cash received |   | $ | 6,855 |   |

| Pro                Forma, unaudited, in thousands, except per share amounts |   | **Fiscal                year ended December 31,** |   |
|-----------------------------------------------------------------------------|--------|---------------------------------------------------|--------|
|                                                                        |   | **2004**                                          |   | **2005** |   |
|                                                                        |   |                                              |   |   |   |
| Total                revenue                                                |   | $                                                 | 80,113 |   | $ | 85,010 |   |
| Net                income from continuing operations                        |   |                                              | 2,230  |   |   | 5,074 |   |
| Basic                and Diluted earnings per share                         |   | $                                                 | 0.29   |   | $ | 0.66 |   |

----

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**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**

| **4.  ** | **Intangibles** |
|--------------------|-----------------|

|                                               |   | **December                31, 2005** |   |
|----------------------------------------------------|--------|--------------------------------------|--------|
|                                               |   | **Successor**                        |   |
|                                               |   | **Acquired                Value**    |   |  **Accumulated                Amortization** |   |   **Carrying                Value** |   | **Weighted                Average Amortization Period** |   |
| Customer                relationships              |   | $                                    | 3,188  |   | $ | 162 |   | $ | 3,026 |   |   | 16 |   |
| Non-compete                agreement               |   |                                 | 3,659  |   |   | 559 |   |   | 3,100 |   |   | 5 |   |
| Software                licenses                   |   |                                 | 79     |   |   | 67 |   |   | 12 |   |   | 1 |   |
| Domain                name                         |   |                                 | 3      |   |   | 3 |   |   | - |   |   | 1 |   |
| Employment                agreements               |   |                                 | 349    |   |   | 36 |   |   | 313 |   |   | 4 |   |
| Trade                know how                      |   |                                 | 615    |   |   | 32 |   |   | 583 |   |   | 8 |   |
| Subtotal                definite lived intangibles |   |                                 | 7,893  |   |   | 59 |   |   | 7,034 |   |   | 9.3 |   |
| Trademark                                          |   |                                 | 10,452 |   |   | - |   |   | 10,452 |   |   | Indefinite |   |
| Total                                              |   | $                                    | 18,345 |   | $ | 859 |   | $ | 17,486 |   |   |   |   |

| **5.  ** | **Inventories** |
|--------------------|-----------------|

|                                    |   | **December                31,** |   |
|-----------------------------------------|--------|---------------------------------|--------|
|                                    |   | **2004**                        |   | **2005** |   |
|                                    |   | **Predecessor**                 |   | **Successor** |   |
| Raw                materials            |   | $                               | 790    |   | $ | 1,260 |   |
| Work                in progress         |   |                            | 316    |   |   | 372 |   |
| Reserve                for obsolescence |   |                            | -      |   |   | (17 | ) |
| Inventory,                net           |   | $                               | 1,106  |   | $ | 1,615 |   |

----

Back            to Index

**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**

| **6.  ** | **Property                and Equipment** |
|--------------------|-------------------------------------------|

|                                                           |   | **2004**        |   | **2005**      |   |
|----------------------------------------------------------------|--------|-----------------|--------|---------------|--------|
|                                                           |   | **Predecessor** |   | **Successor** |   |
| Equipment                under capitalized leases              |   | $               | 642    |          | $      | 1,552 |   |
| Machinery                and equipment                         |   |            | 5,707  |          |   | 7,817 |   |
| Furniture                and fixtures                          |   |            | 83     |          |   | 180 |   |
| Automobiles                                                    |   |            | -      |          |   | 205 |   |
| Leasehold                improvements                          |   |            | 1,496  |          |   | 2,430 |   |
| Total                                                          |   |            | 7,928  |          |   | 12,184 |   |
| Less:                accumulated depreciation and amortization |   |            | (4,767 | )             |   | (5,202 | ) |
| Net                book value                                  |   | $               | 3,161  |          | $      | 6,982 |   |

| **7.  ** | **Accrued                Expenses** |
|--------------------|-------------------------------------|

|                                                       |   | **2004**        |   | **2004**      |   | **2005**      |   |
|------------------------------------------------------------|--------|-----------------|--------|---------------|--------|---------------|--------|
|                                                       |   | **Predecessor** |   | **Successor** |   | **Successor** |   |
| Accrued                liabilities:                        |   |            |   |          |   |          |   |
| Lease                commitments and other accruals        |   | $               | 1,073  |          | $      | 1,259         |   | $ | 1,395 |   |
| Compensation                and other benefit accruals     |   |            | 2,522  |          |   | 552           |   |   | 4,680 |   |
| Deferred                Compensation                       |   |            | -      |          |   | 759           |   |   | - |   |
| State                and local sales taxes and other taxes |   |            | 85     |          |   | 1,529         |   |   | 166 |   |
| Total                accrued liabilities                   |   | $               | 3,680  |          | $      | 4,099         |   | $ | 6,241 |   |

----

Back            to Index

**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**

| **8.  ** | **Income                Taxes** |
|--------------------|---------------------------------|

|                                      |   |  **For                the years ended December 31,** |   | **For                the Two Months ended February 28,** |   |  **For                the years ended****December                31,** |   |
|-------------------------------------------|--------|-----------------------------------------------------------|--------|----------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|
|                                      |   | **2003**                                                  |   | **2004**                                                 |   | **2005**                                                                    |   | **2003** |   | **2004** |   | **2005** |   |
|                                      |   | **Predecessor**                                           |   | **Predecessor**                                          |   | **Predecessor**                                                             |   | **Successor** |   | **Successor** |   | **Successor** |   |
|                                      |   |                                                      |   |                                                     |   |                                                                        |   |   |   |   |   |   |   |
| Continuing                Operations:     |   |                                                      |   |                                                     |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                   |   |                                                      |   |                                                     |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                                   |   | $                                                         | (244   | )                                                        | $      | 666                                                                         |   | $ | - |   | $ | - |   | $ | - |   | $ | 107 |   |
| State                                     |   |                                                      | (206   | )                                                        |   | 377                                                                         |   |   | - |   |   | - |   |   | - |   |   | 818 |   |
| Total                current provision    |   | $                                                         | (450   | )                                                        | $      | 1,043                                                                       |   | $ | - |   | $ | - |   | $ | - |   | $ | 925 |   |
|                                      |   |                                                      |   |                                                     |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred                                  |   |                                                      |   |                                                     |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                                   |   | $                                                         | 718    |                                                     | $      | 519                                                                         |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   |
| State                                     |   |                                                      | 607    |                                                     |   | 295                                                                         |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Total                deferred provision   |   | $                                                         | 1,325  |                                                     | $      | 814                                                                         |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   |
|                                      |   |                                                      |   |                                                     |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                income tax provision |   | $                                                         | 875    |                                                     | $      | 1,857                                                                       |   | $ | - |   | $ | - |   | $ | - |   | $ | 925 |   |
|                                      |   |                                                      |   |                                                     |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                     |   | **For                the years ended****December                31,** |   | **For                the Two Months ended February 28,** |   | **For                the years ended****December                31,** |   |
|------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                     |   | **2003**                                                              |   | **2004**                                                 |   | **2005**                                                              |   | **2003** |   | **2004** |   | **2005** |   |
|                                     |   | **Predecessor**                                                       |   | **Predecessor**                                          |   | **Predecessor**                                                       |   | **Successor** |   | **Successor** |   | **Successor** |   |
| Discontinued                Operations:  |   |                                                                  |   |                                                     |   |                                                                  |   |   |   |   |   |   |   |
| Federal                                  |   | $                                                                     | -      |                                                     | $      | -                                                                     |   | $ | - |   | $ | (909 | ) | $ | 92 |   | $ | 93 |   |
| State                                    |   |                                                                  | -      |                                                     |   | -                                                                     |   |   | - |   |   | - |   |   | - |   |   | 705 |   |
| Total                provision (benefit) |   | $                                                                     | -      |                                                     | $      | -                                                                     |   | $ | - |   | $ | (909 | ) | $ | 92 |   | $ | 798 |   |

----

Back            to Index

**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**

|                                                             |   | **December                31,** |   |
|------------------------------------------------------------------|--------|---------------------------------|--------|
|                                                             |   | **2004**                        |   | **2004** |   | **2005** |   |
|                                                             |   | **Predecessor**                 |   | **Successor** |   | **Successor** |   |
| Deferred                tax assets:                              |   |                            |   |   |   |   |   |   |   |   |
| Net                operating loss carryforwards                  |   | $                               | -      |   | $ | 101,471 |   |   | 92,135 |   |
| Deferred                sales tax                                |   |                            | -      |   |   | 548 |   |   | - |   |
| Depreciable                assets                                |   |                            | -      |   |   | - |   |   | 393 |   |
| Deferred                vacation and bonus                       |   |                            | -      |   |   | - |   |   | 751 |   |
| Bad                debts                                         |   |                            | -      |   |   | - |   |   | 115 |   |
| Inventories                                                      |   |                            | -      |   |   | - |   |   | 214 |   |
| Other                expense accruals                            |   |                            | 4,853  |   |   | 136 |   |   | 15 |   |
| Total                deferred tax assets                         |   | $                               | 4,853  |   | $ | 102,155 |   | $ | 93,623 |   |
|                                                             |   |                            |   |   |   |   |   |   |   |   |
| Deferred                tax liabilities                          |   |                            |   |   |   |   |   |   |   |   |
| Deferred                occupancy costs                          |   |                            |   |   | $ | $- |   | $ | 113 |   |
| Restructuring                                                    |   |                            | -      |   |   | - |   |   | 339 |   |
| Total                deferred tax liabilities                    |   | $                               | -      |   | $ | - |   | $ | 452 |   |
|                                                             |   |                            |   |   |   |   |   |   |   |   |
| Net                deferred tax asset before valuation allowance |   | $                               | 4,853  |   | $ | 102,155 |   | $ | 93,171 |   |
| Valuation                allowance                               |   |                            | -      |   |   | (102,155 | ) |   | (93,171 | ) |
| Net                deferred tax asset (liability)                |   | $                               | 4,853  |   | $ | - |   | $ | - |   |

|                                         |   |  **For                the Years Ended December 31,** |   | **For                the Two Months Ended February 28,** |   |  **For                the Years Ended****December                31,** |   |
|----------------------------------------------|--------|-----------------------------------------------------------|--------|----------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|
|                                         |   | **2003**                                                  |   | **2004**                                                 |   | **2005**                                                                    |   | **2003** |   | **2004** |   | **2005** |   |
|                                         |   | **Predecessor**                                           |   | **Predecessor**                                          |   | **Predecessor**                                                             |   | **Successor** |   | **Successor** |   | **Successor** |   |
| Statutory                rate                |   |                                                      | 35.0   | %                                                        |   | 35.0                                                                        | %      |   | 35.0 | % |   | 35.0 | % |   | 35.0 | % |   | 35.0 | % |
| Change                in valuation allowance |   |                                                      |   |                                                     |   |                                                                        |   |   | (35.0 | ) |   | (35.0 | ) |   | (35.0 | ) |   | (35.0 | ) |
| State                and local income taxes  |   |                                                      | 29.7   | %                                                        |   | 19.9                                                                        | %      |   |   |   |   |   |   |   |   |   |   | 12.1 |   |
| Federal                AMT                   |   |                                                      |   |                                                     |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   | 1.6 |   |
| Effective                tax rate            |   |                                                      | 64.7   | %                                                        |   | 54.9                                                                        | %      |   | 0.0 | % |   | 0.0 | % |   | 0.0 | % |   | 13.7 | % |

----

Back            to Index

**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**

| **9.  ** | **Debt** |
|--------------------|----------|

| 2006  |   | $      | 719    |   |
|-------|--------|--------|--------|--------|
| 2007  |   |   | 576    |   |
| 2008  |   |   | 9,030  |   |
| 2009  |   |   | 400    |   |
| Total |   | $      | 10,725 |   |

| **10.  ** | **Discontinued                Operations** |
|---------------------|--------------------------------------------|

----

Back            to Index

**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**

|                                                          |   | **2003**      |   | **2004** |   | **2005** |   |
|---------------------------------------------------------------|--------|---------------|--------|----------|--------|----------|--------|
|                                                          |   | **Successor** |   |
| Net                Sales                                      |   | $             | 96,042 |     | $      | 38,101   |   | $ | - |   |
| Cost                of Sales                                  |   |          | 90,763 |     |   | 34,505   |   |   | - |   |
| Gross                Profit                                   |   |          | 5,279  |     |   | 3,596    |   |   | - |   |
|                                                          |   |          |   |     |   |     |   |   |   |   |
| Selling,                General & Administrative Expenses |   |          | 1,601  |     |   | 1,215    |   |   | - |   |
| Restructuring                Charge (Recovery)                |   |          | 650    |     |   | (1,093   | )      |   | - |   |
| Impairment                Charge                              |   |          | 1,800  |     |   | 130      |   |   | - |   |
| Operating                Income                               |   |          | 1,228  |     |   | 3,344    |   |   | - |   |
|                                                          |   |          |   |     |   |     |   |   |   |   |
| Interest                Income                                |   |          | 315    |     |   | 153      |   |   | - |   |
| Other                Income                                   |   |          | 2,474  |     |   | 135      |   |   | - |   |
| Income                before Provision for Income Tax         |   |          | 4,017  |     |   | 3,632    |   |   | - |   |
|                                                          |   |          |   |     |   |     |   |   |   |   |
| Income                Tax Benefit (provision)                 |   |          | 909    |     |   | (92      | )      |   | - |   |
| Net                Income                                     |   | $             | 4,926  |     | $      | 3,540    |   | $ | - |   |

----

Back            to Index

**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**

| **11.  ** | **Commitments                and Contingencies** |
|---------------------|--------------------------------------------------|

| **(in                thousands)**                 |   |                              |   |                                |   |                                   |   |
|---------------------------------------------------|--------|-----------------------------------|--------|-------------------------------------|--------|----------------------------------------|--------|
|  **Year                Ending December 31,** |   | **Capital                Leases** |   | **Operating                Leases** |   | **Contingent                Payments** |   |
| 2006                                              |   | $                                 | 536    |                                | $      | 3,566                                  |   | $ | 3,584 |   |
| 2007                                              |   |                              | 481    |                                |   | 3,600                                  |   |   | 4,022 |   |
| 2008                                              |   |                              | -      |                                |   | 3,673                                  |   |   | 4,022 |   |
| 2009                                              |   |                              | -      |                                |   | 3,774                                  |   |   | 688 |   |
| 2010                                              |   |                              | -      |                                |   | 3,917                                  |   |   | - |   |
| Thereafter                                        |   |                              | -      |                                |   | 9,124                                  |   |   | - |   |
| Total                minimum lease payments       |   | $                                 | 1,017  |                                | $      | 27,654                                 |   | $ | 12,316 |   |

| **12.  ** | **Stock** |
|---------------------|-----------|

----

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**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**

| **13.  ** | **Employee                Stock Options and Benefit                Plans** |
|---------------------|----------------------------------------------------------------------------|

*Employee      Stock Options and Stock Awards*

----

Back            to Index

**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**

|                                                                                                          |   | **2003**               |    | **2004**                                              |   | **2005**               |   |
|---------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|-------------------------------------------------------|--------|------------------------|--------|
|                                                                                                          |   |   **Shares** |    | **Weighted****Average****Exer.                Price** |   |   **Shares** |   | **Weighted****Average****Exer.                Price** |   |   **Shares** |   | **Weighted****Average****Exer.                Price** |   |
| Outstanding                at beginning of year                                                               |   |                   | 179,270 |                                                  |   | 26.46                  |   |   | 80,945 |   |   | 18.04 |   |   | 342,380 |   |   | 9.65 |   |
| Granted                                                                                                       |   |                   | -       |                                                  |   | N/A                    |   |   | 300,000 |   |   | 5.56 |   |   | - |   |   | N/A |   |
| Exercised                                                                                                     |   |                   | -       |                                                  |   | N/A                    |   |   | (7,500 | ) |   | 2.00 |   |   | - |   |   | 0.00 |   |
| Canceled                                                                                                      |   |                   | (98,325 | )                                                     |   | 33.39                  |   |   | (31,065 | ) |   | 20.59 |   |   | (12,180 | ) |   | 22.74 |   |
| Outstanding                at end of year                                                                     |   |                   | 80,945  |                                                  |   | 18.04                  |   |   | 342,380 |   |   | 6.71 |   |   | 330,200 |   |   | 9.17 |   |
|  Options                exercisable at year end                                                          |   |                   | 60,945  |                                                  |   |                   |   |   | 42,380 |   |   |   |   |   | 180,200 |   |   |   |   |
| Weighted                average fair value at date of grant of options granted during the                year |   |                   | N/A     |                                                  |   |                   |   |   | 8.33 |   |   |   |   |   | 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                12/31/05**         |    | **In                Years**            |   | **Price** |   | **at                12/31/05** |   | **Price** |   |
|                               |   |                                   |    |                                   |   |   |   |   |   |   |   |
| $18.75                             |   |                                   | 200     |                                   |   | 1 |   | $ | 18.75 |   |   | 200 |   | $ | 18.75 |   |
| $17.50                             |   |                                   | 30,000  |                                   |   | 5 |   | $ | 17.50 |   |   | 30,000 |   | $ | 17.50 |   |
| $5.00                to $12.00     |   |                                   | 300,000 |                                   |   | 9 |   | $ | 8.33 |   |   | 150,000 |   | $ | 8.33 |   |
|                               |   |                                   |    |                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| $5.00                to $18.75     |   |                                   | 330,200 |                                   |   |   |   |   |   |   |   | 180,200 |   |   |   |   |

|                                   |   | **2004** |   |
|----------------------------------------|--------|----------|--------|
| Expected                life           |   |     | 5.0    |   |
| Expected                volatility     |   |     | 90.86  | % |
| Risk-free                interest rate |   |     | 3.70   | % |
| Dividend                Yield     |   |     | 0.00   | % |

*Benefit      Plan*

----

Back            to Index

**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**

*Stock      repurchase program*
** **

| **14.  ** | **Earnings                Per Share** |
|---------------------|---------------------------------------|

|                                               |   | **For                the Years Ended December 31,** |   |
|----------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                               |   | **Successor**                                       |   |
| Weighted                average shares outstanding |   | **2003**                                            |   | **2004** |   | **2005** |   |
| Basic                                              |   |                                                | 7,617  |   |   | 7,620 |   |   | 7,640 |   |
| Diluted                                            |   |                                                | 7,617  |   |   | 7,620 |   |   | 7,670 |   |

|                                                              |   | **2003** |   | **2004** |   | **2005** |   |
|-------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Income                (loss) from operations                      |   | $        | (2,166 | )        | $      | (1,690   | )      | $ | 5,819 |   |
| Preferred                stock dividends                          |   |     | 1,514  |     |   | 1,639    |   |   | 1,774 |   |
| Income                (loss) to common stockholders               |   |     | (3,680 | )        |   | (3,329   | )      |   | 4,045 |   |
| Income                from discontinued operations                |   |     | 4,926  |     |   | 3,540    |   |   | - |   |
| Gain                (loss) on sale of software licensing business |   |     | -      |     |   | (2,643   | )      |   | 5,016 |   |
| Net                income (loss) available to common stockholders |   | $        | 1,246  |     | $      | (2,432   | )      | $ | 9,061 |   |

| **15.  ** | **Related                Party Transactions** |
|---------------------|-----------------------------------------------|

----

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**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) **

| **16.  ** | **Quarterly                Financial Data (Unaudited)** |
|---------------------|---------------------------------------------------------|

|                                               |   | **2004**                    |   |
|----------------------------------------------------|--------|-----------------------------|--------|
|                                               |   | **(Predecessor)**           |   |
|                                               |   | **March                31** |   | **June                30** |   | **September                30** |   | **December                31** |   |
| Total                net revenues             |   | $                           | 13,280 |   | $ | 12,326 |   | $ | 15,994 |   | $ | 10,142 |   |
| Gross                profit                   |   |                        | 6,855  |   |   | 6,074 |   |   | 7,685 |   |   | 5,292 |   |
| Total                operating expenses       |   |                        | 5,405  |   |   | 5,235 |   |   | 5,636 |   |   | 5,807 |   |
| Income                (loss) from operations  |   |                        | 1,450  |   |   | 839 |   |   | 2,049 |   |   | (515 | ) |
| Net                income (loss)                   |   | $                           | 718    |   | $ | 231 |   | $ | 1,370 |   | $ | (793 | ) |
|                                               |   |                        |   |   |   |   |   |   |   |   |   |   |   |

|                                                            |   | **2004**                    |   |
|-----------------------------------------------------------------|--------|-----------------------------|--------|
|                                                            |   | **(Successor)**             |   |
|                                                            |   | **March                31** |   | **June                30** |   | **September                30** |   | **December                31** |   |
| Loss                from operations                        |   | $                           | 400    |   | $ | 594 |   | $ | 392 |   | $ | 304 |   |
| Loss                on sale of discontinued operations     |   |                        | -      |   |   | - |   |   | 2,643 |   |   | - |   |
| Income                (loss) from discontinued operations  |   |                        | 1,466  |   |   | 207 |   |   | 3,002 |   |   | (1,135 | ) |
| Net                income (loss)                                |   | $                           | 1,066  |   | $ | (387 | ) | $ | (33 | ) | $ | (1,439 | ) |
|                                                            |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                per share (basic and diluted):          |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Loss                from operations                             |   | $                           | 0.11   |   | $ | 0.13 |   | $ | 0.10 |   | $ | 0.10 |   |
| Loss                on sale of discontinued operations     |   |                        | -      |   |   | - |   |   | 0.35 |   |   | - |   |
| Income                (loss) from discontinued operations  |   |                        | 0.19   |   |   | 0.02 |   |   | 0.39 |   |   | (0.13 | ) |
| Net                income (loss)                           |   | $                           | 0.08   |   | $ | (0.11 | ) | $ | (0.06 | ) | $ | (0.23 | ) |
|                                                            |   |                        |   |   |   |   |   |   |   |   |   |   |   |

|                                                          |   | **2005**                    |   |
|---------------------------------------------------------------|--------|-----------------------------|--------|
|                                                          |   | **(Successor)**             |   |
|                                                          |   | **March                31** |   | **June                30** |   | **September                30** |   | **December                31** |   |
| Total                net revenues                        |   | $                           | 5,823  |   | $ | 15,372 |   | $ | 19,970 |   | $ | 21,844 |   |
| Gross                profit                              |   |                        | 3,117  |   |   | 8,428 |   |   | 9,847 |   |   | 12,369 |   |
| Total                operating expenses                  |   |                        | 2,791  |   |   | 6,288 |   |   | 7,945 |   |   | 9,729 |   |
| Income                tax provision                           |   |                        | 9      |   |   | 27 |   |   | 27 |   |   | 862 |   |
| Income                from continuing operations         |   |                        | 440    |   |   | 2,036 |   |   | 1,755 |   |   | 1,588 |   |
| Gain                (loss) on sale of discontinued operations |   |                        | 2,152  |   |   | - |   |   | 3,491 |   |   | (627 | ) |
| Net                income                                     |   | $                           | 2,592  |   | $ | 2,036 |   | $ | 5,246 |   | $ | 961 |   |
|                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                per share (basic):                    |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Income                from continuing operations              |   | $                           | 0.00   |   | $ | 0.21 |   | $ | 0.17 |   | $ | 0.15 |   |
| Gain                (loss) on sale of discontinued operations |   |                        | 0.28   |   |   | - |   |   | 0.46 |   |   | (0.08 | ) |
| Net                income                                     |   | $                           | 0.28   |   | $ | 0.21 |   | $ | 0.63 |   | $ | 0.07 |   |
|                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                per share (diluted):                  |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Income                from continuing operations              |   | $                           | 0.00   |   | $ | 0.21 |   | $ | 0.17 |   | $ | 0.15 |   |
| Gain                (loss) on sale of discontinued operations |   |                        | 0.28   |   |   | - |   |   | 0.46 |   |   | (0.09 | ) |
| Net                income                                     |   | $                           | 0.28   |   | $ | 0.21 |   | $ | 0.63 |   | $ | 0.06 |   |
|                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |   |

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Back            to Index

**MERISEL,      INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) **

| **17.  ** | **Subsequent                Events** |
|---------------------|--------------------------------------|

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Back            to Index

**SIGNATURES**

|                                              |                                                                                          |                                              |
|---------------------------------------------------|-----------------------------------------------------------------------------------------------|---------------------------------------------------|
|                                              | **MERISEL,              INC.**                                                                |
|                                         |                                                                                     |                                         |
| Date: May              17,              2006 | By:                                                                                 | /s/ Donald              R.              Uzzi |
|                                              | Donald R. Uzzi                                                                                |
|                                              | Title:              Chairman of the Board, Chief Executive Officer and              President |

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**Index        of Exhibits**

| **Exhibit** | **Description**                                                                                                                                                   | **Method                  of                  Filing** |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|
| 23          | Consent                  of BDO Seidman, LLP, Independent Registered Accounting                  Firm.                                                       | Filed                  herewith                        |
| 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                        |