----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-K**

**FOR      ANNUAL AND TRANSITION REPORTS**

**PURSUANT      TO SECTIONS 13 OR 15(d) OF THE**

**SECURITIES      EXCHANGE ACT OF 1934**

**(Mark      One)**

**x**
**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**

**¨**
**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**                                                   | **01-17156**                            | **95-4172359**                                        |
|----------------------------------------------------------------|-----------------------------------------|-------------------------------------------------------|
| (State                or other jurisdiction of incorporation)  | (Commission                File Number) | (I.                R. S. Employer identification No.) |
|                                                           |                                    |                                                  |
| **127                W. 30****th****Street, 5****th****Floor** |                                    | **10001**                                             |
| **New                York, NY**                                |                                    | (Zip                Code)                             |
| (Address                of principal executive offices)        |                                    |                                                  |

**Documents      Incorporated By Reference**

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**TABLE      OF CONTENTS**

|                    |                                                                                                                                                                   |
|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    | **PART                I**                                                                                                                                              |
|                    |                                                                                                                                                                   |
| Item                1.  | Business                                                                                                                                                               |
| Item                1A  | Risk                Factors                                                                                                                                            |
| Item                1B  | Unresolved                SEC Comments                                                                                                                                 |
| Item                2.  | Properties                                                                                                                                                             |
| Item                3.  | Legal                Proceedings                                                                                                                                       |
| Item                4.  | Submission                of Matters to a Vote of Security                Holders                                                                                      |
|                    |                                                                                                                                                                   |
|                    | **PART                II**                                                                                                                                             |
|                    |                                                                                                                                                                   |
| Item                5.  | Market                for the Registrant’s Common Equity and Related                Stockholder Matters and Issuer Purchases of Equity                Securities |
| Item                6.  | Selected                Financial Data                                                                                                                                 |
| Item                7.  | Management’s                Discussion and Analysis of Financial Condition                and Results of Operations                                              |
| Item                7A. | Quantitative                and Qualitative Disclosures about Market                Risk                                                                               |
| Item                8.  | Financial                Statements and Supplementary                Data                                                                                              |
| Item                9.  | Changes                in and Disagreements with Accountants on Accounting                and Financial Disclosure                                                     |
| Item                9A. | Controls                and Procedures                                                                                                                                 |
| Item                9B. | Other                Information                                                                                                                                       |
|                    |                                                                                                                                                                   |
|                    | **PART                III**                                                                                                                                            |
|                    |                                                                                                                                                                   |
| Item                10. | Directors                and Executive Officers of the                Registrant                                                                                       |
| Item                11. | Executive                Compensation                                                                                                                                  |
| Item                12. | Security                Ownership of Certain Beneficial Owners and                Management and Related Transactions                                                  |
| Item                13. | Certain                Relationships and Related                Transactions                                                                                           |
| Item                14. | Principal                Accountant Fees and                Services                                                                                                   |
|                    |                                                                                                                                                                   |
|                    | **PART                IV**                                                                                                                                             |
|                    |                                                                                                                                                                   |
| Item                15. | Exhibits                and Financial Statement                Schedules                                                                                               |
|                    |                                                                                                                                                                   |

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**SPECIAL      NOTE REGARDING FORWARD-LOOKING INFORMATION**

**Certain      statements contained in this Annual Report on Form 10-K, including without      limitation statements containing the words “believes,” “anticipates,” “expects,”“will,” “estimates,” “plans,” “intends” and similar expressions, constitute“forward-looking statements” within the meaning of Section 27A of the Securities      Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend      these forward looking statements to be covered by the safe harbor provisions      for      forward-looking statements contained in the Private Securities Litigation Reform      Act of 1995 and are included for purposes of complying with these safe harbor      provisions. These forward looking statements reflect current views about the      plans, strategies and prospects of Merisel, Inc. (the “Company”), and are based      upon information currently available to the Company and on current assumptions.      These forward-looking statements involve known and unknown risks, uncertainties      and other factors which may cause actual results, performance or achievements      of      the Company to be materially different from any future results, performance      or      achievements expressed or implied by such forward-looking statements.**

| **·  ** | **These                risks, uncertainties and other factors include, but are not limited                to the                following:** |
|------------------------|----------------------------------------------------------------------------------------------------------------------------------------------|

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

| **·  ** | **the                integration of past and future                acquisitions;** |
|------------------------|------------------------------------------------------------------------------------|

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

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

| **·  ** | **the                Company’s ability to expand its business, including through any future                acquisitions;** |
|------------------------|----------------------------------------------------------------------------------------------------------------------------------|

| **·  ** | **a                deterioration in economic conditions                generally;** |
|------------------------|-------------------------------------------------------------------------------------|

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

| **·  ** | **changes                in technology creating obsolescence;** |
|------------------------|-----------------------------------------------------------------|

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

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

| **·  ** | **other                risks detailed in “Business - Risk Factors.”** |
|------------------------|-----------------------------------------------------------------------------------|

**In      evaluating these forward looking statements, you should consider these risks      and      uncertainties, together with the other risks described from time to time in      the      Company’s other reports and documents filed with the SEC. You are cautioned not      to place undue reliance on these forward-looking statements. The Company      disclaims any obligation to update any such factors or to publicly announce      the      result of any revisions to any of the forward-looking statements contained      or      incorporated by reference herein to reflect future events or      developments.**

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Table          of Contents

**PART      I**

**Item      1. Business. **

**Overview      - **
** **

| ·   | creative                design capabilities; |
|--------------------|----------------------------------------------|

| ·   | production                art expertise; |
|--------------------|------------------------------------------|

| ·   | high                quality customized imaging                capabilities; |
|--------------------|-----------------------------------------------------------------------------|

| ·   | rapid                turnaround and delivery times; |
|--------------------|-----------------------------------------------------|

| ·   | up-to-date                knowledge of the printing press specifications of converters and                printers                located throughout the                United States; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | color                expertise; |
|--------------------|---------------------------------|

| ·   | digital                imaging asset management; and |
|--------------------|------------------------------------------------------|

| ·   | workflow                management. |
|--------------------|-------------------------------------|

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Table          of Contents

**Visual      Communication Solutions Industry, Graphic Services and the Company’s Markets**

| ·   | the                shorter turnaround and delivery time requirements from the creative                design                phase to final distribution of the packaged                product; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an                increasing number of SKUs competing for shelf space and market share; |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | the                increasing importance of package appearance and promotions due to                demonstrated point-of-sale consumer purchasing behavior; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                increasing requirements for worldwide quality and consistency in                packaging                as companies attempt to build global brand name recognition. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

**The      Company’s Growth Strategy **

| ·   | *Organic                Growth.*As                market conditions have created growth opportunities, the Company                relies on                its highly skilled sales force to be the primary growth driver for                the                Company, but also relies on superior product quality, technology,                service,                scale and scope. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Growth                through Acquisitions.*The                Company completed four acquisitions during 2005 and plans to continue                to                seek additional strategic acquisition                opportunities. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Channel                Footprint Expansion.*The                Company intends to broaden its channel footprint beyond current space                such                as leading the industry’s move to digital imaging. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Global                Expansion.*                The Company intends to expand globally by following its key multi-national                clients. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | *Geographic                Expansion.*                The Company’s operations are currently focused in the New York, New Jersey                and Los Angeles markets. Over the next twelve months, the Company                will                look to broaden its geographic footprint to other key                markets. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Services      **

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Table          of Contents

**Marketing      and Distribution **

**Clients      **

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Table          of Contents

**Competition      **

**Purchasing      and Raw Materials **

**Intellectual      Property **

** **

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Table          of Contents

**Employees      **

**Backlog      **

**Seasonality      and Cyclicality **

**Environmental      Compliance**

**Where      You Can Find Additional Information**

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Table          of Contents

**Item      1A. Risk Factors **

**The      Company may not be able to successfully implement its business strategy, which      could adversely affect the Company’s business, financial condition and results      of operations.**

| ·   | general                economic conditions and conditions in the Company’s local                markets; |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | the                competitive environment in the graphic solutions industry that may                force                the Company to reduce prices; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                Company’s ability to anticipate and meet changes in consumer preferences                for graphic solutions products and services in a timely or cost-effective                manner; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                Company’s continued ability to hire and retain qualified                personnel. |
|--------------------|-------------------------------------------------------------------------------------------------------------|

**Stockholders      may encounter difficulties in obtaining, or may be unable to obtain, recovery      from Weinick Sanders & Levanthal with respect to its audit of the financial      statements of the Predecessor and the inability to obtain this consent could      negatively affect the Company's ability to access public capital markets and      to      file future documents in a timely manner.**

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**Any      failure by the Company to successfully complete acquisitions could harm its      business and financial prospects. **

| ·   | demonstrating                to customers and other business partners that the transaction will                not                result in adverse changes in client service standards or business                focus                and helping customers conduct business easily; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | consolidating                administrative infrastructure and consolidating and rationalizing                corporate IT infrastructure, including implementing information management                and system processes that enable increased customer satisfaction,                improved                productivity and lower costs; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | coordinating                sales and marketing efforts to communicate the Company’s capabilities                effectively; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| ·   | preserving                marketing or other important relationships and resolving potential                conflicts that may arise; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | minimizing                the diversion of management attention from ongoing business concerns; |
|--------------------|-------------------------------------------------------------------------------------------------|

| ·   | persuading                employees that business cultures are compatible, maintaining employee                morale and retaining key employees while implementing restructuring                programs; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | coordinating                and combining operations, subsidiaries and affiliated entities,                relationships and facilities, which may be subject to additional                constraints imposed by local laws and regulations and also may result                in                contract terminations or renegotiations and labor and tax law                implications. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**If      the Company’s senior management or other key personnel were to leave, the      Company’s operating results could be adversely affected, and the Company might      not be able to attract or retain additional qualified      personnel.**

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**The      Company lacks long-term agreements with its customers, which could make the      Company’s business and results of operations highly      volatile.**

**If      the Company is unable to rapidly and successfully develop new ways of providing      services and new products, some of its services or products may become obsolete      and its operating results could suffer.**

**The      **
**visual      communication solutions**
**industry      is highly competitive and the Company’s business and results of operations will      be adversely affected if the Company is not able to complete      effectively.**

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Table          of Contents

**The      process of integrating the Company’s recent acquisitions may disrupt the      Company's business, operations and internal resources. **

**If      the Company is unable to relist its common stock with the Nasdaq National Market      or another major securities market or exchange, the trading price of the      Company’s common stock may decline substantially and stockholders will      experience a significant decrease in the liquidity of the common      stock.**

**The      Company’s senior credit facilities may limit its ability to expand its business,      and its ability to comply with the covenants, tests and restrictions governing      the credit facilities may be affected by events that are beyond the Company’s      control.**

**Business        disruptions could seriously harm the Company’s future revenue and financial        condition and increase the Company’s costs and        expenses.**

**Item      1B. Unresolved SEC      Comments.**

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Table            of Contents

**Item      2. Properties. **

| **Location**                      | **Square                Feet****(approx.)** | **Owned                Leased**  | **Purpose**                                              | **Lease                Expiration Date** | **Division**                           |
|-----------------------------------|---------------------------------------------|---------------------------------------|----------------------------------------------------------|------------------------------------------|----------------------------------------|
| New                York, NY  | 25,000                                 | Leased                           | General                Offices, Operating Facility  | December                2011        | Corporate                         |
| New                York, NY  | 81,000                                 | Leased                           | General                Offices, Operating Facility  | April                2014           | Corporate                         |
| Edison,                NJ    | 13,720                                 | Leased                           | Operating                Facility                   | Month                to month       | Color                Edge Visual  |
| Burbank,                CA   | 65,000                                 | Leased                           | General                Offices, Operating Facility  | July                2011            | Crush                Creative     |

**Item      3. Legal Proceedings. **

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Table            of Contents

**Item      4. Submission of Matters to a Vote of Security      Holders**

| a)   | The                Company held its 2005 annual meeting of stockholders on December                14,                2005. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------|
| b)   | Not                applicable. |
|----------------|--------------------------------|
| c)   | The                following matters were submitted to a vote of security holders at                the                annual meeting: |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------|

| 1.   | The                stockholders voted upon and approved an amendment to the Company’s                restated certificate of incorporation and bylaws to eliminate the                classified board structure and provide for the annual election of                directors and to eliminate the supermajority voting provision for                amending                the classified board structure. The vote on the proposal was as                follows: |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **For**   | **Against** | **Abstentions** | **Broker                Non-Votes** |
|-----------|-------------|-----------------|-------------------------------------|
|      |        |            |                                |
| 6,220,463 | 26,196      | 2,511           | -                                   |

| 2.   | Election                of nominees as directors to the Board of Directors. The nominees                were                elected as indicated by the following vote                counts: |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  **Nominee**                   |  **Votes                  For** | **Votes****Withheld** |
|-------------------------------------|--------------------------------------|-----------------------|
| Bradley                  J. Hoecker | 7,417,761                            | 632,636               |
| Dr.                  Arnold Miller  | 8,023,793                            | 26,604                |

| 3.   | The                  stockholders voted upon and approved a proposal to ratify the appointment                  of BDO Seidman, LLP as the Company’s independent registered public                  accounting firm for 2005. The vote on the proposal was as                  follows: |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **For**   | **Against** | **Abstentions** | **Broker                    Non-Votes** |
|-----------|-------------|-----------------|-----------------------------------------|
| 8,026,901 | 22,637      | 859             | -                                       |

| d)   | Not                  applicable. |
|----------------|----------------------------------|

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Table            of Contents

**PART      II**

**Item      5**.      **Market      for the Registrant's Common Equity and Related Stockholder Matters and Issuer      Purchases of Equity **
**Securities.      **

| **Fiscal                  Year 2005** | **High**                 | **Low**                   |   | **Fiscal                  Year 2004** | **High**                 | **Low**                  |
|---------------------------------------|--------------------------|---------------------------|--------|---------------------------------------|--------------------------|--------------------------|
| First                  quarter        | 8                  5/8   | 5                  11/16  |   | First                  quarter        | 6                  5/16  | 4                  1/4   |
| Second                  quarter       | 8                  1/4   | 6                  5/8    |   | Second                  quarter       | 5                  11/16 | 4                  1/2   |
| Third                  quarter        | 8                        | 6                  ¾ |   | Third                  quarter        | 4                  5/8   | 2                  5/16  |
| Fourth                  quarter       | 7                  13/16 | 7                  3/8    |   | Fourth                  quarter       | 6                  3/8   | 3                  15/16 |

**Common      Stock **

**Certain      Provisions in the Company’s Certificate of Incorporation. **

**Transfer      Agent **

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Table            of Contents

**Item      6. Selected Financial Data. **

|                                                                                                     |   | **2001**      |    | **2002** |   | **2003** |   | **2004** |   | **2005                (5)** |   |
|----------------------------------------------------------------------------------------------------------|--------|---------------|---------|----------|--------|----------|--------|----------|--------|-----------------------------|--------|
|                                                                                                     |   | **Successor** |    |
| **Income                Statement Data (1, 2 and 6):**                                                   |   |          |    |     |   |     |   |     |   |                        |   |
| Net                sales                                                                                 |   | $             | -       |     | $      | -        |   | $        | -      |                        | $      | - |   | $ | 63,009 |   |
| Cost                of sales                                                                             |   |          | -       |     |   | -        |   |     | -      |                        |   | - |   |   | 29,248 |   |
| Gross                profit                                                                              |   |          | -       |     |   | -        |   |     | -      |                        |   | - |   |   | 33,761 |   |
| Selling,                general & administrative expenses                                            |   |          | 2,563   |     |   | 2,670    |   |     | 2,602  |                        |   | 2,276 |   |   | 26,753 |   |
| Gain                on debt extinguishment (3)                                                           |   |          | 2,872   |     |   | -        |   |     | -      |                        |   | - |   |   | - |   |
| Operating                income (loss)                                                                   |   |          | 309     |     |   | (2,670   | )      |     | (2,602 | )                           |   | (2,276 | ) |   | 7,008 |   |
| Interest                expense (income), net                                                            |   |          | (264    | )        |   | (802     | )      |     | (436   | )                           |   | (586 | ) |   | 264 |   |
| Income                (loss) from continuing operations before provision for income                taxes |   |          | 573     |     |   | (1,868   | )      |     | (2,166 | )                           |   | (1,690 | ) |   | 6,744 |   |
| Income                tax provision                                                                      |   |          | -       |     |   | -        |   |     | -      |                        |   | - |   |   | 925 |   |
| Income                (loss) from continuing operations                                                  |   |          | 573     |     |   | (1,868   | )      |     | (2,166 | )                           |   | (1,690 | ) |   | 5,819 |   |
| Discontinued                operations:Income                (loss) from discontinued operations         |   |          | (24,042 | )        |   | 8,978    |   |     | 4,926  |                        |   | 3,540 |   |   | - |   |
| Gain                (loss) on sale of discontinued operations                                            |   |          | 36,250  |     |   | -        |   |     | -      |                        |   | (2,643 | ) |   | 5,016 |   |
| Net                income (loss)                                                                         |   | $             | 12,781  |     | $      | 7,110    |   | $        | 2,760  |                        | $      | (793 | ) | $ | 10,835 |   |
| Preferred                stock dividends                                                                 |   |          | 1,292   |     |   | 1,399    |   |     | 1,514  |                        |   | 1,639 |   |   | 1,774 |   |
| Net                income (loss) available to common stockholders                                        |   | $             | 11,489  |     | $      | 5,711    |   | $        | 1,246  |                        | $      | (2,432 | ) | $ | 9,061 |   |
|                                                                                                     |   |          |    |     |   |     |   |     |   |                        |   |   |   |   |   |   |
| **Share                Data (4):**                                                                       |   |          |    |     |   |     |   |     |   |                        |   |   |   |   |   |   |
| Net                income (loss) available to common stockholders per diluted                share       |   |          | 1.44    |     |   | 0.74     |   |     | 0.16   |                        |   | (0.32 | ) |   | 1.18 |   |
| Weighted                average number of diluted Shares                                                 |   |          | 7,989   |     |   | 7,735    |   |     | 7,617  |                        |   | 7,620 |   |   | 7,670 |   |
| **Balance                Sheet Data:**                                                                   |   |          |    |     |   |     |   |     |   |                        |   |   |   |   |   |   |
| Working                capital                                                                           |   |          | 35,304  |     |   | 41,659   |   |     | 42,812 |                        |   | 43,767 |   |   | 20,769 |   |
| Total                assets                                                                              |   |          | 68,955  |     |   | 72,844   |   |     | 67,212 |                        |   | 47,950 |   |   | 77,363 |   |
| Long-term                debt                                                                            |   |          | -       |     |   | -        |   |     | -      |                        |   | - |   |   | 10,487 |   |
| Total                debt, including current portion                                                     |   |          | -       |     |   | -        |   |     | -      |                        |   | - |   |   | 11,743 |   |
| Stockholders'                equity                                                                      |   |          | 35,395  |     |   | 41,750   |   |     | 44,662 |                        |   | 43,841 |   |   | 55,038 |   |

| 1.   | For                the year 2001, Merisel's fiscal year was the 52- week period ending                on the                Saturday nearest December 31. For clarity of presentation throughout                this                report, Merisel described this fiscal year presented as if the year                ended                on December 31. Effective for the year ended December 31, 2002 the                Company                changed its fiscal year to end on December 31. This change did not                have a                material effect on the results presented. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | The                Company has reclassified its consolidated financial statements to                exclude                results related to the U.S., Canada, MOCA and Optisel business units,                which are included in discontinued operations. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | The                Company adopted Statement of Financial Accounting Standard No. 145,                “Reporting Gains and Losses from Extinguishment of Debt” in 2002. The                adoption resulted in the retroactive reclassification of gain on                debt                extinguishment from an extraordinary item to a component of                operations. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.   | Per                share amounts and weighted average common shares outstanding calculations                reflect the impact of a one-for-ten reverse stock split that occurred                on                February 14, 2001. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.   | The                Company acquired substantially all of the assets of Color Edge, Inc.,                Color Edge Visual, Inc., Comp 24, LLC in March 2005 and substantially                all                of the assets of Crush Creative, Inc. in August                2005. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.   | The                Company sold its Canadian distribution business in July 2001 and                its                software licensing assets in August 2004. As a result, the operations                of                those businesses were reclassified as discontinued operations. The                sale of                the software licensing assets was rescinded in February 2005, but                continued to be treated as discontinued                operations. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                             |   |  **For                  the year ended December 31,** |   | **For                  the two months ended February 28,** |   |
|------------------------------------------------------------------|--------|------------------------------------------------------------|--------|------------------------------------------------------------|--------|
|                                                             |   | **2002**                                                   |   | **2003**                                                   |   | **2004** |   | **2005** |   |
| **Income                  Statement Data:**                      |   | **Predecessor**                                            |   |
| Net                  sales                                       |   | $                                                          | 20,041 |                                                       | $      | 46,499 |   | $ | 51,742 |   | $ | 8,532 |   |
| Cost                  of sales                                   |   |                                                       | 11,626 |                                                       |   | 23,662 |   |   | 25,836 |   |   | 5,011 |   |
| Gross                  profit                                    |   |                                                       | 8,415  |                                                       |   | 22,837 |   |   | 25,906 |   |   | 3,521 |   |
| Selling,                  general & administrative expenses  |   |                                                       | 7,728  |                                                       |   | 21,131 |   |   | 22,083 |   |   | 4,615 |   |
| Operating                  income (loss)                         |   |                                                       | 687    |                                                       |   | 1,706 |   |   | 3,823 |   |   | (1,094 | ) |
| Interest                  and other expense, net                 |   |                                                       | 295    |                                                       |   | 353 |   |   | 441 |   |   | 73 |   |
| Income                  (loss) before provision for income taxes |   |                                                       | 392    |                                                       |   | 1,353 |   |   | 3,382 |   |   | (1,167 | ) |
| Income                  tax provision                            |   |                                                       | 91     |                                                       |   | 875 |   |   | 1,856 |   |   | - |   |
| Income                  before extraordinary gain                |   |                                                       | 301    |                                                       |   | 478 |   |   | 1,526 |   |   | (1,167 | ) |
| Extraordinary                  gain                              |   |                                                       | 4,117  |                                                       |   | - |   |   | - |   |   | - |   |
| Net                  income (loss)                               |   | $                                                          | 4,418  |                                                       | $      | 478 |   | $ | 1,526 |   | $ | (1,167 | ) |
| **Balance                  Sheet Data:**                         |   |                                                       |   |                                                       |   |   |   |   |   |   |   |   |   |
| Working                  capital                                 |   |                                                       | 3,402  |                                                       |   | 5,744 |   |   | 9,447 |   |   | 8,761 |   |
| Total                  assets                                    |   |                                                       | 23,413 |                                                       |   | 25,803 |   |   | 27,923 |   |   | 25,286 |   |
| Long-term                  debt                                  |   |                                                       | 5,900  |                                                       |   | 6,711 |   |   | 7,660 |   |   | 7,976 |   |
| Total                  debt, including current portion           |   |                                                       | 8,773  |                                                       |   | 8,293 |   |   | 8,718 |   |   | 8,998 |   |
| Stockholders'                  equity                            |   |                                                       | 7,490  |                                                       |   | 7,968 |   |   | 9,494 |   |   | 8,327 |   |

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Table            of Contents

**Item      7. Management's Discussion and Analysis of Financial      Condition and Results of Operations. **

**Introduction**

**Management      Overview of 2005 Operations and Key Events**

***Color      Edge.***

***Color      Edge Visual***

***Comp      24***

***Crush***

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***Discontinued      Operations***

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Table          of Contents

**Results      of Operations **

**Comparison      of Fiscal Years Ended December 31, 2005 and December 31,      2004**

*Net      Sales *

*Gross      Profit*

*Selling,      General and Administrative*

*Interest      Expense*

*Interest      Income*

*Income      Taxes*

*Discontinued      Operations*

*Net      Income*

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**Comparison      of Fiscal Years Ended December 31, 2004 and December 31,      2003**

*Net      Sales *

*Gross      Profit *

*Selling,      General and Administrative*

*Interest      Expense*

*Interest      Income*

*Income      Taxes*

*Net      Income*

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Table            of Contents

**Liquidity      and Capital Resources**

**Cash      Flow Activity for 2003, 2004 and 2005**

| **Analysis                of Cash Flows**                                 |   | **For                the Years Ended** |   |
|---------------------------------------------------------------------------|--------|----------------------------------------|--------|
| **(in                thousands)**                                         |   | **2003**                               |   | **2004** |   | **2005** |   |
| **Predecessor**                                                      |   |                                   |   |   |   | **Predecessor** |   |   | **Successor** |   |
| Cash                flows provided by operating activities           |   | $                                      | 4,206  |   | $ | 4,111 |   | $ | 5,046 |   |
| Cash                flows used in investing activities               |   |                                   | (3,359 | ) |   | (2,719 | ) |   | (39,044 | ) |
| Cash                flows used in financing activities               |   |                                   | (1,269 | ) |   | (95 | ) |   | (740 | ) |
| Net                cash provided by discontinued operations          |   |                                   | -      |   |   | - |   |   | 425 |   |
| Net                increase (decrease) in cash and cash equivalents  |   | $                                      | (422   | ) | $ | 1,297 |   | $ | (34,313 | ) |

***Debt      Obligations, Financing Sources and Capital      Expenditures***

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**Contractual      Obligations**

| **(in                thousands)**                 |   | **Payment                due by period** |   |
|---------------------------------------------------|--------|------------------------------------------|--------|
| **Contractual                Obligations**        |   | **Total**                                |   | **Less                than 1 Year** |   | **1-3                Years** |   | **3-5                Years** |   | **More                than 5 Years** |   |
| Long                Term Debt Obligations (a)     |   |                                     | 10,725 |   |   | 677 |   |   | 10,048 |   |   | - |   |   | - |   |
| Capital                Lease Obligations (a)      |   |                                     | 1,018  |   |   | 537 |   |   | 481 |   |   | - |   |   | - |   |
| Operating                Lease Obligations        |   |                                     | 27,654 |   |   | 3,566 |   |   | 11,047 |   |   | 7,558 |   |   | 5,483 |   |
| Contingent                Payment Obligations (b) |   |                                     | 12,315 |   |   | 298 |   |   | 10,815 |   |   | 1,202 |   |   | - |   |
| Total                                             |   |                                     | 51,712 |   |   | 5,078 |   |   | 32,391 |   |   | 8,760 |   |   | 5,483 |   |

| (a)   | Long                term debt and capital lease obligations include interest expense                portion. |
|-----------------|--------------------------------------------------------------------------------------------------------------|

| (b)   | Amounts                disclosed represent contingent payables that have not been reserved                for in                the Company’s financial statements. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Item      7A. Quantitative and Qualitative Disclosures about Market      Risk**

***Investments***

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**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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Table            of Contents

**Report      of Independent Registered Public Accounting      Firm**

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Table            of Contents

**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.**

**INDEPENDENT      AUDITORS' REPORT**

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Table            of Contents

**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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Table            of Contents

**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 |   |   |   |   |

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Table            of Contents

**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 |   |

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Table          of Contents

**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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Table            of Contents

**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    |   |   | -      |   |   | -       |   |

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Table            of Contents

**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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Table            of Contents

**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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Table            of Contents

**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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Table            of Contents

**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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Table            of Contents

**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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Table          of Contents

**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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Table            of Contents

**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 |   |                                     | 7,3    |   |   | 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 |   |

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Table            of Contents

**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 |   |

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Table            of Contents

**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 |   |

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Table            of Contents

**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  |   | $ | - |   | $ | - |   |

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|                                         |   |  **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 | % |

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Table            of Contents

**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** |
|---------------------|--------------------------------------------|

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**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    |   | $ | - |   |

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Table            of Contents

**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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Table            of Contents

**MERISEL,      INC. AND SUBSIDIARIES**

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

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

*Employee      Stock Options and Stock Awards*

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**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*

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**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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Table            of Contents

**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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Table            of Contents

**MERISEL,      INC. AND SUBSIDIARIES**

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

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

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Table            of Contents

**Item      9. Changes In and Disagreements with Accountants on      Accounting and Financial Disclosure **

**Item      9A. Controls and Procedures**

**Item      9B.**
**      Other Information.**

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Table            of Contents

**PART      III**

**Item      10. Directors and Executive Officers of the      Registrant.**

| **Name**                                          | **Age** | **Position**                                                                |
|---------------------------------------------------|---------|-----------------------------------------------------------------------------|
| Donald                R. Uzzi                     | 53      | Chairman                of the Board, Chief Executive Officer and President |
| Rajiv                Garg                         | 46      | Executive                Vice President of Merisel Americas                 |
| John                Sheehan                       | 51      | President                of Color Edge                                      |
| Ken                Wasserman                      | 46      | President                of Comp 24                                         |
| Allyson                Vanderford                 | 37      | Chief                Financial Officer                                      |
| Albert                J. Fitzgibbons III (2) (3)  | 60      | Director                                                                    |
| Ronald                P. Badie (1) (4)            | 63      | Director                                                                    |
| Bradley                J. Hoecker (2) (3)         | 44      | Director                                                                    |
| Dr.                Arnold Miller (1) (3)          | 77      | Director                                                                    |
| Lawrence                J. Schoenberg (1) (2) (3) | 73      | Director                                                                    |

**    Donald      R.      Uzzi **
has      served as Chief Executive Officer and President since November      2004. Mr. Uzzi was elected to the Board of Directors as a director in December      2004. He was elected Chairman of the Board of Directors in April 2005. From      December 2002 to November 2004, Mr. Uzzi provided consulting services for      various companies on marketing, corporate strategy and communications. From      July      1999 to December 2002, Mr. Uzzi was Senior Vice President of Electronic Data      Systems Corporation. From July 1998 to July 1999, Mr. Uzzi was a principle      officer of Lighthouse Investment Group. From August 1996 to April 1998, Mr.      Uzzi      served as Executive Vice President at Sunbeam Corporation. Prior to 1996, Mr.      Uzzi held the position of President of the Gatorade North America division      of      Quaker Oats.

**    Rajiv      Garg**

**    John      Sheehan**

**    Kenneth      Wasserman**

**    Allyson      Vanderford**

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Table            of Contents

**    Albert      J.      Fitzgibbons III**
* *

**     **
**Ronald      P. Badie**

**    Bradley      J.      Hoecker**

**    Dr.      Arnold      Miller**

**    Lawrence      J.      Schoenberg**
* *

** **

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Table            of Contents

**Section      16(a) Beneficial Ownership Reporting Compliance**

**Code      of Business Conduct**

**Item      11. Executive Compensation **

**Item      12.**
**      Security Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters.**

***Equity      Compensation Plan Information***

|                                                              | **    ** | **Number of securities****to                be issued upon exercise of outstanding options,****warrants                and rights** |   | **Weighted-average****exercise                price of outstanding options, warrants****and                rights** |   | **Number of securities                remaining available for future issuance under                equity compensation****plans                (1)** |
|-------------------------------------------------------------------|------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Equity                compensation plans approved by stockholders |          | 330,200                (2)                                                                                                                    |   | $9.17                                                                                                                    |   | 312,300(3)                                                                                                                                                                              |

| 1.   | Excludes                shares reflected in the first                column. |
|----------------|------------------------------------------------------------------------------|

| 2.   | Represents                outstanding options granted under the Company’s 1991 Employee Stock Option                Plan, 1992 Stock Option Plan for Non-Employee Directors and 1997                Stock                Award and Incentive Plan. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Represents                shares available for issuance under the 1997 Stock Award and Incentive                Plan. |
|----------------|-----------------------------------------------------------------------------------------------------------------------|

**Item      13.** **Certain      Relationships and Related      Transactions.**

**Item      14.**
**      Principal Accountant Fees and Services.**

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Table            of Contents

**PART      IV **

**Item      15.**
**Exhibits      and Financial Statement Schedules.**

| **1.  ** | **Financial                Statements included in Item 8:** |
|--------------------|-------------------------------------------------------------|

| ·   | Report                  of Independent Registered Public Accounting                  Firm. |
|--------------------|--------------------------------------------------------------------------------------------|
| ·   | Independent                  Auditors’ Reports |
|--------------------|------------------------------------------------------|
| ·   | Consolidated                  Balance Sheets at December 31, 2004 and                  2005. |
|--------------------|----------------------------------------------------------------------------------------------|
| ·   | Predecessor                  Consolidated Balance Sheet at December 31,                  2004. |
|--------------------|------------------------------------------------------------------------------------------------|
| ·   | Consolidated                  Statements of Operations for each of the three years in the period                  ended                  December 31, 2005. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Predecessor                  Consolidated Statements of Operations for the years ended December                  31,                  2003 and 2004 and for the two months ended February 28,                  2005. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Consolidated                  Statements of Changes in Stockholders’ Equity for each of the three years                  in the period ended December 31, 2005. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Predecessor                  Consolidated Statements of Changes in Stockholders’ Equity for each of the                  year ended December 31, 2004 and for the two months ended February                  28,                  2005. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Consolidated                  Statements of Cash Flows for each of the three years in the period                  ended                  December 31, 2005. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Predecessor                  Consolidated Statements of Cash Flows for the years ended December                  31,                  2003 and 2004 and for the two months ended February 28,                  1005. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Notes                  to Consolidated Financial                  Statements. |
|--------------------|-------------------------------------------------------------------------------|

| **2.  ** | **Financial                Statement Schedules included in Item                8:** |
|--------------------|-------------------------------------------------------------------------------------|
| **3.  ** | **Exhibits:** |
|--------------------|---------------|

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Table            of Contents

**SIGNATURES**

|                                                           |                                                                                          |                                 |
|----------------------------------------------------------------|-----------------------------------------------------------------------------------------------|--------------------------------------|
|                                                           | **MERISEL,              INC.**                                                                |
|                                                      |                                                                                     |                            |
| Date:               April 7, 2006     | By:                                                                                 | /s/ Donald              R. Uzzi |
|                                                           | Donald R. Uzzi                                                                                |
|                                                           | Title:              Chairman of the Board, Chief Executive Officer and              President |

**Pursuant      to the requirements of the Securities Exchange Act of 1934, this report has      been      signed below by the following persons on behalf of the Registrant and in the      capacities and on the dates indicated. **

| **Signature**                                                                             | **Title**                                                                                                                      | **Date**                     |
|-------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|------------------------------|
|                                                                                      |                                                                                                                           |                         |
| /s/Donald                R. UzziDonald                R. Uzzi                             | Chairman                of the Board, Chief Executive Officer and President (Principal Executive                Officer)  | April                7, 2006 |
|                                                                                      |                                                                                                                           |                         |
| /s/Allyson                VanderfordAllyson                Vanderford                     | Chief                Financial Officer(Principal                Accounting Officer)                                            | April                7, 2006 |
|                                                                                      |                                                                                                                           |                         |
| /s/Ronald                P. BadieRonald                P. Badie                      | Director                                                                                                                       | April                7, 2006 |
|                                                                                      |                                                                                                                           |                         |
| /s/Albert                J. Fitzgibbons IIIAlbert                J. Fitzgibbons III  | Director                                                                                                                       | April                7, 2006 |
|                                                                                      |                                                                                                                           |                         |
| /s/Bradley                J. HoeckerBradley                J. Hoecker                | Director                                                                                                                       | April                7, 2006 |
|                                                                                      |                                                                                                                           |                         |
| /s/Dr.                Arnold MillerDr.                Arnold Miller                       | Director                                                                                                                       | April                7, 2006 |
|                                                                                      |                                                                                                                           |                         |
| /s/Lawrence                J. SchoenbergLawrence                J. Schoenberg             | Director                                                                                                                  | April                7, 2006 |
|                                                                                      |                                                                                                                           |                         |

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Table            of Contents

**Index      of Exhibits**

| **Exhibit**   | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **Method                of Filing**                                                                                                                   |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1           | Asset                Purchase Agreement dated as of December 24, 2004, as amended, by                and among                Merisel, Inc., MCEI, LLC, Color Edge, Inc. (“CE”) and the direct and                indirect shareholders or members of CE signatories                thereto.                                                                                                                                                                   |   | Filed                as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005.**           |
| 2.2           | Asset                Purchase Agreement dated as of December 24, 2004, as amended, by                and among                Merisel, Inc., MCEV, LLC, Color Edge Visual, Inc. (“CEV”), Photobition New                York, Inc. (“PBNY”) and the direct or indirect shareholders of members of                CEV and PBNY signatories thereto.                                                                                                 |   | Filed                as Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **          |
| 2.3           | Asset                Purchase Agreement dated as of December 24, 2004, as amended, by                and among                Merisel, Inc., MC24, LLC, Comp 24, LLC (“Comp 24”) and the direct and                indirect shareholders or members of Comp 24 signatories                thereto                                                                                                                                                              |   | Filed                as Exhibit 2.3 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **          |
| 2.4           | Amendment                and Waiver to Asset Purchase Agreement dated as of March 1, 2005                by and                among MCEI, LLC, Merisel, Inc. and Color Edge, Inc. and the direct                and                indirect shareholders set forth on the signature pages                thereto.                                                                                                                                                         |   | Filed                as Exhibit 2.4 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **          |
| 2.5           | Amendment                and Waiver to Asset Purchase Agreement dated as of March 1, 2005                by and                among MCEV, LLC, Merisel, Inc. and Color Edge Visual, Inc. and the                direct                and indirect shareholders set forth on the signature pages                thereto.                                                                                                                                                  |   | Filed                as Exhibit 2.5 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **          |
| 2.6           | Amendment                and Waiver to Asset Purchase Agreement dated as of March 1, 2005                by and                among MC24, LLC, Merisel, Inc. and Comp 24, LLC. and the direct and                indirect shareholders set forth on the signature pages thereto.                                                                                                                                                                                          |   | Filed                as Exhibit 2.6 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **          |
| 2.7           | Asset                Purchase Agreement dated as of July 6, 2005 by and among Merisel,                MCRU,                Crush and the shareholders of Crush signatories thereto, as amended                by                that certain Amendment and Waiver to Asset Purchase Agreement, dated                as of                August 8, 2005 by and among Merisel, MCRU, Crush and Guy Claudy as                Shareholders Representative.                    |   | Filed                as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the                SEC on August 9, 2005. **         |
| 2.8           | Amendment                and Waiver to Asset Purchase Agreement, dated as of August 8, 2005                by and                among Merisel, MCRU, Crush and Guy Claudy as Shareholders                Representative.                                                                                                                                                                                                                                                  |   | Filed                as Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the                SEC on August 9, 2005. **         |
| 3.1           | Restated                Certificate of Incorporation of Merisel,                Inc. as amended                                                                                                                                                                                                                                                                                                                                                                            |   | Filed                herewith                                                                                                                         |
| 3.2           | Bylaws,                as amended, of Merisel,                Inc.                                                                                                                                                                                                                                                                                                                                                                                                         |   | Filed                herewith                                                                                                                         |
| 4.1           | Certificate                of Designation of Convertible Preferred Stock of Merisel,                Inc.                                                                                                                                                                                                                                                                                                                                                                   |   | Filed                as exhibit 99.2 to the Company’s Current Report on Form 8-K dated June 9,                2000.**                           |
| *10.1         | 1991                Employee Stock Option Plan of Merisel, Inc. together with Form of                Incentive Stock Option Agreement and Form of Nonqualified Stock Option                Agreement under the 1991 Employee Stock Option Plan.                                                                                                                                                                                                                            |   | Filed                as exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the                quarter ended June 30, 1991.**       |
| *10.2         | Amendment                to the 1991 Employee Stock Option Plan of Merisel, Inc. dated January                16,                1997.                                                                                                                                                                                                                                                                                                                                     |   | Filed                as exhibit 10.67 to the Company’s Annual Report on Form 10-K for the year                ended December 31, 1996.**        |
| *10.3         | Merisel,                Inc. 1992 Stock Option Plan for Non-employee Directors.                                                                                                                                                                                                                                                                                                                                                                                            |   | Filed                as exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the                quarter ended June 30, 1992.**       |
| *10.4         | Merisel,                Inc. 1997 Stock Award and Incentive Plan.                                                                                                                                                                                                                                                                                                                                                                                                          |   | Filed                as Annex II to the Company’s Schedule 14A dated October 6,                1997.**                                          |
| *10.5         | Form                of Nonqualified Stock Option Agreement under the Merisel, Inc. 1997                Stock                Award and Incentive Plan.                                                                                                                                                                                                                                                                                                                      |   | Filed                as exhibit 10.7 to the Company’s Annual Report on Form 10-K for the year                ended December 31, 1997.**         |
| *10.6         | Deferred                Compensation Agreement between Merisel, Inc. and Timothy N. Jenson                dated                September 18, 2001.                                                                                                                                                                                                                                                                                                                         |   | Filed                as exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the                period ended September 31, 2001. **  |
| *10.7         | Amendment                to Deferred Compensation Agreement between Merisel, Inc. and Timothy                N.                Jenson dated December 18, 2001.                                                                                                                                                                                                                                                                                                             |   | Filed                as exhibit 10.9 to the Company’s Annual Report on Form 10-K for the year                ended December 31, 2000. **        |
| *10.8         | Retention                Agreement dated as of April 1, 2001 between Merisel, Inc., Merisel                Americas, Inc. and Timothy N. Jenson.                                                                                                                                                                                                                                                                                                                           |   | Filed                as exhibit 10.24 to the Company’s Annual Report on Form 10-K for the                period ended December 31, 2000. **     |
| *10.9         | Promissory                Note dated March 17, 1999 between Timothy N. Jenson and Merisel,                Inc.                                                                                                                                                                                                                                                                                                                                                             |   | Filed                as exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the                period ended March 30, 1999.**       |
| *10.10        | Bonus                Agreement dated as of August 10, 2000 between Merisel Americas, Inc.                and                Timothy N. Jenson.                                                                                                                                                                                                                                                                                                                             |   | Filed                as exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the                quarter ended September 30, 2000.**  |
| *10.11        | Change                of Control Agreement dated as of April 27, 2000 between Merisel,                Inc.,                Merisel Americas, Inc. and Allyson Vanderford.                                                                                                                                                                                                                                                                                                  |   | Filed                as exhibit 10.32 to the Company’s Annual Report on Form 10-K for the year                ended December 31, 2000. **       |
| *10.12        | Severance                Agreement dated as of December 21, 2000 between Merisel Americas,                Inc. and                Allyson Vanderford.                                                                                                                                                                                                                                                                                                                      |   | Filed                as exhibit 10.33 to the Company’s Annual Report on Form 10-K for the year                ended December 31, 2000. **       |
| 10.13         | Registration                Rights Agreement, dated September 19, 1997, by and among Merisel,                Inc.,                Merisel Americas, Inc. and Phoenix Acquisition Company II,                L.L.C.                                                                                                                                                                                                                                                         |   | Filed                as exhibit 99.4 to the Company’s Current Report on Form 8-K, dated                September 19, 1997.**                    |
| 10.14         | Stock                Subscription Agreement by and between Merisel, Inc. and Phoenix                Acquisition Company II., L.L.C. dated as of June 2, 2000.                                                                                                                                                                                                                                                                                                              |   | Filed                as exhibit 99.1 to the Company’s Current Report on Form 8-K, dated June 9,                2000.**                          |
| 10.15         | Share                Purchase Agreement, dated as of July 2, 2001, by and between Merisel                Americas, Inc., a Delaware corporation, and SYNNEX Information                Technologies, Inc., a California corporation.                                                                                                                                                                                                                                       |   | Filed                as exhibit 2.1 to the Company’s Current Report on Form 8-K, dated July 2,                2001.**                           |
| 10.16         | Real                Property Purchase and Sale Agreement dated as of December 10, 2001                by and                between HD Acquisitions, LLC and Merisel Properties, Inc.                                                                                                                                                                                                                                                                                      |   | Filed                as exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, for the                quarter ended June 30, 2002.**      |
| 10.17         | Tenth                Amendment to Real Property Purchase and Sale Agreement dated as of                May 10,                2002 between DCF I, LLC, the successor in interest to HD Acquisitions,                LLC, and Merisel Properties, Inc.                                                                                                                                                                                                                      |   | Filed                as exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, for the                quarter ended June 30, 2002.**      |
| 10.18         | Consent                to Assignment of Land Purchase Agreement dated May 10, 2002 between                Merisel Properties, Inc., HD Acquisitions, LLC and DCF I,                LLC.                                                                                                                                                                                                                                                                                    |   | Filed                as exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, for the                quarter ended June 30, 2002. **     |
| 10.19         | Purchase                Money Note dated May 20, 2002 issued by DCF I, LLC to Merisel Properties,                Inc.                                                                                                                                                                                                                                                                                                                                                      |   | Filed                as exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, for the                quarter ended June 30, 2002. **     |
| 10.20         | Purchase                Money Deed of Trust dated May 20, 2002 between DCF I, LLC, as Grantor,                Karen Tallman, as Trustee, and Merisel Properties, Inc., as                Beneficiary.                                                                                                                                                                                                                                                                      |   | Filed                as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q, for the                quarter ended June 30, 2002. **     |
| 10.21         | Construction                Promissory Note dated May 20, 2002 issued by DCFI, LLC to Merisel                Properties, Inc.                                                                                                                                                                                                                                                                                                                                              |   | Filed                as exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q, for the                quarter ended June 30, 2002. **     |
| 10.22         | Deed                of Trust and Security Agreement dated May 20, 2002 between DCF I,                LLC, as                Grantor, Karen Tallman, as Trustee, and Merisel Properties, Inc.,                as                Beneficiary.                                                                                                                                                                                                                                |   | Filed                as exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q, for the                quarter ended June 30, 2002. **     |
| 10.23         | Construction                Loan Agreement dated May 20, 2002 between DCF I, LLC, Anthony Dilweg                and                Merisel Properties, Inc.                                                                                                                                                                                                                                                                                                                |   | Filed                as exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q, for the                quarter ended June 30, 2002. **     |
| 10.24         | Amended                and Restated Registration Rights Agreement dated June 9, 2000 (executed                November 7, 2002) between Merisel, Inc. and Phoenix                Acquisition.                                                                                                                                                                                                                                                                              |   | Filed                as exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, for the                quarter ended September 30, 2002.** |
| *10.25        | Amended                and Restated First Amendment to Retention Agreement dated as of July                1,                2004 by and among Merisel, Inc., Merisel Americas, Inc. and Timothy                N.                Jenson.                                                                                                                                                                                                                                  |   | Filed                as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the                period ended June 30, 2004.**        |
| *10.26        | Employment                Agreement dated November 22, 2004 between Merisel, Inc. and Mr. Donald                Uzzi.                                                                                                                                                                                                                                                                                                                                                      |   | Filed                as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the                SEC on November 24, 2004. **     |
| *10.27… | Settlement                Agreement and Mutual General Release dated as of February 3, 2005                by and                between Merisel, Inc., Merisel Americas, Inc. and Timothy Jenson,                Tina                Wurtz, Craig Wurtz, John Low, D&H Services, LLC and TDH Enterprises,                LLC.                                                                                                                                         |   | Filed                as exhibit 10.27 to the Company’s annual report on form 10K for the period                ended December 31, 2004          |
| *10.28        | Merisel                Employment Agreement dated as of March 1, 2005 by and between Merisel                Americas, Inc. and Rajiv Garg.                                                                                                                                                                                                                                                                                                                                 |   | Filed                as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **         |
| *10.29        | Merisel                Employment Agreement dated as of March 1, 2005 by and between Merisel                Americas, Inc. and Kenneth Wasserman.                                                                                                                                                                                                                                                                                                                          |   | Filed                as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **         |
| *10.30        | Merisel                Employment Agreement dated as of March 1, 2005 by and between Merisel                Americas, Inc. and John Sheehan.                                                                                                                                                                                                                                                                                                                               |   | Filed                as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **         |
| 10.31         | Credit                Agreement dated as of March 1, 2005 by and among MCEI, LLC, MCEV,                LLC,                Merisel, Inc., Merisel Americas, Inc., MC24, LLC and Amalgamated                Bank.                                                                                                                                                                                                                                                           |   | Filed                as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **         |
| 10.32         | Pledge                Agreement, dated as of March 1, 2005, made among MCEI, LLC, a Delaware                limited liability company, MCEV, LLC, a Delaware limited liability                company, Merisel, Inc., a Delaware corporation, Merisel Americas,                Inc., a                Delaware corporation and Amalgamated Bank, a New York banking                corporation.                                                                            |   | Filed                as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **         |
| 10.33         | Security                Agreement, dated as of March 1, 2005, made by MCEI, LLC, a Delaware                limited liability company, MCEV, LLC, a Delaware limited liability                company, Merisel, Inc., a Delaware corporation, Merisel Americas,                Inc., a                Delaware corporation, MC24, LLC, a Delaware limited liability company,                in                favor of Amalgamated Bank.                                    |   | Filed                as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **         |
| 10.34         | Corporate                Guarantee, dated as of March 1, 2005, made among each signatory hereto,                in                favor of Amalgamated Bank.                                                                                                                                                                                                                                                                                                          |   | Filed                as Exhibit 10.7 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **         |
| 10.35         | Credit                Agreement dated as of March 1, 2005 by and among MC24, LLC, Merisel,                Inc.,                Merisel Americas, Inc., MCEI, LLC, MCEV, LLC and Amalgamated                Bank.                                                                                                                                                                                                                                                           |   | Filed                as Exhibit 10.8 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **         |
| 10.36         | Pledge                Agreement, dated as of March 1, 2005, made among MC24, LLC, a Delaware                limited liability company, Merisel, Inc., a Delaware corporation,                Merisel                Americas, Inc., a Delaware corporation and Amalgamated Bank, a New                York                banking corporation.                                                                                                                             |   | Filed                as Exhibit 10.9 to the Company’s Current Report on Form 8-K filed with the                SEC on March 7, 2005. **         |
| 10.37         | Security                Agreement, dated as of March 1, 2005 made by MC24, LLC, Merisel,                Inc., a                Delaware corporation, Merisel Americas Inc., a Delaware corporation,                MCEI,                LLC, a Delaware limited liability company, MCEV, LLC, a Delaware                limited                liability company, each of their Subsidiaries from time to time party                thereto, in favor of Amalgamated Bank. |   | Filed                as Exhibit 10.10 to the Company’s Current Report on Form 8-K filed with                the SEC on March 7, 2005. **        |
| 10.38         | Corporate                Guarantee, dated as of March 1, 2005, made among each signatory hereto,                in                favor of Amalgamated Bank.                                                                                                                                                                                                                                                                                                               |   | Filed                as Exhibit 10.11 to the Company’s Current Report on Form 8-K filed with                the SEC on March 7, 2005. **        |
| *10.39        | Summary                of CFO Compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                |   | Filed                as Exhibit 10.01 to the Company’s Current Report on Form 8-K filed with                the SEC on April 20, 2005.**        |
| 10.40         | Amendment                No. 1 to Credit Agreement dated as of August 8, 2005 by and among                MCRU,                Color Edge LLC (formerly known as MCEI, LLC), Color Edge Visual,                LLC                (formerly known as MCEV, LLC), Comp 24 LLC (formerly known as MC24,                LLC),                Merisel Americas, Company and Amalgamated Bank, entered into in connection                with the MCEI/MCEV Credit Agreement.   |   | Filed                as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the                SEC on August 9, 2005. **        |
| *10.41        | Amendment                to Employment Agreement dated November 22, 2004 between Merisel and                Don                Uzzi                                                                                                                                                                                                                                                                                                                                        |   | Filed                as exhibit 10.1 to the Company’s current report on Form 8-K filed with the                SEC on March 9, 2006             |
| *10.42        | Form                of Indemnity Agreement entered into between Merisel and each of it’s                Directors and certain Officers                                                                                                                                                                                                                                                                                                                               |   | Filed                as exhibit 10.2 to the Company’s current report on Form 8-K filed with the                SEC on March 9, 2006             |
| 14.1          | Code                of Business Conduct                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Filed                as exhibit 99.2 to the Company’s Annual Report on Form 10-K, for the                fiscal year ended December 31, 2002.   |
| 21            | Subsidiaries                of the Registrant.                                                                                                                                                                                                                                                                                                                                                                                                                             |   | Filed                herewith                                                                                                                         |
| 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                                                                                                                         |